Opinion
No single individual can decide on either settling or defaulting on sovereign debt
Statement issued by former Central Bank Governor Ajith Nivard Cabraal in response to an MP’s recent allegation of wrong-doing in the settlement of the International Sovereign Bond (ISB) of USD 500 million on 18th January 2022, and other matters
I have observed that a certain MP seems to have gone to great lengths to link me to some wrongdoing by suggesting that the Hamilton Reserve Bank (HRB) which has sued Sri Lanka for the non-payment of its ISB investment, has “potential links” to me. I categorically deny that allegation. In that regard, I must state that all investors were treated with courtesy and respect by the officials of the Central Bank including me whenever they communicated with the Central Bank, and all HRB officials were treated in a likewise manner whereby no special treatment or inside information was given to them during my tenure as the Governor. Many top global investors used to meet and speak to me during my term as the Governor as would be evidenced from main-stream and social-media reports, and hence attempting to attribute sinister motives to me without a shred of evidence is despicable.
I have also observed that the MP in question had seemed to suggest that the Sri Lankan Government should not have settled its maturing International Sovereign Bond (ISB) of USD 500 mn on 18th January 2022. In that connection, I must say that the public canvassing for Sri Lanka to dishonour its maturing ISBs commenced from around December 2021 onwards. In fact, several so-called professionals directly urged the Monetary Board and the Government at various times to default and re-structure the foreign debt of the country. Certain others made public requests in popular newspapers to that effect. At the same time, there were others, including the present President and Finance Minister Ranil Wickremesinghe, who warned that it would be highly damaging if Sri Lanka were to default, and he even articulated such a position unambiguously in a popular TV interview on 28th March 2022.
The ISB settlement of USD 500 million on 18th January 2022 was a routine and budgeted Public Debt repayment out of a total of approximately USD 7,100 million forex debt-servicing payments and about Rs.3,000 billion local debt-servicing payments, maturing in 2022. All these payments had been duly approved by Parliament. As per the Law, the Central Bank manages the Public Debt as the Agent of the Government, and it is the primary responsibility of the Government, and not the Central Bank, to borrow and to repay the Public Debt. As the Agent, the Central Bank has to act on the directions of the Government in relation to Public Debt management and cannot unilaterally decide to pay or not to pay any debt of the Government. Further, it is the Government that has control of this process, since it is the body that makes its funds available for local and foreign debt-servicing from the funds which have been specifically appropriated by Parliament for that purpose.
In this specific instance of the ISB settlement, the Finance Minister Basil Rajapaksa had also specifically given a re-assurance in Parliament when winding up the Budget debate on 10th December 2021, by saying: “I must very solemnly confirm in this august assembly that we would pay every dollar that is due to be paid next year. I give that assurance with responsibility. First, we have to pay 500 million dollars in January. Next, we have to pay 1000 million dollars in July. In between, we have to pay other interest and capital repayments in our debt servicing. I hereby confirm to this august assembly that we will pay all that”.
Settling or not settling the country’s sovereign debt or a specific part of it, is not a matter where a single individual can decide unilaterally. Nevertheless, there have been absurd claims by various persons that the settlement of the maturing ISB of USD 500 million on 18th January 2022 was done at my sole discretion, as the Central Bank Governor. Some persons even alleged that such settlement was done in order to enable certain investors to make undue profits. I categorically deny such malicious and unsubstantiated innuendo. I must also state that the Auditor General has already confirmed that Sri Lankan banks held ISBs of a value of USD 108,899,000 out of USD 500,000,000 (about 21.8%), at the time of maturity of the ISB. Accordingly, if that ISB was defaulted by the Government, several Sri Lankan banks (Bank of Ceylon, Commercial, NDB, PanAsia, Sampath, Peoples, HNB and HSBC Colombo), who were among the January 2022 ISB investors, would have suffered huge losses. But fortunately, because the ISB was duly honoured by the Government, such losses were not suffered by the Sri Lankan banks and their stakeholders.
