The Central Bank Governor spoke in plain and lucid terms to the Press Club earlier this week giving a grim but realistic picture of the state of the economy. He said the people will have to brace themselves for the long haul while the authorities try to fix the crashed economy with inflation running continuously [...]


Lifelines and chokeholds


The Central Bank Governor spoke in plain and lucid terms to the Press Club earlier this week giving a grim but realistic picture of the state of the economy. He said the people will have to brace themselves for the long haul while the authorities try to fix the crashed economy with inflation running continuously at around 40 percent. He said the poorest will be the hardest hit, and the process – of the country returning to the status-quo-ante where the current turbulence will be stabilised and international creditors begin to lend again to Sri Lanka – will take at least another 12 months at best.

He did not hesitate to blame those in the Presidential Secretariat for ignoring early amber lights flashing that the economy was haemorrhaging as far back as in March 2020. It has also been heard within the corridors of the Central Bank that the word “IMF” was banned from the lexicon of Bank officials at the time.

The Prime Minister was quoted in this newspaper last week as saying that he proposed the appointment of a Parliamentary Select Committee to go into identifying those responsible for the “suffering of the people” through fiscal mismanagement – and likely corruption. Later in the week, the Parliamentary Oversight Committee COPE grilled the Governor and his senior officials and also recommended a Select Committee to identify the culprits who ran down the economy to what it is now. But the public is wary of such committees. They usually end up a waste of time, a waste of tongue, a waste of paper and a waste of money as nobody has hitherto been punished by such committees. Why would this committee be any different?

At the Press Club event, the Governor ducked a question on why the people, standing in queues on the streets countrywide for their daily needs, and in whose name sovereign loans are taken from overseas lenders, have no clue from whom, or for what, and at what interest rates, monies have been borrowed. He merely said the information is publicly available. But where, is the question. He did concede, however, that often loans are taken for “public investments” and some of this is spent on recurrent expenditure to balance budgets. The Prime Minister told Parliament that Treasury accounts books are “cooked”. Nobody seems to know for sure the details, other than those who did the cooking. Only a forensic audit will uncover the secrets of cooking books yesteryear.

The country’s negotiators have a tall order when they go before the World Bank and the IMF to answer questions on foreign borrowings. This week the World Bank issued an obscure statement denying it was planning to support Sri Lanka in the form of a bridge loan or with new loan commitments. This statement seems to stem from the fact that the Washington-based, pro-West lending agencies are targeting Sri Lanka’s well-concealed data on the loans it has taken from China and the terms of such loans that have partly, caused Sri Lanka’s debt servicing crisis – as it has happened to many other countries on China’s BRI (Belt and Road Initiative). And so, until such data tumble out, the WB or the IMF will go slow in giving Sri Lanka a helping hand. They just don’t want their members’ money to go to China.

Until then, Sri Lanka, and Sri Lankans will have to undergo the endless queues for essential items, the power-cuts and foreign exchange shortages. The country’s long-held foreign policy neutrality is under stress having no alternative but to lean towards the Western alliance for financial help with India given the lead role in seeing that Sri Lanka keeps its nose above the water without totally drowning, but only just. Analysts ask if this is a lifeline that is being given or a chokehold. But then, beggars can’t be choosers.

Tamil Nadu bearing gifts: New beginning

India has come to this country’s aid at this critical period of time, not without extracting its pound of flesh in inking some crucial strategically important projects for itself in the island. On the sidelines, the southern Indian state of Tamil Nadu has pitched in with food aid “for all the people of Sri Lanka”, and significantly not limited such assistance to the Northern Province with which it has closer ethnic ties.

The local politicians representing the Tamil community, especially those in Colombo and the central highlands deserve the kudos for their stand in asking the Tamil Nadu state government to ensure the packs are not limited for distribution in the North. It is not easy to erase the bitter memories of not so long ago when the Indian Government audaciously air-dropped food over the North. It only set in motion a tsunami of anti-Indian resentment in Sri Lanka among the majority.

While it would be churlish to doubt the Tamil Nadu state government’s goodwill measure, it would also help if the state government ensures its fishermen did not poach illegally in Sri Lanka’s territorial waters in armadas, depriving their starving northern Sri Lankan brethren of their own livelihood and in the process starving Sri Lanka’s parched economy of hard-to-find foreign exchange. According to official statistics of the Tamil Nadu State Fisheries Department, seafood exports close in on USD one billion annually – part of the catch being from Sri Lankan waters. Recently, the state’s Chief Minister wrote to the Indian Prime Minister demanding that over 100 Tamil Nadu registered boats confiscated by Sri Lanka for poaching are not auctioned. Therefore, food aid gifts from Tamil Nadu are like giving to the people of Sri Lanka with one hand while taking away from them their dues with the other.

In a bid to neutralise the anger shown by Sri Lanka’s northern fishermen towards the incursions into their turf by the south Indian fishermen, the Indian side is now distributing kerosene to the fisherfolk of the North, but diplomatically through the Ceylon Fisheries Corporation. This is the 61-day mandatory ‘breeding ban’ period clamped by the Indian side to allow fish to breed anyway, thus preventing Tamil Nadu fishermen from going out to sea in the Palk Strait and the Gulf of Mannar.

Nevertheless, the gesture on the part of the state government should be seen as a refreshing new beginning for closer and friendlier relations, and greater inter-connectivity between Sri Lanka and the southern states of India, including the state of Odisha, long ignored by successive Sri Lankan Governments.

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