Why Sri Lanka is Sinking – Prithi’s Prognosis

In Response to the THUPPAHI Item bringing Imran Khan’s ‘fate’ into juxtaposition with that of Sri Lanka, viz. https://thuppahis.com/2022/04/11/kota-uda-imran-khan-and-sri-lanka/ …….. Prithi Perera has fashioned an “Address to Sri Lankan Aussies” …. And, thus, to Thuppahi @@

Dear Sri Lankan Aussies, Unfortunately, this post does not reflect any of the issues mentioned in my email of 30 March 2022 that explained the real reasons for the present foreign debt and foreign exchange crises facing Sri Lanka today. As per that post where the statistics from the World Bank were quoted, it was clearly shown how the External Debt grew and the years that had the biggest increases with the External Debt growing in double digit increases from 2009 to 2014 with 2012 showing the highest annual increase in External Debt as compared to 2012. viz; 38.54 %. The growths in External Debt which involves foreign currency was highest during the periods 2009 to 2014, recording a growth from USD Billion 19,504,201 in 2009 to USD Billion 42,262,755, an increase of 117%. The External Borrowings from 2015 to 2019 have shown only single digit annual changes and the growth in External Debt has been from USD Billion 43,925,371 in 2015 to USD Billion 56,095,469, thus an increase of USD Billion 12,170,098 or 27% increase during the five-year period ending 2019, as compared to the 117% increase during the five-year period ending 2014.

From the above, it should be clearly evident how our foreign debt grew, including through the non returning, non-performing assets like Magampura Port, Mattala Airport, Sooriyawewa Stadium, Norochcholai Power Plant that broke down 29 times in the first year of its installation, payments on the attempts to acquire new aircraft for a non performing airline, massive forex losses on Petroleum Hedging and Greek Bond investments deals, just to name a few. These losses are still being borne by the Lankan tax payers. This is from where the massive corruption/stealing and seepages of funds destined for the country took place. Today, when borrowings to steal are difficult, they are selling off our countries assets to foreign powers from where they could steal and giving priority to highways when people are struggling to find living ways!!

The above having been said, it is incumbent upon those who govern the country today, to ensure the better management of our Forex Reserves, External Debts and the Economy and provide the ways for people to live, instead of prioritizing the building of highways and byways where massive corruption opportunities are made available.

It is to be reiterated that the present mess of losses in incomes, mismanagement of the debts and economy arose through the following actions of the present government, after 2019:

  1. Reductions in VAT and other taxes resulting in taxflation and losses of billions of rupees, soon after coming to power in 2019 to accommodate Big Businesses, Olygarchs and Kleptocrats who had contributed lavishly for the Presidential Elections in 2019 and to prepare for the Parliamentary Elections that followed 8 months later.
  2. Sudden ban on chemical fertilizers resulting in massive hits on agriculture production across all sectors and thereby affecting related export income and compelling extra imports of essentials badly impacting on our forex reserves and resulting in these actions to cover up for drops in production involving billions of rupees.
  3. Indiscriminately printing billions of rupee currency to overcome local debt servicing and thereby causing rapid inflation.
  4. Pegging and defending the rupee against the dollar at unrealistic levels, resulting in reductions in foreign remittances from overseas Lankan expatriates seeking the unofficial market and depriving forex earning for the government through official channels due to pegged dollar rates.
  5. Delaying to seek IMF assistance and to restructure the debts amidst the crisis that was staring them in their eyes, with the now ousted former CB governor outlining a 6 or 9 month plan and arrogantly declaring that we do not need IMF help. Now we are having to run after the IMF although better late than never!!
  6. Continuing corruption and deal making in imports, supplies and through selling off of assets.
  7. All of the aforementioned actions have resulted in the Credit Rating Agencies such as Fitch, Standard and Poor, Moody’s, etc downgrading Sri Lankas ratings and making foreign borrowings even more difficult.
  8. It is to be noted that many other countries, including those in South Asia do not have the same problems as we do, post pandemic. All such countries have also had to face impacts from the COVID 19 pandemic, as also, the Ukraine Crisis. Rather, they have shown increases in foreign earnings, most having been tied up with global value chains and being better managed. In fact, we are even having currency swaps with India and Bangladesh, the latter, a country that came into being only in 1971 and for whom, aid was even sought through a “Concert for Bangladesh” to provide aid for the helpless situation they were in. And, where are we in Sri Lanka today ????

