• Warns Govt. revenue and reserves in decline 
• Concerned of deepening economic crisis
• Says prudent for Govt. to keep all funding options open, especially given 2021 debt dynamics 
• Points out economy, foreign policy and national security inter-linked 

By Asiri Fernando

Samagi Jana Balwegaya (SJB) parliamentarian and former State Minister for Finance Eran Wickramaratne, yesterday warned that steep declines in Government revenue, high debt and contracting foreign reserves were setting the stage for a deepening economic crisis in Sri Lanka, and called on the Government to refrain from limiting the country’s funding options.   

Speaking to reporters at a press conference, Wickramaratne emphasised that the Government should not alienate any sources, especially by moving closer to China, as it was imperative that all options are kept open to assist the country as it navigates a challenging economic situation made worse by COVID-19. The global pandemic, he pointed out, has already exacerbated shortfalls in public finance, slowed growth and increased Sri Lanka’s debt to GDP ratio. He was accompanied by SJB member J.C. Alawathuwala. 

"In 2020 we will see the nation's largest-ever Budget deficit, which may be around 9%, while Government revenue has dropped about one third," Wickramaratne said. He questioned why the Government was withholding critical second quarter growth numbers and other data related to economic and fiscal management, which was needed to accurately gauge the economic situation. 

"Data is information, we introduced the Right to Information Act (RTI) to have access to information, but unfortunately this Government doesn't seem to believe in it as they won't release data," Wickramaratne stated, pointing out that “some Government officials believe that data belongs to a particular ministry but not the public.” 

The former State Minister of Finance opined the Government should keep its choices open when obtaining loans and that “one should not put all their eggs in one basket,” referring to the Government’s decision to tap China for debt repayment funding, rather than work on an agreement with the International Monetary Fund (IMF). 

Commenting on the recent visit by a high-powered Chinese delegation and the proposed loan sought by the Sri Lankan Government, Wickramaratne said, historically, loans obtained from China had come with high interest rates. 

"We should not forget that the nation's economy, its foreign policy and national security are inter-connected. We are a small island, when we take decisions on the economy, we must be mindful of that fact." Wickramaratne recalled that historically Sri Lankan leaders had maintained a non-allied foreign policy. 

The SJB parliamentarian said the Government should seek to diversify where they obtain loans from and endeavour to seek low interest loans like the 0.1% interest loan which was negotiated for the now cancelled Light Rail Transit (LRT) project from Japan. 

Wickramaratne said the recent downgrade by Moody's, which is the lowest ever, will mean that Sri Lanka will have to obtain loans at higher interest rates.   

He argued that cost of living has increased significantly, and that the price of food items has increased by around 20% -25% when compared to September 2019. “The Government's promise of lowering cost of living is like their promise on delivering fertiliser free-of-charge; it’s not to be found in the market," Wickramaratne quipped.

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