Karan Thapar, in article headed “ “If Ranil Doesn’t Take Tough Steps, Sri Lanka Economy Could Fall into Abyss: Former Central Bank Head”
Indrajit Coomaraswamy identified four critical steps that the government must immediately start to implement as the first stage of restoring the economy to better health.
One of the most highly regarded former governors of the Central Bank of Sri Lanka has said that if Ranil Wickremesinghe does not implement very tough measures, the country’s economy can fall into the abyss. Indrajit Coomaraswamy says he believes it will take the Sri Lankan economy at least five years to get back to where it was – provided certain tough steps are implemented by the Wickremesinghe government.
In an interview to The Wire, Coomaraswamy identified four critical steps that the government must immediately start to implement as the first stage of restoring the economy to better health.
First, it needs an IMF arrangement because the country doesn’t have foreign exchange or rupees. An arrangement with the IMF will act as a certificate of good housekeeping and also facilitate funding by other institutions and, possibly, by friendly supportive countries.
Second, Wickremesinghe must find a way of getting essential supplies such as food, fuel and medicines, and for this he needs to arrange bridging finance. Although India has already given, in swaps, loans etc., up to $3.8 billion, Coomaraswamy is hopeful India will give more. He is also hopeful that Japan will step in and help but, in this case, it could require Sri Lanka restoring some of the projects linked to Japan which were terminated by the Rajapaksa government. However, Coomaraswamy does not think there will be much help from the United States because its attention is diverted in other directions.
Third, Coomaraswamy says major structural reforms are necessary. They include reform of the functioning of including the disinvestment of state-owned enterprises as well as ensuring that the price of utilities are cost reflective. In other words, subsidies must be constrained. Coomaraswamy also believes that Sri Lanka must give independence to its Central Bank and strengthen the Fiscal Management Responsibility Act.
Fourth, Coomaraswamy says steps need to be taken to improve the business climate of the country. He believes work to identify the necessary measures has been done earlier but it now needs to be pulled together and implemented.
These are all tough measures and will not be easy to implement. Already poverty in Sri Lanka has increased by 750,000 people. A strategic and well-devised communication strategy will be necessary to convince the people of Sri Lanka that they have to accept more sacrifices before the country returns to better economic health.
Thapar
Coomaraswamy
*********
A NOTE from Wikipedia on Indrajit:
“Coomaraswamy was born on 3 April 1950 in Colombo, Ceylon.[3][4] He was the son of civil servant Rajendra Coomaraswamy (Roving Raju) and Wijeyamani.[5][6][7] His paternal grandfather C. Coomaraswamy was a civil servant and his maternal grandfather S. K. Wijeyaratnam was chairman of Negombo Urban Council.[5][7][8] He has one sister, Radhika.[5][6] Coomaraswamy was educated at Royal College, Colombo and at Harrow School.[7][9][10] He was captain of Royal’s primary cricket team.[8] He was captain of Harrow’s cricket team from 1967 to 1968 and also played rugby for the school for three years.[4][11] After school he joined Emmanuel College, Cambridge from where he received BA (Hons) and MA degrees.[7][9][12] He played first-class cricket for Cambridge University Cricket Club between 1971 and 1972.[3][13] He then proceeded to the University of Sussex from where he obtained a DPhil degree.[7][9][12]……. https://en.wikipedia.org/wiki/Indrajit_Coomaraswamy
A NOTE from Michael Roberts, 3 August 2022:
Indrajit is the brother of Radhika Coomaraswamy (of the ICES and UN at various stages of her career) and both were born intoa well-placed Tamil family in Colombo. Indrajit was educated at royal college in colombo and proceeded to the exclusive Harrow college in England where he played both cricket and rugger for the school and was good enough to captain its team in 1967(?).
Indrajit playing for Harrow
He went on to Emmanuel College in Cambridge and represented Cambridge in both cricket and rugger –no mean feats. When he returned to Sri Lanka in the early 1970s I recall seeing him play rugger for the CRFC and/or Sri Lanka; in fact, the Wikipedia account notes that “Coomaraswamy played rugby for Ceylonese Rugby & Football Club and captained the national team in the 1974 Rugby Asiad.[8][11][13] He also played cricket for the Tamil Union Cricket and Athletic Club.”
I recall chatting with him once at “Barefoot” in more recent times –probably during a function relating to the Gratiaen Prize in Literature. He is as erudite as well-balanced a personality. His assessments must be treated seriously.
