Sri Lanka announced last week that it would default on $ 51 billion of foreign debt, marking the first time in 25 years that a South Asian country has faced such an economic crisis. Sri Lankans now lack fuel for their vehicles, face regular six hour power cuts, and are preparing for a looming food shortage. Although recent challenges — key among them the COVID-19 pandemic — have aggravated Sri Lanka’s economic crisis, the default has been clearly in the making in the last two years of the regime starting with the massive tax cuts and refusal to go to the IMF.
The President admits it was his mistake. When half the value of the country’s GDP is wiped out can you only apologise and get away? No way Sir. Both big Rajapaksa’s have so far refused to leave office. The current leadership is unlikely to step down, some say due to the backing of certain crony businessmen who surround the President.
Much to the amusement of the public the majority of the private sector who were happily in bed with the Government have woken up. Because their businesses are now under scrutiny. The ex CC Chamber President sat on Government Boards and did nothing when the writing was clearly on the wall. They don’t know what a conflict of interest is? Many flirted with P.B. Jayasundera and S.R. Attygalle. The audit firms were notorious like buses fighting to get passengers. Same later with the ex-Governor Cabraal who is under severe criticism for floating the rupee by 50% without consulting the Cabinet. Former Prime Minister Ranil Wickramasinghe lambasted the Central Bank for devaluing the rupee without Cabinet or Parliamentary approval.
He also reprimanded the SriLankan Airlines Board for attempting to lease/buy new aircrafts when the country can’t even provide a steady line of oil or gas and medicines to the public. First pay the bank loans he demanded. This only goes to confirm how distanced the affluent are from reality. Yesterday, we saw a shareholder of a family company giving an interview at Galle Face green.
Obviously according to observers, it is because the company is under attack because two of its top executives were flirting with the Government openly. They even took positions and posted the pictures on social media. Now we have statements after statements coming from the Chambers. The institutions have also joined the bandwagon. They want it published, so that they can share their statements on social media. The latest to join is CFA. What were they doing in early 2020 knowing very well the country would face a dollar shortage?
In 2020, Sri Lanka’s debt was more open to restructuring. Its official status as a low-income country allowed it to access favourable loans from the International Monetary Fund (IMF) and the World Bank, and little of its debt was held by private investors or other countries. However, the majority of the private sector happily danced with the Government without advising the Government to do the right thing by the country, some happily imported and squandered the dollars of the public. The President had a coterie of private sector friends. We don’t need to highlight them. The public knows who they are.
Recently a new Governor was installed. He projected himself as a saviour. The new Governor who was part of the system for over 30 years announced a sovereign default again without Parliament approval. He said he wanted independence. He made a joke of the default when he subsequently announced that the default was only a pre-emptive default. God knows what the difference really means. Because the rating agencies could not figure it out. Should we have not got the IMF on our side before we made the announcement? Then the former Governor in a press release today says the current regime is continuing with the Monetary Board’s decision of a free float. He was severely criticised by the PAC Chairman in Parliament yesterday. The MP said the free float ruined the livelihoods of the average man on the streets forever. That is why for god’s sake why they are protesting, he said.
Our rich flock owning companies in the CSE, which has been shut down till next week, are giving statements, one after the other, that will not fill their employees’ stomachs. At least go back to your companies, weed out the political parasites out of your businesses and increase the salaries of your employees if you have a heart. Some top executives have already started to reach out to the Opposition to secure their futures. However, the public will never forgive certain business leaders for failing to take action to stop the destruction of their livelihoods.
DAILY FT
