There has been much euphoria over the Government’s move to tap the global capital markets and raise US$ 500 million via its first ever sovereign bond issue. The Government has taken pains to justify it while the Opposition and other activists have been vociferously campaigning against it. Economists have been divided over the benefits of the Bond issue, tenure of which will be 10 years and listed in the Singapore Stock Exchange.

The cross talk has also taken an ugly turn. UNP leader Ranil Wickremesinghe, who has been quite vocal about his party’s position as per some analysts, went too far by threatening to cancel the license of a respected global giant as HSBC. While Wickremesinghe should be commended for reasons cited for opposing the Bond, he also draws flack for some irresponsible remarks. Whether we like it or not, the fact remains that joint lead managers HSBC, Barclays and JP Morgan, are working on the Bond issue on the invitation of the Government. They are not robber barons nor did they mislead the Government into going for a Bond issue. The original idea came from the Government so the UNP leader should confine his comments and aim at the Finance Minister who is none other than President Mahinda Rajapaksa, the Treasury as well as the Central Bank.

In fact HSBC responded to warnings of Wickremesinghe with a short statement. HSBC is one of the largest financial organisations in the world and has a major footprint in the international capital markets based on integrity, longevity, commitment and consistency. The statement also said HSBC has a long and proud history in Sri Lanka stretching back more than 100 years. HSBC maintains the highest standards in all our banking operations and adheres to all laws and regulations in every country in which we operate, the statement added. The other two joint managers are also highly respected financial institutions.

In that context the UNP will do justice to the people, whom it says, will be the ultimate loser from the proposed Bond issue, if it ensures that the Government heeds the main Opposition’s concerns.

Given the serious implications revealed by the UNP (See The Bottom Line issue of August 29) and economists the Government may have to rethink the Bond issue. Though it says funds raised by the Bond issue will be used as a buffer to finance key infrastructure projects, there is little credibility. Some economists have said that the funds will be used to cover up the financial crisis the Government and the Treasury is facing at present. However, the Central Bank has been dishing out statistics to rule out any crisis situation.

The rising public debt is certainly a major issue while the bloating fiscal deficit, which many believe is the root cause of many economic ills and burdens on the people, must be urgently dealt with. However, it appears that the Treasury is comfortable with the deficit as well as the revenue and expenditure performance so far this year. The country would know the true situation when the Budget 2008 is presented in two months time.

There is also a need for the civil society to ensure Governments and politicians, be it in ruling or opposition parties, are held accountable. The private sector, especially the chambers of commerce and industry, too has been largely silent on the Bond issue. If they genuinely feel the Bond issue is the way forward, they must come out and be expressive. Confrontational politics have plagued Sri Lanka. Petty politics will not take us anywhere.