Adani invests in a renewable energy project – The Island
By Shamindra Ferdinando
Former Central Bank Deputy Governor Dr WA Wijewardena said the country would not have been in the current situation if the Monetary Board had launched the rupee in April 2021, six months before Ajith Nivard Cabraal succeeds Professor WD Lakshman.
Consultant in banking, finance and economics, Dr. Wijewardena said it when The Island asked for clarification regarding the statement on ‘hiru’ Sunday (13) that the government in place since December 2019 wasted up to $5,500 million in an attempt to prevent the depreciation of the rupee. Dr. Wijewardena explained how the failure of the Monetary Board to take corrective action when required caused a catastrophe.
Dr Wijewardena pointed out that Cabraal, who took over from Prof Lakshman, did not address the issue either. Cabraal left his seat on the national SLPP slate to receive the governorship on September 15, 2021. Cabraal served as Minister of State for Currency and Capital Markets and State Enterprise Reforms at the time of his resignation .
The retired BC Deputy Governor pointed out that the much-vaunted “roadmap for economic recovery” that was announced on October 1, 2021, did not recommend the depreciation of the Rupee. The outspoken ex-CBSL official said the Rupee depreciation/Rupee floating is not among the corrective measures announced by the incumbent Governor.
The much-delayed decision to float the rupee in the second week of March this year must be seen in the context of the overall failure of the so-called “roadmap for economic recovery” to achieve its goals in six months, said Dr. Wijewardena. Recount The Island.
Responding to Hiru The interviewer, Dr. Wijewardena, said that although CBSL expected the country to receive up to $10.5 million during the period October to December 2021, this did not materialize. Alleging that the timing of the rupee’s float had been unnecessarily delayed, Dr. Wijewardena claimed that the consequences could be quite devastating. The veteran banker likened the cash-strapped Sri Lankan economy to an uncontrolled kite.
Dr Wijewardena cited the pathetic failure on the part of the entire banking system to meet the $16 million requirement to pay a crude oil carrier, highlighting the crisis facing the country. Responding to The Island questions, Dr. Wijewardena questioned the guilt of the Monetary Board in regard to the management of the economy.
The current five-member Currency Council consists of Governor Cabraal (ex-officio), Treasury Secretary SR Attygalle (ex-officio), Sanjeewa Jayawardena, PC, Dr. Mrs. Ranee Jayamaha and Samantha Kumarasinghe. Ms. Jayamaha, former Deputy Governor, Chairman of CBSL and Multichemi International Ltd, Kumarasinghe, joined the Currency Board at the end of June 2020, while Jayawardena was appointed in February 2020.
The Monetary Board cannot absolve itself of responsibility for the current crisis, Dr Wijewardena said, urging the government to review the whole situation without further delay.
Basil Rajapaksa replaced Mahinda Rajapaksa as finance minister last July.
According to Dr. Wijewardena, the banking system has experienced a severe shortage of rupees in addition to the foreign exchange crisis. Dr. Wijewardena estimated the current shortage of rupees at Rs 700 billion.
Dr Wijewardena urged the CBSL to immediately increase bank interest rates from 7.5% to at least 15% as a first step to deal with the crisis. Dr. Wijewardena, who served the CBSL for over 40 years, pointed out that the recent decision to raise interest rates from 6.5% to 7.5% was not adequate at all.
Sri Lanka was unable to cope with the developing crisis by securing limited funds from India, China and Bangladesh. Instead, help from the International Monetary Fund (IMF) should be assured, the veteran banker stressed, adding that those who have rejected repeated calls for IMF help to restructure Sri Lanka’s debt should agree responsibility for the current pathetic situation.
He compared a country’s foreign exchange reserves to an individual’s savings. “Savings are used for emergencies,” said Dr. Wijewardena, pointing out the absurdity of using foreign exchange reserves to protect/support the local currency. The ex-banker recalled how the Thai government took legal action against its central bank governor Rerngchai Marakanond for spending $4.6 billion or £2.5 billion to prop up the baht during the financial crisis 1990s. In May 2005, the Bangkok Civil Court ordered Marakanond to repay the Bank of Thailand within a month, Dr Wijewardena said. Although the Supreme Court cleared him a decade later, the case established the guilt of a decision maker/decision makers in such a situation.
As Parliament is responsible for public finances and enacting laws, the accountability of the House must also be considered, Dr Wijewardena said.
