Sri Lanka’s current financial statement cannot be made public as it will create a big issue for the government, Finance Minister Basil Rajapaksa publicly acknowledged  in  response to a request made by Minister Vasudeva Nanayakkara at the recent cabinet meeting, reliable official sources said.

A similar request has been made by Minister Wimal Weerawansa as well while endorsing the request of MP Vasudeva Nanayakkara.

Thereafter Minister Basil Rajapaksa has agreed to submit the government financial statement to the cabinet of ministers at its next meeting. 

Meanwhile the Finance Ministry has informed the cabinet in a special report that the country’s foreign debt payment this year was around US$ 6.9 billion and of this amount the Central Bank has paid $ 500 million International Sovereign Bond recently .

The Ministry has brought to the notice of the cabinet that another sum of $ 1 billion ISB has to be paid in July this year while the total interest payment will be around $ 860 million. 

 Sri Lanka is negotiating debt relief with international bondholders and is weighing an approach to the IMF; as the country struggles with a foreign reserve crisis that has left it close to default.

Basil Rajapaksa, finance minister, told the Financial Times in an interview that the government was “negotiating with everybody” and “trying all our options” to avoid default and alleviate the economic crisis.

“We have [international sovereign bonds] which we have to repay back, so we are negotiating with them. Then we have creditors and we have to service their debt, so whether we can have an adjustment or some type of thing,” he said.

Rajapaksa added that the government would “think about a programme with the IMF . . . All those discussions are going as well.”

Many investors think Sri Lanka will become the latest to default on its sovereign debt during the pandemic, after the likes of Belize, Zambia and Ecuador. The country has almost $7bn in debt payments due this year but less than $3bn of foreign reserves.

Some Sri Lankan officials have insisted that the country can avoid this fate by boosting foreign currency reserves through tourism and exports while securing additional assistance from China and India, two of its largest benefactors. The central bank governor this week told CNBC that “we don’t need relief” from the IMF.

Rajapaksa insisted the government could manage but was preparing for contingencies. “I know it’s very difficult because we have to pay $6.9bn this year and, in addition to that, we have to find money for medicine, raw material, fuel, all these things,” he said.

Sri Lanka’s group of parliamentarians have stepped in to force the government to take immediate steps to overcome  the current  unprecedented economic crisis, causing severe hardship to all segments of society, especially working people and the poor.

Undoubtedly, the government has a daunting task ahead, and as a country there is a need for everyone including MPs to come together to overcome this challenge, former chairman of the Committee on Public Finance in Parliament M.A. Sumanthiran suggested. 

He revealed that he approached parliamentary colleagues and party leaders, and requested them  to come  together in the knowledge that Parliament is expected to have full control of public finance, and that each MP, therefore, also has a fiduciary responsibility to ensure the proper management of public finances in Sri Lanka

At the same time, the government’s approach to resolving the crisis raises some serious questions, he claimed.

 Its focus, almost solely on meeting foreign debt obligations, is draining the country of dollars needed for importing essentials for our people. 

The government’s emphasis on avoiding a default at any cost appears to be downplaying a fundamental question – can our people eat? After all, a country’s pride rests not only in repaying its loans, but also in ensuring no citizen goes to bed hungry.

Recognising this dire situation, a group of leaders from over half a dozen key political parties in Sri Lanka came together in a closed-door meeting on Thursday 27^th January 2022, to brainstorm ways to tide over this crisis, given the responsibility we have towards the Sri Lankan people.

The current crisis, , is of a proportion that is historically unprecedented for many reasons as indicated in following points. 

(1) The country’s ratings have fallen to the level of being blacklisted in international credit markets. Since April 2020, Sri Lanka has been locked out of borrowing using International Sovereign Bonds (ISBs) in the international market

(2) Repaying US dollar debt in this context means that the usable foreign reserves are down to below one month of imports – the lowest on record since independence.

(3) The ratio of interest on debt to government revenue was above 70% in 2020, a historical high for Sri Lanka, and amongst the highest in the world.