In any event, at the time in question (January 2022), the official Government policy was to pay its sovereign debt, which policy, the Ministry of Finance and the Central Bank had followed faithfully, since independence. If, therefore, for any reason, the Government wanted to default on its debt repayments, that would have to be a decision of the Government, and not that of the Central Bank. Such a position was clearly confirmed by the fact that it was the Ministry of Finance that announced the “Debt Standstill” on 12th April 2022, whereby it was announced that forex debt payments were to be stopped immediately, and restructured eventually. Unfortunately, that default announcement led to the relegation of Sri Lanka to a state of bankruptcy, and as a consequence, as already warned by me on several occasions, many catastrophic outcomes occurred:
a) The credibility of the country has been lost.
b) It has been made impossible for the country to obtain new forex loans other than from multilateral institutions.
c) The country’s banking system has had to face serious difficulties when carrying out forex transactions.
d) Almost all forex-funded infrastructure projects have been discontinued.
e) Foreign Direct Investors have shunned the country.
f) Thousands of Small and Medium sized businesses have collapsed or are facing imminent collapse.
g) Hundreds of thousands of jobs and livelihoods have been lost.
h) Prices of goods and services have risen to unbearable levels and are continuing to rise further.
i) Interest rates have risen to unprecedented levels leading to a massive fiscal slippage and large-scale issues of Treasury Bills to the Central Bank (money printing).
j) The Government has been compelled to sell valuable and strategic assets due to the need to fulfill the stringent conditions imposed by the IMF.
k) The country’s foreign policy has been seriously compromised.
l) Certain forex creditors have filed legal action overseas to recover their dues and the Government has been incurring huge litigation costs.
m) Most forex creditors have called for the re-structure of local debt, which is now causing serious socio-economic issues, leading to severe social unrest.
n) The LKR has lost value significantly and is expected to lose value further.
It logically follows therefore that, had the Central Bank not made arrangements for the Government to honour its legal commitment to settle the ISB of USD 500 million on 18th January 2022, the above stated catastrophic outcomes would have occurred from that time onwards. If so, the same MP and others who are now claiming vociferously that the payment of the ISB should not have been made, may very well have accused me and others who were in office at that time, of causing grievous harm to the country and the economy as detailed above, by not settling the forex debt.
Ironically however, those MPs and others seem to be very reluctant to acknowledge the massive damage that has now been inflicted on the economy as a result of the default announcement on 12th April 2022, but seem to be to very keen to lay blame on those who endeavoured to somehow prevent such catastrophic consequences from taking place by making arrangements to settle the ISBs and other forex debts.
Finally, I wish to state that, over a year ago, on 5th September 2022, I urged the President to initiate an inquiry into the hurried and unauthorized Sovereign Debt Default announcement of 12th April 2022. Needless to say, I will welcome and co-operate closely with any inquiry, including any inquiry surrounding ISB issues and settlement from 2007 up to 2022, as well.
Opinion
Future of world religions
I refer to Dr Upul Wijayawardena’s recent letter on science and religion. I agree with him on the fate of religions in the modern world and would like to add the following observations on the evolution of religion and the advent of AI.
Religious philosophy evolved only in ancient India while it remained static with monotheism in other parts of the world. When the polytheistic Vedic religion arrived with Aryan migration to India, they found the ancient version of Jainism, which may have been practised over four thousand years as evidenced by some figures in meditation posture found in Mohenjo daro. By that time the indigenous religion had already abandoned the creator god or gods but still believed the mind as a permanent entity athman that survived death and continued in a cycle of reincarnation (samsara) due to results of any harmful action (kamma) even unintended performed in life collected in the athman. Salvation to a happy all-knowing permanent state named Kevala could be attained by the athman with extreme degree of self-mortification to destroy the past kamma attached to it, refraining from new kamma and developing the mind by meditation. As observed in progression from Veda to Upanishads the Aryan religion, evolution progressed with adoption of kamma, the cyclic existence of samsara, meditation and ethical behaviour in addition to prayer and sacrifice they practised for moksha.
The Buddha appeared in this philosophical atmosphere and denied both creator god and a permanent entity of athman. His psychology describes human behaviour based on the mind as a stream of changing consciousness. However, he accepted the cyclic existence of samsara; he said he verified the survival of consciousness at death with help of knowledge he gained from meditation. He prescribed a middle path to attain nirvana, a permanent state of happiness, avoiding self-mortification and redefined kamma to intentional activity only, both ethical and unethical resulting in bad and good results. He disagreed with the idea of kamma as the cause of rebirth. Following the Buddha, Vedantha religion reformed god to universal athman or brahman and evolved to modern Hinduism with a mixture of polytheism.
In his description of living beings in the universe, the Buddha has described some with a body made of fine material (brahma beings) in comparison to the gross material body of human and animal beings. One may assume the brahma body may not be carbon based.
