Connect with us

News

Sri Lanka wouldn’t have been in crisis if CBSL had floated rupee in April last year –Dr. Wijewardena

Published

on

By Shamindra Ferdinando

Former Deputy Governor of the Central Bank, Dr. W. A. Wijewardena says the country wouldn’t have been in the current predicament had the Monetary Board floated the Rupee in April 2021, six months before Ajith Nivard Cabraal succeeded Prof. W.D. Lakshman.

Consultant on banking, finance and economics, Dr. Wijewardena said so when The Island sought clarification regarding declaration on ‘Hiru’ on Sunday (13) that the incumbent government since Dec 2019 squandered as much as USD 5,500 mn trying to prevent the depreciation of Rupee. Dr. Wijewardena explained how the failure on the part of the Monetary Board to take remedial measures at the required time caused a catastrophe.

Dr. Wijewardena pointed out that Cabraal, who succeeded Prof. Lakshman, too, failed to address the issue. Cabraal quit his SLPP National List seat to receive the Governor’s post on Sept 15, 2021. Cabraal served as State Minister of Money and Capital Market and State Enterprise Reforms at the time of his resignation.

The retired CB Deputy Governor emphasised that the much touted ‘road map for economic recovery’ that had been announced on Oct. 1, 2021, didn’t recommend depreciation of the Rupee. The outspoken former CBSL official said that the depreciation of the Rupee/floating of the Rupee hadn’t been among the remedial measures announced by the incumbent governor.

The much-delayed decision to float the Rupee in the second week of March this year should be examined against the backdrop of the overall failure of the so-called ‘road map for economic recovery’ to achieve its targets within six months, Dr. Wijewardena told The Island.

Responding to Hiru interviewer, Dr. Wijewardena said that though CBSL expected the country to receive as much as the USD 10.5 mn during Oct-Dec, 2021 period, it didn’t materialise. Alleging that the timing of the floating of the Rupee had been unnecessarily delayed, Dr. Wijewardena asserted that the consequences could be quite devastating. The veteran banker compared the cash-strapped Sri Lanka economy with an uncontrolled kite.

Dr. Wijewardena cited the pathetic failure on the part of the entire banking system to meet USD 16 mn requirement to pay for a crude oil carrier underscored the crisis the country faced. Responding to The Island queries, Dr. Wijewardena questioned the culpability of the Monetary Board as regards the handling of the economy.

The current five-member Monetary Board consists of the Governor Cabraal (ex-officio), Treasury Secretary S.R. Attygalle (ex-officio), Sanjeewa Jayawardena, PC, Dr. Mrs. Ranee Jayamaha and Samantha Kumarasinghe. Mrs. Jayamaha, an ex-Deputy Governor, CBSL and Multichemi International Ltd Chairman Kumarasinghe joined the Monetary Board in late June 2020 whereas Jayawardena received his appointment in Feb 2020.

 The Monetary Board couldn’t absolve itself of the responsibility for the current crisis, Dr. Wijewardena said, urging the government to review the entire situation without further delay.

Basil Rajapaksa replaced Mahinda Rajapaksa as the Finance Minister in July last year.

According to Dr. Wijewardena, the banking system experienced a critical shortage of Rupees in addition to the foreign currency crisis. Dr. Wijewardena estimated that the current Rupee shortage at Rs 700 bn.

Dr. Wijewardena urged the CBSL to immediately increase bank interest rates from 7.5 percent to at least 15 as an initial measure to address the crisis. Dr. Wijewardena, who had served the CBSL for over 40 years emphasized that the recent decision to increase interest rates from 6.5 % to 7.5% was not adequate at all.

Sri Lanka couldn’t address the developing crisis by securing limited funds from India, China and Bangladesh. Instead, the assistance of the International Monetary Fund (IMF) should be secured, the veteran banker pointed out, adding that those who dismissed repeated calls to seek IMF help to restructure Sri Lanka’s debt should accept responsibility for the pathetic state of affairs today.

He compared a country’s foreign reserves with that of savings of an individual. “Savings are utilized in an emergency,” Dr. Wijewardena said, pointing out the absurdity in using foreign reserves to protect/prop up local currency. The ex-banker recalled how the Thai government moved court against the Governor of its Central bank Rerngchai Marakanond for spending USD 4.6 bn or 2.5 bn Pounds to prop up Baht during 1990s financial crisis. The Bangkok Civil Court in May 2005 directed Marakanond to reimburse the Bank of Thailand within a month, Dr. Wijewardena said. Although, the Supreme Court cleared him a decade later, the case established culpability of a decision maker/ decision makers in such a situation.

As the Parliament is accountable for public finance and enactment of laws, the responsibility of the House, too, should be examined, Dr. Wijewardena said.



News

U.S. Ambassador to UN Agencies in Rome Cindy McCain to visit Lanka

Published

on

Colombo, September 23, 2022: United States Permanent Representative to the UN Food and Agriculture Agencies in Rome Ambassador Cindy McCain will visit Sri Lanka from September 25-28 to highlight U.S. food assistance programs in Sri Lanka and reinforce the U.S. commitment and lasting partnership with the island nation.

