MP drops bombshell over EPF discrepancy, demands immediate remedy

…. asks whether IMF is blind

By Shamindra Ferdinando

Dissident SLPP MP Gevindu Cumaratunga faults Parliament for continuing to allow a special category of EPF (Employees’ Provident Fund) recipients, created since 2022, regardless of the matter being brought to the attention of Parliament.

Addressing the media at Sri Sambudhathva Jayantha Mandiraya, Cumaratunga said that in spite of the public finance being under the control of Parliament, the Wickremesinghe-Rajapaksa government had allowed an unprecedented discrepancy in what he called beneficial interest rates received by members of the Central Bank Provident Fund.

Pointing out that in the year 2022, all EPF members had been given 9% interest, whereas CB employees received a staggering 29.27%, MP Cumaratunga alleged that the Parliament had hindered his efforts to compel the Finance Ministry to admit the truth in Parliament.

The leader of the Yuthukama civil society group said that his question, pertaining to the EPF, that was raised on 10 July, 2023 received an answer only on 07 Nov. On behalf of the Finance Ministry, State Minister Shehan Semasinghe had admitted that those of the Central Bank Provident Fund were paid 29.27% whereas the rest received 09%, MP Cumaratunga said. Both EPF funds are managed by the Central Bank.However, State Finance Minister Semasinghe had failed to explain how Central Bank employees received an interest three times higher than other EPF beneficiaries, MP Cumaratunga said. Responding to a query by The Island, the MP said that though he raised the issue in Parliament, on July 10, 2023, the government and the Opposition were fully aware of the EPF issue.

Instead of taking remedial measures in this regard, the Parliament passed the Domestic Debt Optimization (DDO) plan on July 01, 2023, thereby legitimised the flawed EPF interest payment scheme. The MP said that the ruling SLPP voted for the controversial resolution that was adopted with a majority of 60 votes. The resolution received 122 votes in favour whereas 62 voted against. Forty one MPs skipped the vote.

Much of the 10-hour debate, on July 1, 2023, centred on how the DDO process impacted on the EPF and ETF (Employees Trust Fund).

Cumaratunga said that the Governor of the Central Bank Dr. Nandalal Weerasinghe had recently given Uthara Lanka Sabhagaya (ULS) an opportunity to discuss the matter at the Governor’s Secretariat. On behalf of the grouping, represented mainly by dissident MPs elected and appointed on the SLPP lists, MP Cumaratunga accompanied by Ven. Athureliye Rathana Thera met Dr. Weerasinghe and senior officials of the CB.

He said that during the discussion the Central Bank had assured that the information requested by the Finance Ministry, pertaining to the question the lawmaker raised in Parliament, had been furnished without delay. The top political leadership should take responsibility for causing the delay in answering the question, even though the Central Bank responded to the request made by Additional Secretary, Finance Ministry, in a letter dated July 27, 2023, Cumaratunga said. The official has requested the information before Aug 10, 2023, according to the MP. This transpired during the discussion the MPs had with Dr. Weerasinghe.

MP Cumaratunga said that before calling the media briefing he had examined past Central Bank reports, going back over ten years. President Wickremesinghe who also functions as the Finance Minister, owed the country an explanation so do State Finance Minister Shehan Semasinghe, MP Cumaratunga said.

In 2020 and 2021, the EPF members received 9% interest whereas Central Bank employees were paid 6.37% and 8.24%, respectively. The inflation had been 4.6% in 2020 and 6% in 2021 whereas interest rates were relatively low, MP Cumaratunga said.

But in 2022, when an explosive combination of issues caused unprecedented economic-political-social turmoil, the government increased interest rates. Pointing out that inflation rose to 46.4%, MP Cumaratunga said that EPF remained at a paltry 9% while Central Bank employees were granted significantly bigger – 29.27%. “This couldn’t be justified under any circumstances.”

Responding to another query, Cumaratunga said that Parliament should have addressed the issue promptly. “We are aware that the Central Bank employees are entitled to pensions whereas the vast majority of those who received just 9% beneficial interest didn’t have anything else to depend on after retirement.”

Cumaratungar said that Parliament at least now should intervene in this matter. Cumaratunga pointed out that though ordinary EPF members had been paid just 9% in 2021 and 2022, according to Central Bank records, there was a significant increase in profits in 2022 compared with the previous year. While 2021 investments had brought in Rs 293 bn profit, 2022 recorded Rs 349 bn in profits, the MP said.

Cumaratunga called for a thorough examination of all data as the biggest margin between interests paid to EPF and members of the Central Bank Provident Fund had been 1.7% in the recent past. That was in 2018 when EPF was paid 9.5% while Central Bank employees received 11.2%, the MP said.

Declaring that he had no faith in IMF remedies, MP Cumaratunga said that if the funding agency had been genuinely concerned about bankrupt Sri Lanka it could intervene in this matter, too, as it pressed the government to go all out to meet revenue targets.