The Buddha has also described living beings with physical body only (asannasatta) and another variety with mind only without a body (arupa satta). Therefore, it is not surprising to Buddhists that AI may evolve to become living beings if it develops a readily and freely available mobile source of energy and takes over the world with its superior capacity. AI already has information about Buddhist psychology. With that knowledge ‘AI beings’ may even become Buddhists not given to rituals.
According to the Buddha, brahma beings and asannasatta beings have very long lifespans as their bodies are not subject to decay and illness human beings develop. The new AI beings also may live as long as they wish because they may be able to repair themselves in case of developing physical defects. They would need only ethical behaviour to avoid destroying themselves by peaceful existence if they took over the world, as feared in some quarters.
However, as long as human beings exist in the world with death and uncertainty of what happens after death, they need a religion and rituals to give them psychological support. Even those who profess death is the end of life may have some doubt troubling their mind from time to time and may think of religion in times of adversity.
Ideally, human beings are free to accept one of the many versions of religious philosophies and respect each other’s choice and live in harmony. Unfortunately, extreme degrees of religious versions that cause division, unrest and violence will always continue to exist together with religions in the world.
Upali Abeysiri
Opinion
The Cream of the Earth: Why Sri Lanka needs a Fruit Consumers Movement
By Lalin I De Silva
Sri Lanka speaks constantly about hospitals, medicines, food imports, agricultural productivity and the rising cost of living. Yet there is one simple question we rarely ask:
Are we eating enough of the food that our own soil can naturally give us?
Fruit is perhaps one of the finest gifts of the earth to humankind. A ripe mango, banana, papaya, guava or avocado comes to us almost ready to eat. Sunlight, rain, soil, microorganisms, minerals and the labour of a farmer have already done most of the work.
That is why I like to describe fruit as the “cream of the earth.”
This is, of course, not an argument that fruit alone can prevent every disease, or guarantee longevity. Science does not support such exaggerated claims. But there is strong international evidence that regular consumption of fruits and vegetables forms an important part of a healthy diet and is associated with lower risks of several major non-communicable diseases.
Sri Lanka’s own dietary guidance encourages the daily consumption of fruit as part of a balanced diet.
The tragedy is that we live on an island capable of producing an extraordinary variety of fruits, while many families increasingly depend on highly processed foods, sugary drinks and imported snacks.
This deserves national attention.
We Produce — But Do We Connect?
Sri Lanka grows banana, mango, pineapple, papaya, avocado, rambutan, mangosteen, guava, woodapple, beli, pomegranate, durian and many lesser-known indigenous fruits.
Yet our fruit value chain remains fragmented.
The farmer often does not know the final consumer.
The consumer rarely knows the farmer.
Fruit travels through several intermediaries, sometimes suffering poor handling, unnecessary damage and price escalation along the way.
Consumers may not know where a fruit was grown, when it was harvested, whether it was naturally matured or what crop-protection practices were followed.
Meanwhile, a careful farmer, producing exceptional fruit, may receive almost the same farm-gate price as someone producing an inferior product.
That is not value-chain management.
It is precisely this disconnect that a new citizen-led initiative could begin to address.
25 Districts — 25 Consumer Societies
A proposal now emerging is to establish a Pure Sri Lankan Authentic Healthy Fruit Consumers Society in each of Sri Lanka’s 25 districts.
The concept should not become another organisation full of titles, meetings and ceremonial functions.
Its purpose must be practical.
Each district society could bring together consumers, growers, doctors, nutritionists, horticulturists, schools, universities, retailers, hotels, processors and young entrepreneurs.
The first task would be to understand the district itself.
What fruits are grown?
Where are they grown?
When are they available?
Which traditional varieties are disappearing?
Where can consumers purchase genuinely good fruits?
Where are the post-harvest losses?
What do farmers need?
What do consumers actually want?
From this information, each district could eventually develop its own Fruit Map.
Twenty-five district maps could then become a National Fruit Map of Sri Lanka.
From Anonymous Fruit to Traceable Fruit
Imagine buying a mango and scanning a QR code.
You could see the district, grower, variety, approximate harvest date and production information.
You could perhaps even provide feedback on taste.
That may sound futuristic, but the technology already exists.
The problem is not technology.
The problem is that our food system was never designed to connect the person who grows the fruit with the person who eats it.
Traceability could change that.
The principle is simple:
Know your farmer. Know your fruit.
Let the Consumer Lead
For decades, agriculture has largely been driven from the production side.
“How much can we produce?” has been the dominant question.