I hope to have been INCISIVE enough in detailing the underlying causes for the country’s present foreign exchange and financial crises!!

Lastly and not the least, I wonder if the Truth Seeking Sri Lankan Aussie could please come down to Sri Lanka as a patriotic citizen of the motherland and give all the reasons adduced in his letter, in front of the  massive protests being launched on a daily basis by millions of starving Sri Lankans who are living through 13 hour power cuts and are lining  in queues for  petrol, diesel, gas for cooking, milk powder for the kids, important medicines for the sick, loss of daily wages, food at exorbitant prices and so on…whilst those who made ill-timed decisions and mismanaged the economy are still hanging on to power !! How would the Aussie citizens react in such situations?? Did the writer attend the protests by Lankan Expats in Melbourne, Sydney and other states and attempt to give the details adduced in his letter to those protestors ??? As a Sri Lankan now living in the motherland, I would like to know ???

It is my humble opinion that if the incumbent Executive President who has all the Executive Powers through the 20th Amendment and a 2/3 bought over majority in Parliament, but, still could not deliver, although the 2/3 majority has been only lost now and yet   does not want to resign amidst all these issues brought on due to the ill timed decisions and gross mismanagement during his tenure, he must be made to agree to the following, if he is truly a patriotic citizen of the country, who genuinely wants to serve the country, but, not merely retain power against the will of the millions of people who are now manifesting against misrule, because they have been really made to suffer on a daily basis.;

  1. Immediately reduce the draconian Executive Powers of the Executive Presidency provided under the 20th Amendment and bring in an improved version of the 19th Amendment at the soonest, where Independent Commissions and Independence of the Judiciary are put in place  in order to ensure the rule of law in the country, with one rule for all citizens.
  2. Formulate a new reduced Cabinet of Ministers without anyone from the Rajapaksa family who have been in power for 12 out of the last 17 years and  comprising only  qualified, untainted representatives in parliament (only a few available) selected from across the spectrum of the parties represented in parliament and a Prime Minister to be selected from the chosen few and to be elected by way of a secret ballot.
  3. Work out a new Constitution as soon as possible with inputs from intellectuals, civil society representatives and the knowledgeable  general public.
  4. Declare new elections at the first opportunity as soon as the perilous economic situation shows improvement and based on the new constitution within the next year.

Hope to have provided some constructive suggestions that could be improved upon.



@@ PRITHI PERERA is apparently responding to the item https://thuppahis.com/2022/04/11/kota-uda-imran-khan-and-sri-lanka/ …. But does not seem to have comprehended the searching essay, a concise one, by “Truthseeker” (see below). His negative perspective on the Rajapaksas may have some sound foundations, but there is a marked antipathy to the developments in Hambantota District (the harbour, and Mattala airport in particular) — one he displayed earlier in a debate in Thuppahi (where he was challenged by several others).  Readers are encouraged to weigh the following items after taking note of Prithvi’s present essay.

A = “Truthseeker”: “Sri Lanka’s Financial Crisis,” 11 April 2022, https://thuppahis.com/2022/04/11/sri-lankas-financial-crisis/#more-60661

B = Darini Rajasingham:  “The Principal Roots of Sri Lanka’s Economic Crisis,” 12 April 2022, https://thuppahis.com/2022/04/12/the-principal-roots-of-sri-lankas-economic-crisis/

C = Uditha Jayasinghe: “Explainer: Sri Lanka on the edge as debt burden mounts,” 17 January 2022, https://www.reuters.com/markets/rates-bonds/sri-lanka-edge-debt-burden-mounts-2022-01-17/

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