The present state of Affairs in Sri Lanka requires urgent steps in 2 directions, politically and economically. At first with a stern focus on the economy. Sri Lanka was in need of a professional economic expert cum banker. Fortunately the re-activated former CB Board Member Dr. P. Nandalal Weerasinghe, a Sri Lankan economist and banker was appointed on 07th of April as the 17th Governor of the Central Bank of Sri Lanka. Weerasinghe holds a Ph.D and Master’s Degree in economics from the Australian National University and served as a visiting lecturer in the field of Economics at the University of Colombo. Flown in from Australia as an economic surgeon and firefighter at the same time, Dr. Weerasinghe in his first working days administered a virtual bail out for the ailing SL Banking sector. This just to prevent a looming bail out on the horizon, which would have put Sri Lanka’s economy in a freefall on its knees. His decision to unilaterally suspending external debt payments and thereby keeping a least quantum of foreign reserves, was largely welcomed by the banking sector in Sri Lanka.
On “prima facie” the raising of key interest rates has been seen as a relief and as a magnet to trigger a more positive sentiment for new FD investments within Sri Lanka’s business community among others who are financially well off. On one hand the drastically increased 700 basis points key interest rates resulted in cheers by depositors who were less attracted in recent times by un-attractive interest rates. For debtors the interest hike meant a very bleak future outlook. The SME segment reacted with less enthusiasm on the interest hike. SME see CB’s increment of interest rates as no suitable solution to fiscal and external imbalances in the first place. It is seen as the wrong path burdening debtors to its rims. Amid increasing bankruptcies for non-performances on existing loan payments more negative fall-outs are waiting around the corners.
Dr. Weerasinghe’s next bold proposal was even incomparable to International Bondholders. To accept Sri Lankan Rupees as a currency for settlement or even capitalized interests. It sounded like an affront to the seemingly unassailable status of US and Euro as the only currencies with unchallenged global acceptance. The CB’s Governor might have been inspired by the latest Russian approach to pry out the US Petrol Dollar payment system to accept only Russian Rubel in exchange for their Oil and Gas-Exports as the only legitimate currency. Russia’s selected an intelligent move after the International Banking Sector expelled Russia’s CB from the global SWIFT System. China and Saudi Arabia will be next with tickets on the same train.
Sri Lanka “QUO VADIS” – and what major changes should be implemented to turn the disastrous path on our Island. The appointment of the CB Governor can be seen as an example with significance into the right direction. Professionals and Academics to lead government and not to only serve Governments as advisors.
The direct and unhindered involvement of University Heads of Departments covering a huge field of expertise pared with Professionals in all Industries to build TASK FORCES starting with the 3 main GDP contributors, Apparels, Foreign Employment and Tourism among other Export oriented industries. Assuming that these TASK FORCES are set up with experts their final recommendations should be implemented as policies without being altered or bypassed even by elected popular politicians. Expertise over Popularity could be the measure of all things.
Singapore once visited Sri Lanka to learn from us. Nowadays is time to learn from Singapore. The Prime Minister of Singapore Lee Hsien Loong is a Bachelor of Mathematics both in Cambridge and in Harvard. The Minister of Trade Ong Ye Kung is a Bachelor cum Master of Engineering (Cambridge). Minister of Ports Mr. S. Eswaran with an Education Degree in Economics and a Master Degree of Public Administration in Harvard. Singapore’s Finance Minister Lawrence Wong has a Master Degree in Economics and a Degree in Economics from 2 Universities in Wisconsin and Michigan.
- Singapore currently enjoys a AAA Rating from all International reputed Rating Agencies while Sri Lanka had been downgraded to CCC, which equals the meaning “in default with little prospect for recovery” According to the latest assessment of the IMF, Sri lanka’s debts are presently unsustainable
- The immediate task is the need is to mitigate the adverse impacts on the poor and vulnerable