News
Change catastrophic strategies or face consequences -CB warns Parliament
By Shamindra Ferdinando
Central Bank Governor Dr. Nandalal Weerasinghe has warned political parties represented in Parliament that unless they abandon their ill-conceived strategies, Sri Lanka would have to seek IMF interventions 16 times in the next 20 years.
Dr. Weerasinghe issued the warning at a meeting organised on the intervention of Speaker Mahinda Yapa Abeywardena at the Parliament, on 31 August. This was ahead of the successful conclusion of the Staff-Level talks with the International Monetary Fund (IMF)for a four-year USD 2.9 bn loan facility.
Dr. Weerasinghe said that over the years Sri Lanka had sought IMF’s intervention on 16 occasions and this was the 17th time.
Pointing out that measures that had been taken by the yahapalana government (2016-2019). following agreement with the IMF, was disregarded by those who regained power in 2019/2020, Dr. Weerasinghe said if the government/Opposition reneged on the undertakings, the country would face a similar crisis, in three years.
Dr. Weerasinghe chided political parties for seeking political gains at the expense of the national economy. The government and the Opposition and vice versa repeatedly, made election promises that undermined the national economy, Dr. Weerasinghe said. Those who voted for them ultimately paid a very heavy price, Dr. Weerasinghe added.
Top Central Banker Dr. Weerasinghe, who retired in January 2021, was requested by former President Gotabaya Rajapaksa to succeed Ajith Nivard Cabraal as its Governor in April this year.
Dr. Weerasinghe said that those who obtained IMF assistance promising to rectify their wrongdoings, but continued to do the same.
At the onset of his one-hour long speech, Dr. Weerasinghe, having declared that the situation was so bad the current crisis could be compared with that of Zimbabwe and Lebanon. The CBSL Chief stressed that the per capita income in USD terms had dropped from USD 4,000 to 3,200. Unless tangible measures were taken, the economy could collapse, Dr. Weerasinghe warned, while advising lawmakers how hyperinflation could cause the government to lose control.
Dr. Weerasinghe alleged reckless and irresponsible spending by successive governments against the backdrop of year on year widening budget deficit led to the current crisis. The governments deprived the private sector of the much required funding for investment purposes etc., by utilizing such funds, he said.
The CBSL Chief showed how Parliament repeatedly raised the ceiling on borrowings to facilitate the agendas of the ruling party whoever was at the helm at that time.
Commenting on rapid deterioration of the economy, Dr. Weerasinghe pointed out large scale commercial borrowings that began in 2005 as against concessionary loans secured earlier undermined the very basis of the economy. Imprudent investments of such commercial loans contributed to the current catastrophe, Dr. Weerasinghe said, asserting that commercial borrowings had reached a critical level.
Declaring that he wasn’t making a political statement, Dr. Weerasinghe explained how the Mahaweli project contributed to Sri Lanka’s development, especially saved valuable foreign exchange by enhancing hydro-power generation capacity. Otherwise, Sri Lanka would have been in deeper trouble, Dr. Weerasinghe said, finding fault with successive governments for procuring loans at higher interest rates to further expand the public sector, pay salaries and pensions and other non- productive measures.
Dr. Weerasinghe said that those who had been in power simply secured loans from those ready to give. The reckless project continued as long as Sri Lanka had access to financial markets, Dr. Weerasinghe said, adding that this was interrupted in 2020/2021 when the country lost access to such markets. Dr. Weerasinghe declared that the moment creditors stopped giving us more loans we were bankrupt.
Referring to recurring losses suffered by state enterprises, Dr. Weerasinghe disclosed State Corporation sustained losses amounting to Rs 1 trillion. Addressing Power and Energy Minister Kanchana Wijesekera who was among those present on the occasion, Dr. Weerasinghe said that the lawmaker knew the extreme difficulties in managing the crisis.
Dr. Weerasinghe slammed the previous government for abolishing a range of taxes in the absence of a public campaign. That triggered the unprecedented crisis, Dr. Weerasinghe said, acknowledging Central Banks world over printed money as a temporary measure as happened during the Covid-19 pandemic. However, Sri Lanka continued the practice, the CBSL chief said, comparing the actions of the then government to a person who didn’t want to give up the use of ‘abing’ (opium).
Dr. Weerasinghe said that at the time he took over the Central Bank in April this year, both Bank of Ceylon and People’s Bank had defaulted. The reserves in April amounted to just USD 20 mn and the economy was in tatters, Dr. Weerasinghe said.
