-By A Special Correspondent
(Lanka-e-News -20.Feb.2024, 9.00 PM) The year 2022 marked a devastating turn for Sri Lanka as the government declared its first-ever sovereign default, catapulting the nation into an economic crisis of unprecedented proportions. Amidst the chaos, Mr. K M M Siriwardana, the Secretary to the Treasury, has bravely come forward with startling revelations, shedding light on the systemic failures within the country's financial institutions. This investigative report delves into Mr. Siriwardana's disclosures, highlighting the negligence of policymakers and the dire consequences that ensued.
In April 2022, Sri Lanka's government made the grim announcement of default, shattering its economic reputation and becoming the first sovereign default since independence in 1948. This landmark event not only tarnished Sri Lanka's financial standing but also marked it as the inaugural state in the Asia-Pacific region to face such dire fiscal circumstances in the 21st century.
With over three decades of service within the Central Bank, Mr. Siriwardana brings a wealth of experience to the table, having held key positions such as Assistant Governor and Director of the Economic Research Department. His allegations are damning, pointing fingers at policymakers, particularly the then Finance Minister Basil, for disregarding his warnings regarding deteriorating economic indicators. Despite his efforts to convey these concerns to the influential Finance Committee of Sri Lanka, his reports were allegedly brushed aside or overlooked.
Mr. Siriwardana's claims gain credence from the Supreme Court judgment on case SC-FR 195/2022, further bolstering the validity of his assertions. When questioned about the Central Bank's failure to act promptly, Mr. Siriwardana turned the tables, questioning why there hadn't been inquiries into the lack of timely provision of economic data that could have averted the catastrophe. He expressed empathy for the public's plight, acknowledging the ongoing economic hardships faced by ordinary citizens, including his own family members.
In a bold move, Mr. Siriwardana called upon politicians to speak truthfully about the economy, urging transparency and accountability in addressing fundamental issues. He lamented the uphill battle within the Finance Ministry to confront the realities of the economy, amidst accusations from a political class accustomed to luxury, attempting to force reforms onto the populace.
Mr. Siriwardana identifies a series of detrimental decisions during the relevant period, including:
Tax Revisions: Unilateral tax adjustments led to a downgrading of Sri Lanka's credit rating by international agencies, hampering foreign investment and borrowing.
Exchange Rate Manipulation: Artificial control of foreign exchange rates exacerbated the depletion of reserves, intensifying the financial crisis.
Failure to Seek IMF Assistance: Despite mounting economic challenges, the government failed to promptly seek assistance from the International Monetary Fund (IMF), exacerbating the crisis.
Inadequate Interest Rate Adjustments: The failure to make necessary adjustments to interest rates worsened inflationary pressures and debt burdens, exacerbating the economic collapse.
The fallout from these missteps was catastrophic, resulting in a depletion of official reserves, a collapse in foreign debt obligations, and a significant loss of jobs as citizens migrated overseas in search of better opportunities. The absence of a support mechanism, such as IMF assistance, further compounded the crisis, leaving Sri Lanka grappling with the aftermath of its sovereign default.
Mr. Siriwardana's revelations serve as a wake-up call, highlighting the urgent need for accountability and reform within Sri Lanka's financial governance framework. As the nation strives to recover from the fallout of its sovereign default, it must heed the lessons learned from this economic catastrophe. Transparent communication, prudent economic management, and a commitment to addressing fundamental issues are imperative to steer Sri Lanka towards a path of sustainable growth and prosperity. It is time for the truth to be unveiled and for responsible leadership to emerge in guiding the nation towards economic stability and resilience.
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by (2024-02-20 15:41:31)
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