The more charitable explanation for the government’s omission of key information from the annual debt policy statement, which it lays before the National Assembly every year as obliged by the Fiscal Responsibility and Debt Limitation Act 2005, is gross incompetence. The less charitable explanation is that the government is trying to hide something. The Debt Office has reached a first of sorts, as it claimed it had omitted information it had already provided. This must be the first time a government organization has had any hesitation about repeating information. The suspicion does raise its head that the government is trying to hide something, perhaps that it has failed to control debt, and there is an upward trend in incurring debt, and thus that it is not in compliance with the targets laid in the Act, or perhaps that the government wants to hide the fact that it is borrowing to service old loans. Fresh debt should go towards project financing, but the amount of debt, which is not being released, going towards servicing old loans is not a sustainable practice.
This does not bode well for the resumption of the IMF programme which has seen the third tranche withheld. The debt situation is not encouraging for resumption of the facility, and it is not helpful that there has been a puerile attempt to conceal information. This need is leading the government to take actions it had previously vowed never to take, just as much as it went to the IMF after loudly and decidedly proclaiming that it would not. The increase in the power tariff was big enough a shock, and it was followed promptly by a fuel price hike. While this may gain it brownie points with the IMF, it further placed the ordinary consumer under pressure. The government is also likely to hurriedly abolish by a presidential ordinance corporate income tax exemptions worth between Rs 150 billion to Rs 200 billion a year, rather than wait to do so in the coming 2021-2022 Budget, so as to secure the resumption of the programme.
The government may feel that the Fiscal Reliability and Debt Limitation Act cannot be obeyed. If so, it should say so forthrightly. In the digital age, concealment is not possible, and such old-fashioned behavior is not expected of such a tech-savvy party.
