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.
Speculations about origin of placename, ‘Negombo’ (Meegamuwa)
By Chandre Dharmawardana,
A writer using the pseudonym GADS, replying to a previous article regarding Negombo, states (The Island 17 Sept. 2023), “It is also historically recorded that the name Negombo is the Portuguese corruption of its Tamil name Neerakolombu and the Sinhala name Meegamuwa which means and comes from old Tamil Naval terminology Meegamam Pattnam. Meegamam denotes a naval captain”.
Unfortunately, the author does not give the reference to this “historical record” or elaborate on the details available from any early sources, Portuguese and Dutch maps etc. Furthermore, he asserts that “Meegamam” denotes a naval captain. Here again, this is certainly not so in any of the Dravidian languages, or Indic languages. No such usage exists even in Arabic and other languages of the Hebrew family, as far as we can ascertain.
A “naval captain” in Arabic would be Kabtin Bahriun, while the Tamil usage would be Katarpatai Kaptain in modern usage. In old Tamil words like Nakutawere used . However, “gama, gamuwa, gammam, kamam, etc., are all refer “village”.
I have collected what is known about the place name Negombo in the website listed at the end of this note . I quote from it below:
The name Meegamuva is believed to refer to a village (gamuwa) which was reputed for its honey (mee). Thus, the Mahavamsa-based tradition has it that honey was procured from this region for Queen Vihara Maha Devi, (2 century BCE), initially from a honeycomb found in a boat turned upside down. It could also refer to a forest of Mee trees, Madhuca Longifolia (Koenig). It is well known that placenames have been based on vegetation and prominent land marks; in our view, this is the most likely source of the name.
Another interesting legend is that the name is related to “Nihumbala, the nephew of the Yakka king Raavana. The Tamil form, Neerkozimpu may mean water, and ‘kozimpu’ is sometimes claimed to mean ‘village’, but such a meaning is not recognised in standard Tamil Lexicons. Also, the Tamil name originally applied only to the lagoon-like area and not to the whole of Meegamuwa. Given the ancient histoofthe village, kozimpu may have comefrom the sinhala kalapuva adorned with the Tamil “nir”.
Maya Oya flows north of Negombo and falls into the ocean near Kochchikade. This was an early center of the cinnamon trade, set up by the Moors in medieval times. The Portuguese ousted them in the 16th century and built a fort, and established a strong Catholic religious centre here. The Dutch ousted the Portuguese in the 1644 CE. The ruins of the fort, with its fine archway marked ‘1672’ can still be seen. In 1796 the British took over Negombo, by which time the cinnamon trade had declined. The town has remained strongly Roman catholic to this day.
Frivolous folk-lore etymology attriutes the name ‘Negambo’ to nikam biruva. That is, a dog ‘just barked’ is said to be the response given by a non-comprehending bystander to a colonial who asked ‘what is the name of this town? While GADS recognizes such frivolities for what they are, the claim that Meegamuwa or Neer-kozimpu comes from the Tamil words for “sea captain” can be very intriguing if anyone takes it seriously; one cannot find a source for substantiating such a claim in any reputed Tamil lexicon or Tamil literary source.
Madras Tamil Lexicon.
 Mahawamsa, XXII, verse 48.
How to conserve electricity at home and workplace
Going through my old paper clippings, I came across the following news item which is more applicable today when the country is facing a severe energy crisis on how to conserve or restrict the use of electricity at Offices and other working places.
There are several ways of conserving electricity at home, offices and other workplaces. It is absolutely necessary to do so because electricity is harmful for our environment and the planet we live in.
Here is how
(a) Unplug all electrical appliances in the kitchen when not in use, except the refrigerator. This includes coffee pots, sandwich toasters, blenders and ovens. These appliances use small amounts of electricity when they are left in standby mode.
(b) When it comes to washing, soap them first and then open the tap halfway to wash them.
(c) Use the washing machine once a week. Try washing some of your lighter clothes by hand and save jeans and other heavy clothing for the washing machine
(d) When drying your clothes, do not use the dryer unless very necessary. Hang wet clothes on a line in the backyard which is an easy way of drying them and clothes dry so easily during the day in this intensely hot weather.
