We would need to engage with a whole range of multilateral, bilateral and private investors to find a solution.
by Harsha de Silva
Today, it is no secret that Sri Lanka is bankrupt and people have been forced into dire straits. Queues for fuel are kilometers long and businesses across the country have come to a halt due to the shortage of fuel, as they are unable to get their goods to the market. People have lost access to chronic medications due to shortages or simply because they have lost their spending power as a result of inflation. Islandwide power cuts that last as long as 7 hours have essentially brought the country to a standstill and has paralyzed every sector in society. From a small vendor in Bandarawela, vital foreign exchange earning export sector to students studying for their A/Ls, and even hospitals are unable to care for their patients nor conduct life-saving surgeries. The government keeps passing the ball between Ministers and showcasing a sense of disunity as no one wants to take responsibility. Nonetheless all members of the government should be held accountable.
On the 9th of February 2022, the Governor of the Central Bank reiterated his factually inaccurate statement to media, claiming that we do not have a shortage of dollars nevertheless, today he is stating that the Central Bank is unable to create dollars. Does he not understand the gravity of the issue or is he just trying to fool the public? I initially warned of the consequences that could emerge if we were to go down this path of implementing Modern Monetary Theory and Import-Substitution policies, far back as November 2020 during my response to the budget speech. In the same speech, I pointed out that if we do not go into a debt-restructuring program with the IMF, our debt would eventually become unsustainable thus, cutting into our everyday functions.
Fast forward to January of 2022, given the state of the economy, I urged the government to restructure our debt and save critical reserves to purchase vital essentials such as fuel, LPG, milk powder, cement etc. However, the government was hell bent on making the bond payment of $500 mn on the 18th of January to pave way for their friends and allies to make an immense profit, at the cost of all ordinary citizens. The Opposition has made multiple requests to provide the list of bondholders that were paid on the 18th of January, but we are yet to receive it. Nevertheless, it is now evident that some bondholders have made a profit of over 100% in dollars. This raises a compelling question, whether this government has profited from all crises that we have experienced thus far; going back to the Rapid-Antigen tests, to the sugar and even the garlic scam. They have continued to make money while majority of the country is suffering with no ability to conduct their day to day activities or provide for their families.
President Gotabaya Rajapaksa should not be running away from the problem, as he is the top most official in charge of the country, thus it is his responsibility to get all parties together to initiate a sustainable solution. As a responsible Opposition, we have repeatedly warned of the consequences and proposed several solutions to the government to evade this economic crisis, but it has always fallen on deaf ears. What is the point of an Opposition if our advise and requests go unheeded? The Finance Minister is never to be seen in Parliament, as he is purposely neglecting our questions.
The question of debt sustainability has been a major topic at the recently held IMF board meeting, which discussed Sri Lanka’s state of the economy. Global markets nor the IMF is ready to believe in the fairytales circulated by the Rajapaksa government. In the case that our debt is deemed unsustainable, we will not be able to solve this crisis by merely going to the IMF. We would need to engage with a whole range of multilateral, bilateral and private investors to find a solution. If we had initially gone to the IMF in 2020, we would not be in this precarious situation. Unfortunately Sri Lanka has fallen to the bottom now, begging neighboring countries for spare change and being unable to pay back our creditors, on top of the inability to import critical commodities. Therefore, we vehemently urge the government to stop the suffering of our people at least now and swallow their ego to pave way for negotiations with the IMF. There is no other solution at this juncture before this economic crisis throws Sri Lanka into social unrest.
Harsha de Silva was a Minister of Government of Sri Lanka and a Member of Parliament
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