Commenting on his immediate predecessor Ajith Nivard Cabraal’s much touted road-map meant for economic recovery didn’t yield expected results. In spite of projected USD 10 bn in terms of fresh funding there was absolutely nothing, Dr. Weerasinghe declared.
The CB Governor strongly defended the declaration he made as regards Sri Lanka’s failure to meet its loan obligations. The declaration was made in the wake of the IMF turning down Sri Lanka’s request for USD 800 mn which was made available due to covid. Sri Lanka was denied that on the basis the country couldn’t have repaid that facility provided to all countries affected by covid-19.
Then having squandered precious USD by fixing Rs at 203 to the dollar, the currency was floated without following proper procedures. That was nothing but a disastrous measure that finally led to street protests and the change of government. Emphasizing the responsibility on the part of the incumbent government to ensure strict implementation of measures currently in place to control expenditure by imposing import restrictions, Dr. Weerasinghe warned that unless the government achieved that there would be a change of government again.
Acknowledging the extreme difficulties experienced by fixed income earners and the poor, Dr. Weerasinghe underscored the pivotal importance of what he called a social security safety net. The IMF expected the government to pay attention to the issue at hand as whatever the proposed reforms they couldn’t be sustained unless the administration looked after those vulnerable groups. If those unable to make ends meet come onto the streets, there would be a bloodbath. Such a scenario would be far more dangerous than the Galle Face protest campaign that forced the change of government in July, Dr. Weerasinghe said.
The CBSL Chief said that he was also concerned about the sustainability of the banking sector. The outspoken official pointed out that with food inflation at over 90 percent sustaining the economic reforms and taking forward the staff level agreement with the IMF to the next level would be a challenge.
… America-Pakistan developed required ‘intel’ for operation
By Shamindra Ferdinando
The US Embassy in Colombo declined to comment on a special police probe into the recent narcotics detection, jointly made at the China-managed Colombo International Container Terminal (CICT) by the US Drug Enforcement Administration’s (DEA) New Delhi Country Office and Sri Lanka Police..
US Embassy spokesperson said that the mission wouldn’t add to their press release, issued on 2 Sept., in the immediate aftermath of the raid.
Police Headquarters, on 11 Sept., declared that the Central Crime Investigation Bureau (CCIB) was conducting investigations into the recovery of 473 kg of Crystal Methamphetamine (‘Ice’). Police never acknowledged the role played by the US in the operation.
According to Police Headquarters, on a directive given by IGP Priyantha Weerasooriya, the Special Investigation Unit has launched an internal probe into, what it called, shortcomings and irregularities in the Colombo Port raid.
The Island:
Have you (relevant US authorities) received an update of Sri Lanka’s investigations from the Police?
US Embassy:
U.S. and Sri Lankan law enforcement authorities maintain close and ongoing cooperation on counternarcotics matters, including the exchange of information that helps both countries combat transnational drug trafficking. We don’t have anything further to share on communications with Sri Lankan authorities beyond what we’ve already said publicly about the successful operation.
The Island:
Did the Police seek clarification regarding DEA, New Delhi Country Office role in the successful raid?
US Embassy:
As the Embassy noted publicly following the seizure, cooperation with the U.S. Drug Enforcement Administration contributed to the Sri Lanka Police Narcotics Bureau’s successful seizure of approximately 463 kilograms of methamphetamine at the Port of Colombo.
The seizure demonstrates the value of close U.S.-Sri Lankan cooperation in disrupting transnational narcotics trafficking.
The Island:
Before we raised this issue were you aware of the internal investigation into the drug bust which was also raised in Parliament last week?
The US Embassy:
We don’t have anything further to share beyond what we’ve already said publicly about the successful operation.
Our focus remains on the strong U.S.-Sri Lanka law enforcement partnership and the concrete results our cooperation can deliver—disrupting transnational criminal organisations, cutting off the profits that fuel illicit drug trafficking, and protecting our citizens from the dangers of narcotrafficking.
The US Embassy attributed the success of the counternarcotics operation to the US-Sri Lanka partnership
The US Embassy statement, dated 2 Sept: The U.S. Drug Enforcement Administration’s (DEA) New Delhi Country Office and Sri Lanka’s Police Narcotics Bureau (PNB) conducted a successful joint operation disrupting a Pakistan-based narcotrafficking network attempting to smuggle crystal methamphetamine through Sri Lanka to international markets.
