The creators and profiteers of our misery

Those who are directly responsible for their misery continue to rule the country- or walk free to the bank while our children are starving

This is a crisis that was self-made by Gotabaya Rajapaksa and his handpicked acolytes for excessive profiteering and personal political survival

 8 July 2022

Sri Lanka is in the depth of an economic and political crisis of apocalyptic proportions. Many millions in the most vulnerable sections are skipping meals; Inflation has crossed 50% ( unofficial figures put it at two and half times (128% in May).  The GDP in nominal rate has halved over less than six months-  on purchasing party, it might have lost by a higher margin.
An entire economy is at standstill.   Small and Medium Size businesses are fighting for survival, threatening large-scale joblessness. An entire grey economy has already been shut and agriculture is decimated, leaving the largest chunk of the Sri Lankan workforce unemployed and struggling to feed their families.

Schools are closed owning to the fuel crisis, depriving most of the country’s children of their only way up the ladder. Hospitals are barely functioning, and hundreds of life-saving drugs are out of stock. Even the ambulance service Suwa Seriya, warns of having to scale down the services owning to fuel shortage.
This is much more than a crisis that is caused by excessive borrowing or decades of poor economic management, as it is often attributed. Those are indeed root cases, but this is a crisis that was self-made by Gotabaya Rajapaksa and his handpicked acolytes for excessive profiteering and personal political survival. As a result, the incumbent regime that came to power after a race-baiting election campaign has decimated a decade of economic and social gains.

Gotabaya Rajapaksa is the chief architect of the current misery of the nation. He was ignorant and egoistic. He was the ‘Manchurian Candidate’ of a bunch of local businessmen, who promoted him and bankrolled his campaign. He reciprocated by announcing a set of extensive tax concessions which deprived the government of Rs 600 billion in revenue. The collapse of public finance has a cascading effect, leading to credit rating downgrade and as a result unsold bond issuance and eventual drain of the foreign reserve. 
Then, Rajapaksa decimated the agricultural sector with the ban on chemical fertilizer. 

But, the recklessness of Gotabaya Rajapaksa as much as he is ill-equipped to lead- (and a murderer in the eyes of many in the international community) could have been restrained under a team of competent policymakers.
Instead,  he had world-class conmen to advise him. 
Consider the chief economic hitmen who brought Sri Lanka to its knees- a feat that megalomaniac terrorist leader Velupillai Prabakaran could not achieve over two and half decades of a separatist terrorist campaign. 

Ajith Nivard Cabral, the governor of the Central Bank under Mahinda Rajapaksa and Gotabya is a controversial figure in the first place. A Central Bank investigation in the 2000s found Mr Cabral’s association in an infamous pyramid scheme known as Gold Quest. After Mahinda Rajapaksa appointed him as the Governor of the Central Bank, the investigation was halted. Cabral, then, turned the Sri Lankan economy into one of a kind Ponzi scam, cooking books, overplaying economic performances and diverting the resources to Mahinda Rajapaksa’s dynastic dream.

Billions of state liabilities of foreign and commercial loans were transferred to State Owned Enterprises to lower the amount of severing debt- through SOE loans themselves were backed by sovereign guarantees. This could go on immediately after the end of the war as the economy was in the catching-up mood. But, the party ended sooner than it started as economic growth plummeted at the end of the second term of the Rajapaksa regime as corruption and deal-making took the best of it.

The second coming of Cabral under Gotabaya Rajapaksa was a lot more momentous. Gotabaya was ill-equipped for the job- running the national policy is surely a lot more demanding than running white vans.  Cabral and fellow cronies were smarter.  They made the best out of the inadequacy of the head of the state and turned the Sri Lankan economy into their own Ponzi scam. If they had been pilfering the golden eggs under Mahinda, now in a rush to loot whatever the remainder of an economy facing inevitable collapse – they killed the ageing goose.  An estimated US$ 7.6 billion of foreign reserves that existed in 2019 evaporated to thin air under Gotabaya Rajapaksa’s presidency of two years- US$  5.6 billion was spent on defending the Sri Lankan rupee at 203 LKR to  US$. The unsustainable dollar peg created a black market and a few local wheeler-dealers with access to endless rupees made a killing by purchasing dollars in the parallel market at a Rs  30-40 premium.

They were privy to the end game. The Central Bank free floated the rupee after all its reserves ran out, without requesting an IMF facility – which might have helped to control the float.  That would then have deprived the monied cronies of their insane gains. Today, these cronies are at 60 per cent profit as the rupee is traded at 360 per Dollar in the official market- or RS 15-18 more in the parallel market.

Cabral did not leave until he paid the last US$ 500 million in the foreign reserves to the bondholders in January, effectively draining it dry, despite all well-intentioned advice from local and foreign experts against it.  Whose who are the beneficiaries of that last payment is treated as a banking secret, but many who have known the extent of nepotism suspect grand larceny.
The current government has rejected calls for a forensic audit into the last bond payment of US$ 500 million.
Cabral is a free man, but in any other country, he should be in jail. Sri Lanka has failed to hold looters of the national wealth accountable. Corruption became synonymous with the successive Rajapaksa regime, but Gotabya Rajapaksa took it to an end, letting the cronies suck dry the bone marrows of the nation.

Today, Sri Lankans have been robbed of their dignity and decades of their wealth. The further collapse of the rupee would wipe out whatever is left. 
But, those who are directly responsible for their misery continue to rule the country- or walk free to the bank while our children are starving. This is a crime against the Sri Lankan nation. They should be held accountable, starting with the head of the state- if Sri Lankans are to have a semblance of justice.