Wijeyratnam Maha Vidyalayam was a Tamil school vested in the govt., in the seventies. It is still operating along Sea Street in Negombo.
I remember him as a junior at College. His credentials as a sportsman & his elite education are indeed superlative. My two nephews too went to Cambridge and themselves lost sight of reality soon enough. His family background is exemplary. His sibling is even more articulate in Womens & Human Rights fora. They have done the chattering classes proud! At least he’s been an honest Governor. For all these going by SL’s ‘bowing & scraping’ custom, we must pay obeisance & genuflect to the wisdom of these few Brahmins who still gravitate amongst us.
But I’m certainly loathe to say “ehey hamuduru-waney” by rote any longer – to these panjandrums of Lanka’s skewed financial world. He too must take some blame for not wishing to rock the boat and call a spade a spade. India’s Jyoti Gosh would be an ideal Governor – not of a little backwater like Sri Lanka but of India nay of the World itself (there’s a courageous truth talking, upright soul with her head screwed on right!) As head of the IMF she would have transformed it & the entire developing world!
But we’ve got to settle for these tired old ‘solutions’ – Indrajit’s Four Commandments – honestly is it that the man cannot distinguish the wood from the trees or, more tellingly, him pretending not to see.
If that largely redundant burden – the 400,000 strong services costing 52% are unsustainable fiscally – then trimming that down to a force of 50,000 would remedy a lot of fiscal pain. Seems justified when 80% of the nation is now below the poverty line. This is an economic war, not a ‘war of the worlds’ Dravida Goni Billa threatening Sri Lanka!
Secondly a bloated public service of 1.5 mn sitting clam-like on the backs of the nation, an ugly gargoyle – inefficient to the core – unproductive – without a semblance of independence — acting as peons & water carriers to the politicians — which has not been fit for purpose from the ‘beginning of time’ should/could be trimmed to 50% of its size. After that any new skill requirements should go to the young, before a reformed PSC for enlargement.
Thirdly, the World Bank makes reference an Asset Recovery Handbook (ref 1-286 pages). There are claims of an astounding quantum of ‘stolen assets’. What is its true extent and how may Sri Lanka recover these assets, if any?
Fourthly The composition of the external debt of $51bn is not mentioned by our Brahmin Indra Jit. Blackrock itself is owed USD 1 bn. Private credit is outside this $51bn (apparently). It’s curious if this is not in the IMF’s ‘arrangements with creditors’ pre-condition.
Jyoti Gosh says the West has emergency contingency funds of $400bn. The IMF itself should be seeing (and Indra – Jit too) that these debt defaults 3rd world countries have pushed themselves into, are the realisation of that nightmare the world has in fact prepared for. Jyoti says the IMF must itself make ‘arrangements’ to buy Sri Lanka’s entire $51bn and prevent parts of it it from being sold to ‘Vulture’ Funds who will be the new blood sucking predators hovering over Sri Lanka.
Again almost nonchalantly INDRAJIT uses just one word “Business”; but what does that mean? He does not talk of a massive investment fund to kick start the economy: shouldn’t there be a Marshall Plan type effort to do that? Whose going to bell that cat? Shouldn’t he be advocating for a fund (from the West) of at least $30-50bn to create an entirely new economy of production, of export oriented enterprise, of value added agriculture?
I would recommend the thoughts of Schumacher (Small is Beautiful), and everything surrounding Prof Yunus’s Social Business (Bangladesh’s father of microfinance) to our cricketing, rugby playing Guru Indrajit. Might going to Cambridge itself in the context of Sri Lanka’s failure be an indication of an academic irrelevance – to the Third World?
Perhaps the thoughts of Jose Mujica, the worlds most radical president (ref 2) might be good bed time reading for our erudite scholar?
“Uruguay’s José Mujica lives in a tiny house rather than the presidential palace, and gives away 90% of his salary. He’s legalised marijuana and gay marriage. But his greatest legacy is governing without giving up his revolutionary ideals”
(1) Asset Recovery Handbook
https://star.worldbank.org/sites/star/files/asset_recovery_handbook_0.pdf
(2) José Mujica: is this the world’s most radical president? https://www.theguardian.com/world/2014/sep/18/-sp-is-this-worlds-most-radical-president-uruguay-jose-mujica