Rupee depreciation, mismanagement and Government’s indecisive nature

By Our Special Political Correspondent

On Tuesday, the Cabinet heated up once again over the rupee depreciation and the mismanagement of the currency. Despite the eloquent economic analysis by the Governor of the Central Bank and the Finance Ministry Advisers praising each other over their astute economic interventions, the value of the rupee against the US Dollar fell to a new low of Rs. 171 for the first time in its history yesterday. 

According to the exchange rates issued yesterday by the Central Bank the selling price of a US Dollar was Rs. 171.42 and the buying rate was Rs. 167.55. The Finance Minister on Tuesday had even taken a firm stand that he would not allow the Chief Minister (CM) of the north to import a new vehicle for his official use. 

The CM is running in a battered vehicle when the Colombo-based Ministers including the Finance Minister run around in S Class Mercedes Benz, top end SUVs or BMW 7 Series. The Opposition was quick to produce a copy of how the Ministers had sold their duty free permits, including Minister Samaraweera.  The Finance Minister had rightly also objected to Minister Ranawaka’s proposal for a mega city development. The other controversy that went viral on social media was the high speed light rail project. It is alleged controversial businessman now turned politician Samarawickrama had demanded a fee from the investor. The Minister was quick to refute the allegations. 

Now a complaint has been lodged with the Bribery Commission according to media reports to investigate the allegations. The Minister is a close ally of the Prime Minister. The Prime Minister can ill-afford to have allegations against his confidants given that the presidential elections are 15 months away. 

The maritime and logistics industry was also up in arms with the Government after State Minister of Finance Eran Wickramaratne had urged the shipping industry to embrace liberalisation, saying it benefitted all and aided the country’s push to become a maritime and logistics hub. 

While there is general agreement that Sri Lanka’s greatest resource is its strategic location within the Indian Ocean, the country captured only a small amount of transhipment containers while the full potential remained unfulfilled. The indecent hurry to liberalise the industry is baffling the industry. The industry now allege that a jobless consultant is misleading the Minister and Government into it to help an international operator he is consulting with, to expand in Sri Lanka. 

On Wednesday, the National Economic Council (NEC) with the Finance Ministry and the Central Bank met with the private sector captains to discuss short-term measures to improve foreign exchange inflow in dealing with the current foreign exchange crisis. The President and the Prime Minister had been at the meeting. Heated exchanges had taken place between the Prime Minister and Hayley’s Chairman Pandithage over the liberalisation of the shipping industry. 

Ports and Shipping Minister Samarasinghe had been livid that he had not been invited for the liberalisation discussion co-organised by the Finance Ministry and the EU. He had said: “How can you take decisions for the industry when the line Minister is not present?” 

Business tycoon Harry Jayawardane had outlined how the Government could increase revenue and had urged the President to engage the security forces to improve the revenue collection in the Ports and Customs. He had said Rs. 50-60 billion is lost every year due to mismanagement by the Finance Ministry. He had urged the President to appoint competent and practical people with experience to run the government. 

The PM’s top Economic Advisers Paskaralingam and Ratwatte and International Strategies Minister Samarawickrama had not been invited by the President for the business meeting. A SLFP Minister had pointed out in private that the duo of Ratwatte and Paskaralingam were largely responsible for the loss of confidence of the private sector. It was they who had led the PM’s Economic Affairs Committee and taken all the controversial decisions relating to the economy. 

With a depreciating rupee, exports being taxed heavily, and FDI not taking off, our so-called economic experts will have to stop talking about how well they have performed in keeping inflation below 5% when half the population in the country has seen a 20% drop in their disposable income and take a cue from Dr. P.B. Jayasundera and stimulate the economy to come out of this rut. 

The CSE that used to provide livelihoods to over 600,000 retail investors is now like a ghost town. The Central Bank-managed EPF and other State funds have done next to nothing for three years to prop up the market. The market is now in a free fall with foreign investors pulling out. 

A big investor forum is set to begin next week in London. Let us hope the Government before that event at least shows that it has some confidence in its own stock market by investing in it to give a message to the world that the Sri Lankan stock market is a good place to invest. 

Unfortunately for the Government, many of its political appointees in key places have forgotten how they got into their positions in the first place and are clearly not towing the Government line and instead taking the high road. That in effect portrays the sad indecisive nature of the current Government. Some one really needs to take control and deliver! ‘Will they?’ is the big question.