To pay or not to pay?
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If M.S. Fernando, a popular singer in the 1970s, was known as the ‘Baila Chakravarthy’, Desmond de Silva, who sadly passed away last week, was known as the ‘king of Baila’.I was reminded of this when Aldoris, the choon-paan karaya, came down the lane in his tuk-tuk — this time with the song ‘Sumihiri paane’ (Sweetest drink) blaring from his loudspeaker. This was a popular hit by Desmond, who was based in Australia and, interestingly, he did a duet with Sunil Perera of Gypsies fame, another popular singer who passed away some months ago. Desmond and Sunil were the kings of Baila.
As Aldoris stopped at the gate, Kussi Amma Sera asked him about the song. “Eka janapriya sinduwak desmond de silvage. Aparade eya maruna eka (It’s a very popular hit by Desmond de Silva. It’s unfortunate that he died last week),” said Aldoris.
“Okkoma ape honda sangeethagnayan nethiwenawa. Amaradevath nethi wunane avurudu keepayakata issella (We are losing all our best musicians including Amaradeva who passed away some years back),” added Serapina.
“Me wage prasidda kattiyata anduwen mokak hari piligenimak denna ona, egollo jeevath wela inna-kota. Egollo jathika wasthun-ne (The government should provide some recognition to famous artistes, while they are alive as they are national treasures),” said Mabel Rasthiyadu.
Desmond’s and for that matter Sunil’s songs were simple expressions of daily life, community understanding, fun and laughter just like the duo’s version of ‘Sumihiri Paane’.
Here is the first verse for anyone interested in the song: “Sumihiri paane padamata gahala//Heta marunath hithata sepai ada joli karala //Noka nobi loba kamata wasthu soyanne//Maruna data copin eke api nidiyanne //Hodata joli karapan”. Translation – Hit the sweetest drink and be high as ever//Be jolly and happy today even if we die tomorrow//Don’t search for wealth while being greedy, not eating or drinking //We will be sleeping in the coffin the day we die//Be as jolly as ever//
I was also listening to the song from Aldoris’s tuk-tuk when the home phone rang. It was my jolly-mood economist friend, Sammiya (short for Samson).
“I say…….interesting times next week with a foreign repayment of US$500 million. I wonder what will happen,” he said.
“Well, Central Bank Governor Ajith Nivard Cabraal insists that the payment will be made as the country cannot default,” I said, adding: “Cabraal seems to be ‘gunning’ for economists and business leaders who say the best option is to postpone payment as this money can be used for crucial essential imports like crude oil, pharmaceuticals or fertiliser.”
“That may be so but doesn’t Cabraal have a point? He says those critics are the very same people who accused the government of a likelihood of defaulting on its foreign debt obligations which is not a good thing,” he said.
“Well when such comments were made maybe it was at a time when we were not so badly off in our dollar reserves,” I said, ending the call after discussing other related issues.
Sri Lanka has to make three vital foreign debt (international sovereign bond – ISB) payments this year (in addition to development bonds, bilateral and project loans). While $500 million is due to be paid on January 18, $1billion is due to be paid in July and $5 billion at the end of the year. A repayment of $5 billion is due in 2023; $4.8 billion in 2024; $5 billion in 2025; and $3.8 billion in 2026.
In recent weeks, the January 18 foreign debt repayment has generated a lot of discussion in newspapers and on television with economists, some very eminent ones, and business leaders saying the best option – at this juncture in the crises that the country is facing – is to default payment, restructure the debt and use these scarce foreign resources to import essential items.
The government, in a statement on Wednesday, rejected rating agency S&P’s downgrade of the Sri Lanka rating, saying it wished to reassure all stakeholders, including the international investor community, that Sri Lanka remains committed to honouring all forthcoming obligations in the period ahead and maintain its unblemished record of debt servicing.
“The Sri Lankan authorities also welcome direct engagement with investors and invite investors for regular one-on-one discussions without being distracted by such unfounded announcements by external agencies,” it said. The statement issued by the Central Bank (on behalf of the government) follows a similar pattern of rebuttals in the past against rating downgrades by other international rating agencies. A further downgrade of the Sri Lanka rating by these agencies borders on ‘bankruptcy’.
Cabraal, at a news conference this week, defended his decision to repay the January 18-due debt, saying: “Default as some business leaders and ‘internet economists’ want will be disastrous and lead to anarchy.” According to media reports, he said Sri Lanka had been successful in servicing maturing ISBs of $2 billion in the past two years, insisting that there would be no default whatsoever. “The government was committed to honouring all its obligations as it had done for 73 years,” he said.
While opposition is mounting over fulfilling this repayment, the government is struggling to keep the economy ticking as the dollar crisis exacerbates every essential service. For example, there is absolute confusion over the power crisis in the country. While the Ceylon Electricity Board (CEB) said it was enforcing power cuts on Tuesday, Power Minister Gamini Lokuge, after a meeting with the President who urged the CEB to avoid power cuts, said there won’t be any power cuts.
However, power was disrupted in several areas for one hour on Tuesday. There were no power cuts on Wednesday with the CEB this time saying power has been fully restored but on Thursday there was a 90-minute power cut.
The economic crisis is worsening with the now familiar queues for gas, kerosene and milk powder continuing this week though officials say the dollar shortage situation will ease as tourism is rebounding with nearly 90,000 arrivals in December and foreign currency is coming from that source.
With so much intense discussion on the economy by economists and business leaders (who are perceived as independent and not opposition-backed), won’t it be appropriate to bring these minds together with the Central Bank and the Finance Ministry to discuss a way-forward, a game plan to overcome the dollar crisis?
This is what I reflected on when Kussi Amma Sera came into the office room with my second mug of tea humming the tune ‘Sumihiri Paane’.
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