Economy Forward

T he Central Bank Governor after securing his six-year term is now in the constant media talks on the difficulties confronted by the general public in the present currency crisis and the envisaged IMF based bailout plan to resume the economy with essential imports in next six months. Therefore, this article is intended to establish that the envisaged IMF bailout plan for the stabilization of the economy is nothing but another public cheat by him in trying to revive the failed debt-based import financing model in which he has played the lead role in more than a period of 15 years. This article is based on views expressed by the Governor at two media interviews, i.e., Hiru Salakuna on 25 July 2022 and the CNBC business media on 21 July 2022, as highlighted below. Governor’s views expressed at Hiru Salakuna Programme In response to a question raised at the interview on the allegation that the present foreign debt trap is a result of US$ 10 bn of International Sovereign Bonds (ISBs...

  T his article is intended to examine the above statement made by the CB Governor at a recent interview with the CNBC international business media as published on 21 July 2022. Although the Governor has made a number of sweeping statements without supporting facts, this article focuses only on his view of fiscal mismanagement as the root cause of the present economic crisis. He has got a new habit of making such blunt statements to the international media to pretend that he is an independent central banker on the global front to make comments on the Sri Lankan economy above the government and is to serve a full term of 6 years even if the economy is completely collapsed in the present crisis.  As the Central Bank is now virtually inactive without a foreign currency reserve and the hand in the exchange rate, he has the luxury of seeking to pretend through his media campaign that he is the most active policymaker to get the economy back from the crisis in few months to come...

T his article is intended to highlight the lack of technical knowledge of the present CB Governor on regulations as reflected in the Monetary Board circular issued on 07 July 2022 on the subject of  “Concessions to Affected Borrowers of Licensed Banks amidst the Prevailing Extraordinary Macroeconomic Circumstances”.   Therefore, this circular has been issued to mislead the public and the government that he acts to resolve the excessive credit risk problem confronted by banks and public.   Regulations are the means of direct interventions by the government in the behaviours of market participants, i.e., buyers and sellers, for various national objectives or benefits as determined by the government. For example, imposition of maximum retail prices of selected consumer items such as rice is intended to benefit the consumers by reducing the risks to the cost of living. Similarly, traffic rules are intended to benefit the public by reducing the risks of accidents. In general...

T here is no controversy over the current political mess as a direct byproduct of the current economic crisis. Therefore, as soon as the political mess is sorted out and resolved, the economic mess should be sorted out and resolved on priority basis in order to prevent the recurrence of the political mess again in the near-term. Despite high-ranking policymakers such as the Treasury and Central Bank with all public powers well-enacted, people of Sri Lanka are now aware that they have to rise again from the scratch and are now prepared as they have no option but to live. As usual, the market mechanism that prevails across the globe will facilitate the people to face the recovery at fairer prices than the prices intervened by the policymakers. Therefore, people or markets will find natural and competitive solutions to the present economic collapse caused by the policymakers equipped with international know-how in macroeconomic planning and management. There is no controversy over how t...