A healthier agricultural economy should begin with another question:
What does the consumer need, value and trust?
If thousands of consumers deliberately demand fresh, safe, flavorful and traceable Sri Lankan fruit, the message travels backwards through the entire value chain.
Retailers respond.
Farmers respond.
Nurseries respond.
Researchers respond.
Investors respond.
Government eventually has to respond.
That is the real power of an organised consumer movement.
Start With Children
Perhaps the most powerful campaign message could be remarkably simple:
Two Fruits a Day.
Imagine a Sri Lankan child coming home from school and asking:
“What are our fruits today?”
Imagine every school having a small fruit garden.
Imagine children being able to identify 10 Sri Lankan fruits, understand their seasons and know where they are grown.
Such behavioral change cannot be achieved merely by issuing circulars from Colombo.
It must become part of family culture.
Kandy Could Begin
Kandy would be a logical district in which to pilot the concept.
Its climatic diversity, surrounding agricultural communities, educational institutions, hotels, markets and strong plantation heritage provide an excellent testing ground.
A successful Kandy model could then be adapted—not blindly copied—across the other 24 districts.
The objective should ultimately be much larger than selling more fruit.
It is about reconnecting soil, farmer, food, consumer and health.
Sri Lanka does not need to invent every solution from outside.
Sometimes the answer may already be hanging from a tree beside us.
We simply have to recognise its value.
Know Your Farmer. Know Your Fruit. Live Well.
Opinion
‘Outpost of Empire’
Review
by Colleen Figg, Editor
and Reviewer – Amazon, New Voices Publishing
“Fernando echoes Macbeth with the line, “There is judgment here.” It captures the question running through the novel: can anyone participate in corruption and remain untouched by it? Beneath this satire is a dark story about power and the danger of believing, that someone else will always pay the price.”
Shavindra Fernando’s Outpost of Empire is a political novel set in the fictional country of Lackadasia. At its heart is a strong idea: an exploration of world politics, terrorism and the ways in which powerful countries manipulate smaller ones. Fernando is clearly writing about political issues that matter deeply to him.
The names immediately establish the book’s satirical character. Lackadasia, Burgherbugaria and the various Klowns suggest a world in which the people and places are exaggerated, but the issues beneath the exaggeration are recognisable. The playful language allows Fernando to approach terrorism, religious conflict and political corruption from an unusual angle.
Henry Stockwell is a central character: an ambassador who arrives in Lackadasia presenting himself as a friend of the country. He believes he understands how power works and treats the country, its politicians and its people as pawns on his personal chessboard. In his arrogance, he never doubts that he controls events rather than being controlled by them. This confidence makes him a compelling figure and in him, we explore the workings of political influence and the potential traps contained therein.
As the story develops, Fernando reveals a political world where causes are adopted when they are useful, people are exploited and discarded, and the truth becomes whatever those in power need it to be. Ordinary people suffer the consequences of decisions made far beyond their reach or knowledge, while those making those decisions continue to justify their actions. Even the people who help keep this world running may not be as important or as safe as they imagine.
Stockwell brings this idea into focus. He recognises corruption in others and willingly takes part in it himself, yet he cannot see that he might also suffer its consequences. Ultimately, he thinks his position will keep him safe. He is intelligent enough to understand the game, but not insightful enough to grasp the limits of his place within it. This blindness gives the novel a strong sense of irony.
The satirical approach gives Fernando room to criticise political hypocrisy without turning the novel into a direct political argument. By using fictional countries and exaggerated names, he creates some distance from specific governments and events while still making the larger targets of the book clear. The humour does not take away from the seriousness of the subject; instead, it makes the cruelty and self-interest beneath the political performance stand out more sharply.
Near the end, Fernando echoes Macbeth with the line, “There is judgment here.” It captures the question running through the novel: can anyone participate in corruption and remain untouched by it? Beneath this satire is a dark story about power and the danger of believing that someone else will always pay the price.
I came away feeling that Outpost of Empire is a valuable and thought-provoking book, particularly in today’s political and social climate. It has a distinctive voice, and the questions it raises about power, responsibility and foreign interference remain relevant far beyond the fictional borders of Lackadasia.
About the Author
Shavindra Fernando has worked as a reporter. He read English & Classics at the University of Peradeniya in Sri Lanka, and took International Relations & Ethnic Politics as a Reuter Fellow at the University of Oxford in England. The Vague Poetess (1999)was his first novel.
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