Acting on intelligence developed by DEA’s Foreign Counterparts Unit Pakistan Anti-Narcotics Force Special Investigations Cell between August 14–29 on suspicious maritime containers moving from Pakistan to Colombo, PNB seized approximately 463 kg of crystal methamphetamine with a street value of $21 million, concealed in bath towels, and arrested several suspects, including Pakistani nationals. This operation underscores the strength of the U.S.-Sri Lanka partnership in dismantling transnational criminal organisations that fund terrorism and threaten communities in both our countries. This cooperation builds on long-standing training and technical assistance provided through the U.S. Department of State’s Bureau of International Narcotics and Law Enforcement Affairs (INL) to the Sri Lanka Police and Customs. The United States remains committed to working with Sri Lanka and regional partners to aggressively pursue transnational criminal organizations, deny them the revenue from illicit drug trafficking, and protect our citizens from the dangers of narcotrafficking.”
SLPP National Organiser Namal Rajapaksa, in Parliament, raised questions about the internal investigation into the raid. However, Rajapaksa, too, hasn’t mentioned the US role in the operation. The Special Investigation Unit has recorded a statement from Senior DIG Ranmal Kodituwakku regarding the Colombo Port raid.
MP Rajapaksa questioned the rationale behind questioning the officer who led the raid against the backdrop of controversial releasing of 323 containers from the Colombo Port in January 2025. The failure to question those responsible for the releasing of 323 containers indicated who was behind that operation, MP Rajapaksa told Parliament.
Bodu Bala Sena (BBS) General Secretary Ven. Galagodaaththe Gnanasara Thera appeared before the Colombo High Court yesterday in a case filed by the Attorney General over statements allegedly insulting Islam.
The case was taken up before Colombo High Court Judge Buddhika C. Ragala, who ordered that it be called again on September 30.
His appearance came six days after the Supreme Court invalidated the presidential pardon granted to Gnanasara Thera by former President Maithripala Sirisena in 2019.
Speaking to journalists outside the court, Gnanasara Thera said he was prepared to face the legal process and would abide by the law, rejecting reports that he had gone into hiding following the Supreme Court judgment.
“It is the weak who disappear and flee. We worked for the country and are facing the consequences for that. We are not afraid and will not flee,” he said, noting that he would surrender to the court and face whatever legal consequences following the Supreme Court decision.
The Supreme Court, on September 10, ruled that the presidential pardon granted to Gnanasara Thera by Sirisena was invalid. The judgment followed fundamental rights petitions challenging the legality of the pardon. A three-judge bench, comprising Justices Janak de Silva, Sobhitha Rajakaruna and Sampath Abeykoon, delivered the ruling.
Gnanasara Thera was convicted by the Court of Appeal in 2018 for contempt of court and sentenced to a total of 19 years’ imprisonment to run concurrently as six years. The conviction related to his conduct during proceedings at the Homagama Magistrate’s Court concerning the disappearance of Prageeth Eknaligoda.
He was released from Welikada Prison on May 23, 2019, after then President Maithripala Sirisena had granted him a presidential pardon.
The Supreme Court found the pardon to be arbitrary and invalid in law, following its consideration of the petitions challenging the exercise of the presidential power of clemency.
Meanwhile, police have said they are awaiting the Supreme Court judgment before determining what further action should be taken following the invalidation of the pardon.
The proceedings before the Colombo High Court yesterday are separate from the contempt of court case that resulted in the six-year sentence. They concern alleged statements made by Gnanasara Thera regarding Islam.
In June this year, the Colombo High Court rejected an appeal by Gnanasara Thera against a nine-month prison sentence imposed by the Colombo Magistrate’s Court in connection with statements made at a 2016 media briefing that were found to have disrupted religious coexistence.
The latest High Court proceedings, therefore, form part of separate legal action concerning his alleged remarks about Islam, while the Supreme Court ruling relates specifically to the legality of the 2019 presidential pardon granted in connection with his contempt of court conviction.
The case before the Colombo High Court will be called again on September 30.
Colombo Fort Magistrate Pasan Amarasena yesterday (16) ordered SLPP National Organiser Namal Rajapaksa, MP, to be further remanded, until September 23. The Magistrate issued the order when Rajapaksa was produced before the court as a suspect in an investigation into an alleged USD 2 million bribe case connected to the acquisition of aircraft for SriLankan Airlines.
The Magistrate issued the order following the submissions made by Deputy Solicitor General Janaka Bandara, appearing on behalf of the Criminal Investigation Department (CID).
President’s Counsel Anil Silva, along with other attorneys representing Rajapaksa, also made submissions before the court.
The Magistrate also announced that a decision on Rajapaksa’s bail application would be announced on 23 September.
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