SL economy in dire straits: Cabraal

Published : 7:20 am  July 21, 2015 | No comments so far |  |  (481) reads | 

By Sandun A.Jayasekera
Sri Lanka’s economy is facing uncertainty with foreign reserves having dwindled to US$7 billion from the US$8.2 billion in January, former Central Bank Governor Ajith Nivard Cabraal said yesterday.


He told a media conference that investors had lost confidence and were leaving the country resulting in a drop in Foreign Direct Investments and the government being compelled to depend on commercial loans at high interest. “The Central Bank is continuing to bolster state revenue through International and Sovereign  Bonds  and Treasury Bonds at interest rates from investors, lending agencies and banks. It is the responsibility of the government to arrest this negative trend soon through meaningful and pragmatic measures without sticking to statements,” Mr. Cabraal said.


He said rhetoric would not resolve the current economic quagmire and pointed out that though Finance Minister Ravi Karunanayaka had promised to take steps to increase the value of the rupee to Rs.130 against the US dollar, today it had depreciated to Rs.133 against the dollar.  Mr. Cabraal said it was the consequence of offending China which had come to our rescue militarily and economically with its vast financial resources.  


He said though the Central Bank governor had assured there would be no more international bond issues this year, the Central Bank has issued sovereign bonds to the value of  US$600 million. Mr. Cabraal said the government’s loan portfolio in the first four months had exceeded the entire loan portfolio last year and was a manifestation of the dire financial straits that had engulfed the country’s economy.  
He said the small, medium and major industrial sectors had ground to a halt with thousands losing direct or indirect employment. Mr. Cabraal claimed that under the previous government the entire country was a huge factory with development projects launched countrywide.

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Commenting on the controversial sale of CB bonds, he said he was awaiting a response to his letter challenging Prime Minister Ranil Wickremesinghe to a debate on the bond issue. Former top public official and PM’s Secretary S. Amarasekara said he was shocked at the way the government treated public officials. “Legislative remedies have to be introduced to save public officials from legal action for duties performed when they were in active service. My personal view is that it is wrong to take legal action against them for acting on political advice because they cannot go against directives received from the political hierarchy,” Mr. Amarasekara said.