Sources say that for the first time in history, Sri Lanka’s decision to default on a foreign loan on the 12th was taken with the approval of the Cabinet and without any cabinet paper or cabinet discussion.
On the morning of April 12, Finance Minister Mohamed Ali Sabri, Governor of the Central Bank Nandalal Weerasinghe and Secretary to the Ministry of Finance Mahinda Siriwardena had a discussion at the Ministry of Finance. Sources from the Ministry of Finance stated that the three of them had decided to suspend the repayment of foreign loans from that evening.
The decision taken by the three was immediately communicated to the world and implemented.
According to Finance Ministry sources, they have not sought the approval of the country’s executive cabinet or a cabinet paper or a cabinet meeting or at least not even the Prime Minister of the country to take such a drastic decision affecting the entire 22 million people of the country.
If such a crucial decision is taken, which will have a huge and long-term impact on the country, it must be approved by the Cabinet. Furthermore, since Parliament sets aside all money to pay off debts at the beginning of the year if the government decides to default on any debt, it must seek the approval of Parliament. But Ali Sabbari, Nandalal Weerasinghe, and Mahinda Siriwardena have taken this crucial decision regarding the future of the country, the lives and deaths of the people, and the children born tomorrow, without taking any of the above-mentioned steps and ignoring all of that.
What happens next through the Sri Lankan government’s debt default process?
- In the future, no letter of credit will be able to be opened by any Sri Lankan bank
- Sri Lanka will be ranked last in the international credit rating as a defaulting country.
- All Sri Lankan banks will be advised to repay all loans extended by foreign banks as soon as possible.
- The value of the rupee will not be able to maintain or control
- The Monetary Board will have to immediately increase the historic interest rate hike of 7% on April 8, 2022 by another 12%.
- With such a sharp rise in exchange rates and the inability of businesses and individuals to carry out all imports, almost all businesses in the country are at risk of collapsing.
- In such a situation people automatically fall suffer
- The risk of starting to lose a lot of jobs in a few weeks
- In three or four weeks there will be no imported goods in all the supermarkets
- Shortage of fuel, gas, pharmaceuticals, coal and other essential commodities will worsen
According to the Constitution of Sri Lanka, the sovereign power belongs to the people. The people elect a group of people’s representatives to represent them and send them to parliament, which has the full power to make decisions about the country’s finances. So how could the Minister of Finance, the Governor of the Central Bank, and the Secretary to the Ministry of Finance alone take such a drastic decision despite all that?
Even Finance Minister Mohamed Ali Sabri was not directly elected by the people but came to Parliament from the national list. The other two are officials who are not representatives of the people at all. Would representative democracy in the country be a joke if these three could make a decision to default on the country that would severely affect even unborn children?
At the same time, according to economic sources, the decision of these three will lead to further damage to the country. We look forward to presenting an analysis on this at the economic and technical level in the future as well.
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