(e) Change the traditional light bulbs for energy saving bulbs. The garden lights can be replaced with solar powered lights. In the kitchen, the refrigerator is out of direct sunlight and not next to the oven. Avoid putting hot dishes in the refrigerator as it will have to work harder to cool the dish, therefore wait for a while for the dish to cool and then put it in the refrigerator.
(f) Unplug any phone or laptop chargers when they are not in use.
(g) Unplug the computer when it is not in use. This is very important because it can get very badly damaged if it is plugged in during a thunderstorm. You may not even be at home during the storm, so it is advisable to unplug the computer when it is not being used. Do not leave the computer switched on for long hours.
(h) Unplug the television set and gaming consoles too, as they can get damaged if they are on standby mode during a thunderstorm.
(i) Keep DVD players, TVs and other audio and stereo equipment plugged into a multi-port which can be turned off with one switch. This saves electricity.
(j) Turn off the lights, fans and air-conditioner when you leave the room. Remember that you do not need the lights switched on during the day.
(k) Do not use electric appliances such as vacuum cleaners and use the broom instead.
Some lesser known historical facts
The Greek women in ancient Greece realised to their utter dismay that their husbands were always fighting wars overseas. One brave Greek woman, Lysistrata, organised a women’s front with the sole purpose of denying their husbands the marital pleasures unless they remained at home to fulfill their marital duties
Socrates, known for his wisdom, was invited by the King of Sparta, which had waged war against Greece, to be an honorary citizen of Sparta. He gracefully turned down the offer as he valued the democratic way of life in Athens. As he was always arguing with fellow Athenians neglecting household work his wife used abusive language on him in the presence of his companions. Socrates continued with his arguments when his wife in utter exasperation treated him with a plate full of dish water. Socrates merely said to his companions that after thunder comes the rain.
In the Olympic games held during the peaceful times the athletes ran the races naked. Women were not permitted to attend them. The penalty was death if a woman was discovered breaking the law. On one occasion a middle-aged woman was caught breaking the law. As she happened to be the mother of a celebrated athlete she was forgiven.
Julius Caesar was caught dressed as a woman in a women only club in Rome. He was not punished since he had gone there only to meet his lover who saved him. On another occasion he had to offer a bribe to the ship’s captain, a pirate, who threatened to throw him overboard into the Mediterranean Sea.
Isaac Newton was accused by Robert Hooke for plagiarizing when the former introduced the gravitational constant in his book Principia Mathematica. Hooke was the Secretary of the Royal Society of which Newton was the President. Hooke was the person who encouraged Robert Knox to write the book “Historical Relations…” Newton was accused by the German philosopher Leibniz of plagiarism as the latter had published the calculations of infinitesimal calculus before Newton. There was a rule in the Universities that dons should take holy orders. The king exempted Newton from this obligation. Newton’s denial of the divinity of Jesus and the trinity did not earn any punishment from the ecclesiastical authorities. The complementary part of calculus, integral calculus, had been discovered by Archimedes in the second century BC. After the conquest of Greece by Rome the intellectual supremacy and the culture of Greece saw a gradual decline. It was known that the burial place of Archimedes was a much-venerated place visited by Greeks. The Romans did not show such veneration and the burial place got neglected. However, when Cicero, a Roman intellectual, lawyer and writer became the governor of Athens in the second half of the first century BC, he visited the burial site and had the monument restored to its former state. He noticed the epitaph wherein the symbol of a sphere within a cylinder had been inscribed.
A century later Rome conquered England, killing the English queen Boudica. There stands the figure of this queen on a horse (close to the underground tube station Westminster) with words emblazoned on the flanks in poetic language indicating that while England was colonised by Rome, England had conquered half of the world.
Guy Fawkes was the man who made an attempt to set fire to the Parliament building. This incident is known as the “Gunpowder plot”. He failed in his attempt and was executed. This incident may be compared to the attempt by a JVP member who threw a hand grenade when a Cabinet meeting was taking place in the Parliament building with the President JRJ presiding. The culprit got away.
When a German prince from Hanover became George the First of England, he found life in England very dull as he could not speak English. So, he invited his old German friend Handel, the musician, to be his companion. It was during this time that Handel composed his famous “Water music” and many operas.
Dr. Leo Fernando
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