What happened to the Cabraal roadmap?

Following is the statement issued by UNP MP Dr. Harsha de Silva yesterday:

On 4 January this year we issued a statement on the state of the economy. Referring to that the ‘Road Map of Monetary and Financial Sector Policy for 2012’ unveiled by Governor Nivard Cabraal, the previous day we said it was “a nauseatingly one-sided propaganda attempt”.

The statement issued under my name specifically stated: “It has no analyses of the possible scenarios for exchange rates and interest rates given the current rupee defense strategy, but says it has more than sufficient reserves to intervene in the foreign exchange market, presumably to hold the currency at the current level.”

We pointed out that the three words ‘balance of payments’ which was absolutely the most important issue of the day was not even mentioned once in the entire 140 slide presentation and said it was like Hamlet without the Prince of Denmark! We concluded by warning “one would shudder to think what would happen when the veil over the propaganda material, presented in so-called professional presentations like this, is removed”.

We said so because that was how we saw the unfolding events. We warned on numerous occasions throughout the last year that the policies adopted by the completely politicised Central Bank were detrimental to the sustained progress of the economy. We agreed with other independent economists that a crisis in the external account was brewing and that immediate corrective action had to be taken with interest rates and exchange rate policies to reduce the blow to the people of this country.

However, in response to our statement the Governor released to the press his own statement, published inter alia in the Sunday Observer of 8 January, saying “I believe it is my duty to pen these few lines.” In it, instead of addressing the points that were raised, he attacked me personally by saying “as usual, Dr. Silva’s (sic) highly political comments couched in a few economic terms carry a vituperative attack against the Central Bank.” He went on to say: “The credibility of his so-called economic analysis has taken a severe beating and those are no longer taken seriously.” Mr. Cabraal concluded by saying that it was clear that the attitude practiced by me was a confirmation of the old saying that “there is none so blind as those who will not see”.

It is now very clear who did not comprehend even a few economic terms and also who was so blind. The result of the decision making by those who call themselves wise is that millions of innocent people are suffering unable to make ends meet and when they protest, the Government is using deadly force against them. Clearly, this is not what was promised in the ‘Mahinda Chinthana’.

Now that the ‘strong’ rupee has lost its bearings and is touching 130 to the dollar levels while interest rates are soaring, we only hope that at least now the economic decision makers of the Government would sit down to assess the real situation of the economy. There is no point in again attempting to fool the people by ridiculing the messenger or name calling.

As a responsible Government, what is required is a frank evaluation of the policies in play and a determination of what has to change. The UNP has never found fault with the professionals at the Central Bank, but only the completely politicised decision making process adopted by the Governor.