The ‘Local Loans and Development Fund’ activities that are under the Ministry of Public Administration, Home Affairs, Provincial Councils and Local Government is to be formalised per the directives of the Committee on Public Enterprises (COPE).
It is following the summoning of the authorities of the aforesaid fund by the COPE on Thursday (20) under the chairmanship of Member of Parliament Prof. Ranjith Bandara, following the investigations carried out on the Auditor General's reports for the financial years 2020, 2021 and current performance.
It was revealed that the fund has received 9 projects worth Rs. 249 million in the year 2023, but the board of directors has not considered them yet. Thus, it was recommended that a formal system and set of guidelines be set up, focusing on issues such as granting and recovery criteria, loan recovery capabilities, projects using loans and productivity. The committee emphasised the need for the loan committee to operate according to that formal system.
In addition, the COPE chairman revealed that Rs. 691 million of the total loan amount of Rs. 847.7 million has been given to the North-Western Province in 2021. The committee recommended that the loan distribution system to each province be streamlined.
The committee also discussed the lack of a permanent Internal Auditor to conduct the internal audit properly. It was recommended to recruit a permanent Internal Auditor and to provide the audit reports for the years 2011 and 2012 to the Auditor General within a month. It was also advised to implement the recommendations of the National Audit Commission.
Further, the need to amend the Act was emphasised by taking into consideration the timely matters as the Act is not appropriate for the Secretary of the Ministry to act as the Chairman of the Fund, as the Auditor General pointed out. Since the Prime Minister as the Minister in charge of the subject has also held a discussion to amend the Act, the Secretary of the Ministry of Public Administration, Home Affairs, Provincial Councils and Local Government was informed to take steps promptly.
It was also revealed that, in 2018, the 'Asian Foundation' had given a report regarding the restructuring of the institution and if it had been acted upon, great progress could have been achieved.
Moreover, the COPE ordered the authorities of the said fund to inform within two weeks about the next steps to be taken to appoint a permanent Director General as well as a full-time permanent Internal Auditor eliminating the acting position.
A corporate plan has been prepared for the period of 2019-2023, but it was revealed that it has not been approved. Accordingly, the committee advised to approve a corporate plan from 2023 to 2028.
Attention was also paid to the non-recovery of a loan amount of Rs. 12 million given to the Dambulla Pradeshiya Sabha in 1995, under the multi-crop development project, and the loan amount of Rs. 60.9 million given to the Kandy Municipal Council. Accordingly, it was advised to take the relevant legal steps immediately.
The COPE Chairman pinpointed that the activities of the ‘Local Loans and Development Fund’, which is the only institution that provides financial assistance to development activities through local government bodies, should be more streamlined. It was also decided to summon this institution in another six months.
State Ministers Jagath Pushpakumara, Members of Parliament Anura Priyadarshana Yapa, Dayasiri Jayasekara, Nimal Lanza, S.M Marikkar, Upul Mahendra Rajapaksa, Madhura Withanage and Prof. Charita Herath was present in this committee.
This institution has been established by Ordinance No. 22 of 1916 with the aim of providing financial facilities at a concessional interest rate to the local government bodies for running public utility
services as authorised by law. It has been amended on several occasions and has been named as the Local Loans and Development Fund under Act No. 24 of 1993.