Scraping the barrel
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In dire straits. That’s the pitiful state of Sri Lanka’s economy and what bigger warning than one coming from the newly-appointed Governor of the Central Bank.Governor Dr. Nandalal Weerasinghe who took over in April, at a media conference on Wednesday warned that he would resign in the coming weeks if political instability continues. He said the economic situation has worsened in the country and appealed to Sri Lankan expatriates to send their remittances through the official banking channels and for exporters to repatriate all their earnings to solve the forex crisis.
As far as worker remittances are concerned, the figure in January-March 2022 was US$782.5 million which could reach nearly $3 billion by the end of the year, still far short of the record $7 billion reached in 2020. It fell to $5.5 billion last year. The unrealistic rupee-dollar peg last year which saw the US currency being pegged at a continuous Rs. 200 per dollar, while the unofficial market saw the dollar rising to Rs. 300 and over, resulted in many migrants sending their money through these channels.
While export earnings reached $12.5 billion in 2021, higher than $12 billion in the previous year, it’s confusing as to how this did not improve the country’s forex balance sheet.
Recently, former Prime Minister Ranil Wickremesinghe told Parliament that the country’s usable foreign reserves had sunk to a mere $25 million, a few days after then Finance Minister Ali Sabry last week said the usable reserves had fallen to $50 million. It had been $103 million at the beginning of April. Governor Weerasinghe said reserves were sufficient for just around a week.
Sri Lanka indeed is scraping the barrel in its stock of foreign exchange and the worst, according to the Central Bank Governor, is yet to come.
As I pondered over these issues, the trio was having their conversation this Thursday morning under the margosa tree and judging from their actions and hand movements, they seemed to have a lot to talk about particularly after peaceful protesters were attacked at ‘Gotagogama’ at Galle Face.
Kicking off the conversation, Kussi Amma Sera said: “Bohoma loku avasanavak sanduda ara samakami virodatha-karuwanta pahara deepu eka. Eh goda denek aga-methi mahinda rajapaksage daruwo wage-ma ne. Aiyo, aei mahinda eyage adarakaruwanta prachandathwa kriya karanna dunne (It was very unfortunate that the peaceful protesters were attacked on Monday. Many of them were youngsters just like Prime Minister Mahinda Rajapaksa’s children. Aiyo, why did he have to resort to violence through his supporters?)”
“Janathawa hariyata duk vindinawa. Parlimenthuwe kiyana katha anuwa apita thawa avurudu dekak wath inna wei wage polim wala athavashya badu ganna (People are suffering. From what is being said in Parliament, we may have to stand in queues for essential goods for at least another two years),” said Serapina.
“1970 ganan wala badu hingayak thibbata, mechchara duk vinde ne (Even though during the 1970s there were shortages, we didn’t suffer this much),” noted Mabel Rasthiyadu.
As I moved away from their conversation and walked into the office room to continue writing my column, the phone rang. It was ‘Shifty’ Silva, the always-inquisitive IT expert.
“Hello…..hello,” I said, adding: “Long time no see.”
I hadn’t spoken to him for a long time and welcomed the call. “Yeah, I have been busy because being in the IT business, we have a lot of work,” he said.
“I wanted to talk to you about the induction of a new President with demands by protesters for the President to step down, now that the Prime Minister has resigned,” he added.
“Well the Constitution is clear on this point. Section 30 of the Constitution states that if there is no Prime Minister, the Speaker is appointed President once the incumbent President steps down,” I said.
The only occasion there was a change during the tenure of a sitting President was when Prime Minister D.B. Wijetunge took over as President after President Ranasinghe Premadasa was assassinated on May 1, 1993.
“Will this happen? The President is intransigent and although everyone expected him to announce stepping down from his post during his address to the nation, at 9 p.m. on Wednesday, that didn’t happen,” ‘Shifty’ said.
We discussed at length political stability, an issue that has drawn the attention of many in the business community with a general view that the President must resign and pave the way for a new government. Both the Sajith Premadasa-led SJB and the Anura Kumara Dissanayake-led JVP were ready to lead a government, if called upon to, only if the President steps down. However the President (later on Thursday) appointed Ranil Wickremesinghe as the new PM.
Political stability was the key word too in the Central Bank’s annual report for 2021, released last week. The report warned that economic recovery and current efforts to restore Sri Lanka’s economic stability rest on “reassuring social coherence and restoring political stability and an enduring political will, to take this reform agenda forward”.
Stability was also essential to move forward with make-or-break talks with the International Monetary Fund on a bailout package, which has indicated that the discussions will continue even if a new government is in place.
At the same time, there was an interesting meeting by Governor Dr. Weerasinghe and Treasury Secretary Mahinda Siriwardena, with SJB leader Sajith Premadasa and his team on the economic situation, giving credence to the fact that the economic decision-makers in the country were prepared to work under any new administration – with the incumbent government crumbling.
The Ceylon Chamber of Commerce was unrelenting in its condemnation of Monday’s brutal attack on peaceful protestors at ‘Gotagogama’ by rampaging mobs who came out of Temple Trees after a meeting with then Prime Minister Mahinda Rajapaksa.
“We are alarmed by the violent attacks on protesters outside Temple Trees and at Galle Face and call upon the Government and the armed forces to take immediate action to prevent peaceful demonstrators being attacked. An impartial investigation should be carried out to identify those responsible and hold them accountable,” it said.
The Joint Chambers of Sri Lankan business together with the Institute of Chartered Accountants of Sri Lanka said the President should resign after an interim cabinet is formed.
As I thought about all these issues and was close to concluding my column, Kussi Amma Sera walked in with my second mug of tea, explaining that the newspapers hadn’t arrived due to the curfew.
I thanked her and reflected on the troubled state of the country and whether we would have to suffer in queues for the next two years.
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