Is it possible that we’re barking up the wrong tree? We frequently target politicians without realizing that they frequently act on advice given to them. In such a case, have we overlooked the role of senior officials and questioned whether they may have misled the governors and the government?
Did they suggest taking $12 billion ISBs? If they didn’t, did they make any notes about their concerns? Did they bargain over debt repayment? What alternatives did they consider before declaring Sri Lanka would default on repayment? The role of Finance Minister Sabry is also being called into question.
The primary cause that made debt repayment unsustainable was the $12billion international sovereign bond loans taken by Central Bank Governor Indrajit Coomaraswamy (2016-2019)
Questions for Indrajit Coomaraswamy (IC)
· Did IC decide to take $12b ISBs on his own or was he following advice of CBSL Top Management?
· What was IC’s intention of taking $12b ISB loans?
Questions for Central Bank Top Management (CBTM)
· Did CBTM advise IC to take $12b ISBs
· Was CBTM getting any external advice to promote taking of $12b ISBs
· Was there a particular reason for CBTB to advise the Governor to take $12b ISB loan especially when they were aware of the roll-over maturing debt status
· What was done with this $12b ISB loan
· Was CBTM aware that taking $12b ISB loan would make Sri Lanka economically vulnerable on account of roll-over maturing debt repayment?
· Did CBTM initiate discussions to delay repayment – if they did, do they have evidence of this? If they did not, why did they chose not to or did anyone ask them not to?
· Why didn’t CBSL officials think of repaying debt using the inflows from 25% export conversions of $750m & roll-over maturing SLDBs of $363m (total $1133m)
· Why didn’t CBTM consider utilizing the $1b plus trade loan of $1.5b from China that was to be received end of May 2022?
· Why did CBTM along with Finance Minister Sabry decide to declare Sri Lanka defaulting on loan repayment when there was an Indian line of credit for another $1b as well as another $500m from postponement by Indian from Asian Clearing Union settlements?
· With all the above options at hand, why did Finance Minister Sabry, present CBSL Governor & Mahinda Siriwardena opt to declare Sri Lanka would default on 12 April 2022 supported by the cream of Sri Lanka’s business circles and so-called politician econimists and financial gurus.
· The above team are to be personally held responsible for reversing 74 years of debt-honoring by Sri Lanka – embarrassing the country beyond measure.
Questions for present Governor Nandala & then Finance Minister Sabry
· Did you both take consent of CBSL Monetary Board & Sri Lanka’s Cabinet or even the Parliament to declare default on 12th April 2022? If not, who gave you both the green light to make such a public announcement that would impact the entire country?
Did the CBTM & Governor & Finance Minister lead Govt & Sri Lanka astray?
Both CB Governor & CB Top Management knew far more than the People of Sri Lanka”
· Both were aware of the fiscal state of Sri Lanka
· Both knew the impact of roll-over maturing debt repayment against more loans taken
· Both knew that if Sri Lanka could not pay the next option was to renegotiate a delayed payment
· Both knew the repercussions of declaring default & bankruptcy – not only to the State but Private Sector as well as General Public as well.
What then Finance Minister Sabry & Central Bank Top Management was aware of
· In 2022 Sri Lanka had to repay a debt of $7100m
· $1166m had been repaid in March 2022 (balance $5934m to be paid)
· $244m debt servicing to be paid in April 2022
· $789m debt servicing to be paid for May-June 2022
· $1033m debt servicing total for April-May-June 2022
· Sabry-Nandalal-Siriwardena’s decision to declare default on 12th April 2022 was without approvals of Parliament, Cabinet or Monetary Board & fully aware that China was to extend $2.5b and India was to assist with $1.5b by end May 2022
What top businessmen/women were ignorant of in pushing to default repayment
· A bevy of top businessmen/women issued statements appealing to default payment in January 2022 arguing that the money should be used to buy essentials
· In April 2022, Sabry-Nandalal-Siriwardena declared default as a result not only did Sri Lanka become a country globally declared untrustworthy to deal with, there was no forex to buy essentials which was far more than what was required to pay off loan repayments. Rating agencies placed Sri Lanka under “D” default status.
· Suppliers refused to give on credit & demanded up-front payment & inability to do so left people in queues.
· It cannot be that Sabry & CBSL were unaware of the outcome of Sri Lanka being declared defaulting.
· If they took a decision without consulting others – they should have had a backup plan as well – what happened to that?
· Is their only back-up plan to go running to the IMF? If so was it on their advice that no negotiations to defer payment of loans took place & instead floated the rupee (IMF requirement) and thereafter declared default?
· Why aren’t this group being held responsible for the default status of Sri Lanka unilaterally decided by them?
Either way it is not the Govt but CBSL Top Management and the CBSL Governor who are answerable along with the professional economists who also pushed for defaulting on loan repayment.
Shenali D Waduge