(4) The ratio of public debt compared to the value of Sri Lanka’s domestic production (GDP) is also the highest on record, at 120%. It skyrocketed, by almost 25 percentage points, in the last two years.

Each of these situations by themselves would spell a serious economic challenge. Occurring simultaneously, they threaten our future in both the short term and long term, added. 

In this context, the Central Bank’s policy has been to hoard the scarce dollars to pay creditors in full and on time. 

This has fueled a shortage of dollars for the needs of our own people, and reduced imports of essential items such as food, medicines and fuel. 

We see the shortage manifesting in long queues for essential items and frequent power outages. The situation will only worsen over the year, if the government does not urgently shift gear and ensure adequate dollars are available to the Sri Lankan economy.

Already, the government’s rash chemical fertilizer policy has impacted farmers across Sri Lanka, leaving us with an imminent food crisis,  he said adding that the government’s current policy path on debt management, as it was in the case of fertilizer policy, is exacerbating the crisis, without a sensible or viable solution in sight.

There was wide acknowledgement that the Central Bank hoarding dollars to make lump-sum debt payments was leading to a shortage of dollars to procure essential supplies within the country.

 This group of political leaders agreed to continue engaging and working together towards ensuring justice for the people of Sri Lanka, through solutions that are sustainable. We must steer the country out of this unprecedented economic crisis, and forge an equitable and just future for our future generations, he disclosed.

Sri Lanka fell 8 places in Transparency International’s corruption perception index (CPI) for 2021, with the state now ranking 102^nd in the world. With a score of 37/100, Sri Lanka drops behind countries such as Vietnam, India, China and East Timor. 

The latest ranking is the second worst score it has received from Transparency International “Transparency International notes that the global COVID-19 pandemic has been used in many countries as an excuse to curtail basic freedoms and side-step important checks and balances,” said Transparency International Sri Lanka (TISL) in a statement.

“It adds that despite the increasing international momentum to end the abuse of anonymous shell companies, many high-scoring countries with relatively “clean” public sectors continue to enable transnational corruption.”The latest fall in Sri Lanka’s rankings comes as the island faces a massive economic crisis.

Sri Lanka’s rank has dropped from 94 in 2020 to 102 in 2021 in its Transparency International’s corruption perception index (CPI) for 2021 while Bhutan with better index had the most transparency in South Asia, the latest Transparency International data showed.

“According to Transparency International, Sri Lanka’s overall performance is in line with the observation that corruption levels remain at a standstill worldwide, with 86 percent of countries making little to no progress in the last 10 years,” the local body Transparency International Sri Lanka (TISL) said in a statement.

“Over the past 10 years Sri Lanka’s CPI score has remained relatively the same with the lowest score of 36 being reported in 2016 and the highest score of 40 being reported in 2012.”

CPI calculates a country’s level of public sector corruption using data collected from 13 external sources, including the World Bank, World Economic Forum, private risk and consulting companies, and think tanks.

This index calculates a range of corruption in public sector such as bribery, diversion of public funds, effective prosecution of corruption cases, adequate legal frameworks, access to information, and legal protections for whistleblowers, journalists and investigators.

The country with the highest public corruption last year was South Sudan with 11 points and Denmark remained the cleanest with 88 points.

Sri Lanka’s CPI score in 2021 was 37, one point lower than the previous year.

Bhutan with 68 points was ranked at 25th to lead in the ranking among South Asian nations. Both Maldives and India with 40 pints were ranked 85th while Nepal (117), Pakistan (140), Bangladesh (147), and Afghanistan (174) were behind Sri Lanka’s ranking.

“Transparency International notes that the global COVID-19 pandemic has been used in many countries as an excuse to curtail basic freedoms and side-step important checks and balances,” the TISL said.

“It adds that despite the increasing international momentum to end the abuse of anonymous shell companies, many high-scoring countries with relatively “clean” public sectors continue to enable transnational corruption.”

The watchdog called to reduce public sector corruption, uphold the rights needed to hold power to account, restore and strengthen institutional checks on power, combat transnational forms of corruption, and uphold the right to information in government spending to improve the index.