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The Government last week obtained approval from Parliament for its Domestic Debt Restructuring Plan now referred to as Domestic Debt Optimisation.

The resolution adopted by Parliament gave authority to the Finance Minister to restructure domestic debt.

How the country has come to such a sorry pass was described by Central Bank Governor Dr. Nandalal Weerasinghe in a wide ranging interview with the AFP’s Amal Jayasinghe, last week. Much of what the Central Bank Chief said was already in the public domain, but the significance of his interview was that it gave authenticity to the events that led to the economy’s catastrophic crash, and is therefore worth reiterating.

He revealed that he and his colleagues warned the Government of the day, three years earlier, of the dangers of the path being traversed by the Government, but it fell on deaf ears.

“I saw this crisis was coming,” he was quoted as saying, adding that he had serious concerns about the Central Bank’s monetary policy, at the time.

Dr. Weerasinghe also went on to say he was side-lined for warning of the dangers of the path the Central Bank was taking at the time. He said it was “obvious” that if the Government continued with its policies of “excessive monetary financing, suppressing interest rates, bad exchange rate policy, fixing at one rate for a long period and running down our reserves,” the country would head for disaster, and he noted that what happened between May and July last year was exactly as he had feared.

With the Gotabaya Rajapaksa administration continuously ignoring his warnings Dr. Weerasinghe decided to go in for early retirement and migrated to Australia in September 2021. With the situation taking a turn for the worse and island-wide protests against the Government, President Rajapaksa invited the former Senior Deputy Governor to return and take over as Central Bank Governor.

The cost to the country as a result of the Gotabaya Rajapaksa Presidency ignoring warnings of the Central Bank officials, economists and the Opposition members as to where the country was heading is brought home when one examines the figures relevant to the time.

When President Rajapaksa took over in November 2019, the country had more than seven billion dollars in its reserves, but by the time Dr. Weerasinghe returned to the Central Bank the useable reserves were just 25 million. Days later, Sri Lanka defaulted on its US$46 billion foreign debt.

What is strange, however, are the contrary narratives emerging from within Government from President Rajapaksa’s political co-travellers.

Higher Education State Minister Dr. Suren Raghavan has on several occasions said President Rajapaksa had told him that he was not aware of the seriousness of the economic situation until his Secretary P.B. Jayasundera had left his position in the President’s office.

In other words what President Gotabaya Rajapaksa was saying in his own defence was that the former President’s Secretary had pulled the wool over his eyes with regard to the economic situation faced by the country.

Dr. Ragavan has also claimed that the Sri Lanka Freedom Party (SLFP) of which he was a member had been warning the President where the country had been heading for one and a half years before the economy crashed.

Foreign Minister Ali Sabry too has publicly admitted in several interviews that the Government knew for over a year that going to the International Monetary Fund (IMF) was absolutely necessary to avert the impending economic crisis.

Economists and the Opposition in and out of Parliament too had warned the Government of the dangers to the economy but to no avail.

As a result of the semblance of normalcy that prevails in the country the impact on the citizenry as a result of the gross mismanagement of the economy has been hidden from the public eye.

However a snapshot of the misery people face is brought home with devastating effect when one looks at some figures.

According to a recent nationally representative survey conducted by LIRNEASIA, a regional think tank, four million Sri Lankans fell into poverty in the past four years. Seven million Sri Lankans (31% of the population) are now living in poverty (in 2023), compared to three million in 2019.

According to the Sri Lanka Foreign Employment Bureau (SLBFE) figures there has been increase in the registration of those seeking employment abroad from 122,000 in 2021 to a record 311,000 last year.

According to the SLBFE in the first five months of this year, the Bureau recorded around 122,000 people leaving which is equal to the number who left the country in the whole of 2021.

Last year, the number of people applying for passports more than doubled–from more than 382,500 in 2021, when the economy grew by 3.3 percent, to a record 911,689 passports in 2022, when the economy contracted 7.8 percent.

This year through May, 433,000 overseas travel documents have been issued, according to the Immigration and Emigration Department.

These figures show that the people are fast losing faith in the State and have decided to search for greener pastures in a bid to fend for themselves.

Thus the sooner the Government takes steps to address the concerns and problems of the people at the lower end of the economic ladder, the better. (javidyusuf@gmail.com)