Nivard Cabraal says regime change panacea for Sri Lanka’s economic ills

Nivard Cabraal who was the Central Bank Governor during President Mahinda Rajapaksa tenure addresses the Voice for Justice media briefing yesterday in Colombo 

By Ashwin Hemmathagama

The corrupt and imprudent management style of the Unity Government has led the country to doldrums, charged former Central Bank Governor Ajith Nivard Cabraal, who was seeking a new mandate for the former President and SLPP MP Mahinda Rajapaksa to become the next Prime Minister.

Cautioning Sri Lankans of further depreciation of the rupee, escalating interest rates, growing unemployment and winding up of businesses, unfair tax regimes, and lack of rule of law in the coming months, Cabraal urged the country to elect a stable Government to change the alleged downturn in the economy.

“I have received several invitations to revive the economy. I do have plans, which will save the country. President Sirisena’s strategy was to have elections in early January and to have a stable Government established before the end of the month. That golden opportunity is lost,” he said, claiming to have the formula which will boost the economy with a regime change.

According to Cabraal, the alleged instability has reduced investor confidence, forcing foreign funds to pull out from the country and leading to both short- and long-term economic issues. “We cautioned the country on several occasions. We knew the foreign investments will withdraw from the market and the rating agencies would give us bad ratings. We knew the country will lose the debt-servicing capabilities. We held the foreign reserves to come down. We predicted the budget deficit would increase and no nation would come to our rescue,” he added.

Giving hope, Cabraal went on to say that the country will not be up on its feet unless the Rajapaksas are back at helm. Charging the Unity Government with losing the foreign reserves to $7 billion levels from the $8 billion maintained under the Rajapaksa regime, Cabraal said: “We knew the crisis was heading our way. In the rule of law index – South Asia we fell from the 1st position in 2014 to the 3rd position. Globally, we fell from the 48th position to 68th position. In the index of economic freedom – South Asia, we fell from the 1st position in 2014 to the 2nd position in 2017. Globally from the 90th position in the 2014 to the 112th position in 2018. In terms of the ease of doing business index, we fell from 1st position in 2014 to 4th position in South Asia. Globally we fell from the 99th position to 111th position. In the global competitiveness index, we fell from the 2nd position to 3rd position in South Asia. In the corruption perception index, Sri Lanka which stood at 2nd place in 2014. Now we are at 3rd place.” 

However, Cabraal commended Central Bank Governor Dr. Indrajit Coomaraswamy for challenging the decisions of the international rating agencies, Moody’s, S&P, and Fitch for issuing unfavourable ratings. 

According to Cabraal, Dr. Coomaraswamy took the correct measure on behalf of the country, which should not follow foreign agendas. 

“We should not allow the International Monetary Fund to dictate terms. During my term, it is true that we took financial assistance, but without following their terms. We were able to maintain the foreign debt at a stable level, which was payable. Now we have exceeded the payment possibilities. We had debt at 71% of the GDP in 2014. This has gone up to 90% now,” he added.  According to Cabraal, the Sri Lankan economy took the beating due to imprudent management, which can only be corrected with proper Government in place. “The recent remarks of the US ambassador in Sri Lanka Alaina Teplitz are not welcome. She was not here for a long time, and should not have made comments without knowing the country’s situation. It is true the United States is a friend of Sri Lanka, but friends don’t do such things when in need,” he charged.