In addition to meeting with senior government officials and aid organizations in Colombo, Ambassador McCain will join U.S. Ambassador to Sri Lanka Julie Chung to travel to Central Province to visit schools, agricultural research facilities, and community organizations and meet with recipients and implementers of relief provided through U.S. government-funded humanitarian assistance programs.

The United States is the single largest country donor to the three United Nations food and agriculture agencies, the Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD), and the World Food Program (WFP).  U.S.-funded UN projects showcase how the U.S. government, the UN Food and Agriculture Agencies, and the government of Sri Lanka collaborate to reduce food insecurity and advance humanitarian relief, livelihood protection, and agriculture-led economic growth, especially at this critical time of increased global hunger.

The United States has provided partnership and assistance to the people and government of Sri Lanka for more than 70 years.  Since June, Ambassador Chung has overseen the announcement of nearly $240 million in new U.S. government assistance to Sri Lanka, including U.S. Agency for International Development (USAID) Administrator Samantha Power’s September 2022 announcements of an additional $40 million to provide Sri Lankan farmers with fertilizer and $20 million to meet immediate humanitarian needs in the country.

Continue Reading

News

President urges SL diaspora in the UK to invest in their motherland

Published

on

By Sujeeva Nivunhella
reporting from London

President Ranil Wickremesinghe last week urged the Sri Lanka diaspora in the United Kingdom to invest in Sri Lanka projects to revive the economy. Addressing a gathering at the Sri Lanka High Commission in London, he said that he is proud that the British Sri Lankan community for making a mark in every field of the UK economy such as trading, services, business, and requested them to come together as Sri Lankans and people of Sri Lankan origin to help build the motherland.

The President added that Sri Lanka is looking at transforming its economy to a competitive export-oriented one to meet the current challenges and build social systems and modernize the education system.

He remarked on the special affection Queen Elizabeth II had towards Sri Lanka as the Head of the Commonwealth and the longest serving Head of State of Ceylon for 20 years prior to the nation becoming a Republic and stated that her passing is the end of an era.

The president, first lady and party arrived in London on Sept. 17 via Dubai by an Emirates flight to attend the State Funeral Service of Queen Elizabeth II.They were received at the Heathrow airport by High Commissioner Saroja Sirisena and were driven to the Intercontinental Hotel in Park Lane, London where they stayed.

On Sunday (Sept. 18), the President accompanied by the First Lady and High Commissioner attended the Lying-in-State of the late Queen at the Palace of Westminster which was followed by a Reception hosted by His Majesty King Charles III at Buckingham Palace.The President and the First Lady attended the State Funeral Service held at the Westminster Abbey on Monday (Sept. 19).  On the same day, he signed the Book of Condolence. The Secretary of State for Foreign, Commonwealth and Development Affairs James Cleverly MP hosted a reception for the visiting world leaders at Church House.

On 20th September, the President met the Secretary General of the Commonwealth, Patricia Scotland QC. They discussed Sri Lanka’s engagement with the Commonwealth Secretariat and matters of mutual interest. He also visited the London Buddhist Vihara during which Ven Dr Bogoda Seelawimala, Chief Incumbent of the Vihara and the Chief Sanga Nayaka of Great Britain invoked blessings on the President and the people of Sri Lanka.

Continue Reading

News

Families countrywide facing malnutrition, says Cardinal

Published

on

By Norman Palihawadane

Colombo Archbishop Malcolm Cardinal Ranjith has warned that the prevailing economic crisis and increasing unemployment and food prices are accelerating malnutrition among hundred thousands of families countrywide.

Addressing a ceremony at the annual get-together of the Archdiocesan Family Apostolate Service held at St Peter’s College Auditorium in Colombo, the Archbishop said that it was a shame that responsible local officials keep denying the prevailing status quo when world humanitarian organizations such as UNICEF continue to warn of the increasing malnutrition levels among children.

Many international organizations have pointed out that malnutrition in Sri Lanka was increasing at an alarming rate but the authorities responsible are hiding the truth and go to the extent of rejecting such reports.

“If they reject the reports of international organizations, then it is their paramount duty of conduct proper surveys to understand the situation. It is no secret that large numbers of Lankan families are starving due to the high prices of food. According to the UNICEF more than six million people consume only a single meal a day. It is so unfortunate that Health Ministry officials who spend their times in the air conditioned rooms in Colombo do not know the plight of the poor in rural areas,” the Cardinal said.He said that 225 MPs were concerned only of their well-being while continuing to ignore the actual and pressing issues of people.

“This country is in dire situation today mainly due to inefficient and corrupt political leaders. It is sad that these so-called people’s representatives are not concerned of the situation of people who are experiencing the worst ever economic and political crisis this country has ever faced,” the Cardinal said.

Continue Reading

Trending