20 September, 2018

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An Open Letter To Dr. Indrajith Coomaraswamy, The New Governor Of The Central Bank!

By Hema Senanayake

Hema Senanayake

Hema Senanayake

Dear Sir,

Finally we have a new governor appointed to the central bank. It’s you. After assuming duties you declared that you fear no one in discharging your duties. We, the readers and contributors to Colombo Telegraph eagerly waited for such a person to be appointed as the new governor for the central bank. We urged from the President, “to appoint a Governor who can win greater independence for the central bank by proving his professional wisdom in managing the nonphysical system of monetary infrastructure. Do not believe on guys who would talk about mere executing monetary policy, interest rates, reserve ratio, managing foreign reserves, listing rupee bonds in international markets etc. Trust on a guy who is capable of managing a dynamic hypothetical system flexibly and accurately” (June 19, 2016, Colombo Telegraph).

We hope that we now have found a true professional in you for the position. We may trust you, but still we need to verify as things get going under you. When I say this I am not that much concern about bond scams because it is something which can be prevented pretty easily if you are interested, instead I concern as to how you conduct the monetary policy and advise the government on fiscal policy and other matters on macroeconomics. This is the most important job that you have to do and this is the job that you have to fear no one in carrying it out. Why?

Dr. Indrajit Coomaraswamy received his appointment letter as the new Governor of the Central Bank from President Maithripala Sirisena, this morning (July 4) at the President’s residence. | Photo The President's media unit.

Dr. Indrajit Coomaraswamy received his appointment letter as the new Governor of the Central Bank from President Maithripala Sirisena, this morning (July 4) at the President’s residence. | Photo The President’s media unit.

The existing paradigm of central banking is now outdated. In regard to the execution of monetary policy what had worked for years had failed big time in 2008 with the financial meltdown in the United States and Europe. This failure was preceded by the failure occurred in Japan in early 1990s which is still continuing and the virtual economic collapse occurred in Argentina in Dec. 2001. Before the collapse, Argentinian fixed exchange rate system had been considered, including IMF, as a model for all developing countries. After these crises, the world is now left with no proper model for central banking and this is true for developed countries whose domestic currencies are used as international reserve currencies by other developing countries and is true for countries like ours which use some other country’s domestic currency as international reserve currency. So what we practice now can be defined as “ad-hoc” central banking. In this context what you had learnt in regard to central banking in any prestigious university might have outdated by now.

Former Governor Arjuna Mahendran was considered as a mastermind in “ad-hoc” central banking. If you need me to justify my point I may suggest you to read the minutes of the first Board Meeting of Monetary Board after he took reigns of the central bank. In that board meeting occurred on February 23, 2015, the Monetary Board had decided to list Sri Lankan sovereign bonds in Euro Clear Exchange. You may know what does this mean?

As you may know that the most important function of the central bank is to ensure having a credible domestic currency which could penetrate easily and flexibly into any economic produce so as to reveal its value in order to facilitate the exchange of such produce among various economic agents. So, it requires a dependable currency for economic activity. When the foreign exchange reserves began to deplete according to the known wisdom, we cannot have a stable or dependable domestic currency which is the rupee. So, rather than tackling the issue, macro-economically supported by monetary and fiscal policy measures, Arjuna presented a business level solution suggesting to list bonds in Euro Clear Exchange, in order to boost foreign exchange reserves. So, far not a single bond was listed in Euro Clear Exchange – And does this reflect the kind of professionalism exist in the institution?

However, if listing of bonds in Euro Clear Exchange was a serious concern then such hope was dashed when Arjuna decided to float the rupee after a few weeks later. I never argue that the rupee can be pegged artificially to the dollar – and here, I insist the word artificially. Yet, the rupee can reasonably be pegged to the dollar, if we can contain the domestic credit growth. This means if you peg the domestic credit growth at desirable level there won’t be any necessity to peg the rupee to dollar artificially and if you cannot peg the domestic credit growth at desirable level, then there is no method for the central bank to peg the rupee to dollar even artificially. Therefore this is the exact time that you should abandon in continuing “ad-hoc” central banking based on “commonsense.” On the contrary we must look beyond the existing economic paradigm. That is how we can gather new know-how to tackle the issues faced by our country right now.

This is why I insist you that you may look into the true macroeconomic theory and fundamentals (not inflation, price stability, unemployment, growth rate, gross domestic product, etc.) in doing your job. A stable currency is a prime requirement to attract real foreign direct investments. This means you have to begin from nation’s current account and balance of payment. Do not let the politicians in the government to begin from project end. Get them justify their projects by showing firstly, as to how such projects and programs affect the nation’s current account deficit and secondly to the balance of payment. If you do not do this, then we will see that our currency would be further depreciated.

You have specified three concepts; integrity, technical excellence and professionalism, as the guiding principles for you and your staff in moving forward.

Further, you said that, “… if any of you think I am not living up to those principles, please find a way of getting that message to the 15th floor (Office of the Governor).” We congratulate you for those words.

However, you will be judged not by your words but by your efforts in stabilizing the rupee without excessive foreign borrowing and/or without being instrumental to sell national assets to foreign buyers. Thank you.

Good luck!

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Latest comments

  • 2
    4

    Good one – in the end we won!

    There was regime change at the Central Bank! Of course Dr. Raghuram Rajan of the RBI should be invited as a top consultant to help clean of the corruption and RESET the Central bank.

    We need from the Sri Lanka Central Bank a Road MAP on Corruption investigations to trace and recover funds looted by Politicians, their cronies and associated businesses and held in Off Shore accounts – to pay off at least some of Sri Lanka’s gigantic national debt. However, Coomaraswamy’s friends like Balendran are mentioned to be holding Panama Papers Accounts.

    Question is why put funds in Panama when Asia is the growth hub, unless the funds are looted ones and tax avoiding? Coomaraswamy is an out and out NEOLIBERAL; an insider in the corrupt global financial system. He loves the corrupt IMF and World Bank that has seen massive growth in GLOBAL inequality that is cause for the GREAT CLASS WAR in the world today. Today 63 people own over half the world’s wealth according to OXFAM. Coomaraswarmy should ask IMF and WB that used to call itself knowledge bank (ha, Ha, Ha), to help trace all the looted funds in off shore accounts, rather than for more loans that add to national DEBT!
    Coomaraswamy is famous for turning a blind eye on corruption even though UN has identified Corruption as a primary driver of economic inequality and poverty.

    Also, Mahendran, Cabraal, Alloysius and Perpetual Treasuries must be COMPREHENSIVELY investigated, tried and held accountable to ensure FUTURE Accountability of Central Bank governors and ensure that never again will this kind of looting of the national economy happen at the Central Bank. The assets of Aloysius, Perpetual Treasuries, Mahendran and Nivard Cabraall to be frozen and Perpetual Treasuries investigated. A full investigation of Mahendran and Nivard Cabraal and their bond scams, insider trading and currency manipulations is necessary.

  • 7
    1

    Hema Sena nayake,
    Easier said than done.
    As long as long as MaRa Bros and their cronies are there in SL politcs, and with substantial support from the media and the clergymen it is going to be a herculean task for the new CB governor.

    Look at Malinda Seniveratne how he uses democracy and crying to bring back MaRa gangs through Local Government .
    elections .

    Mother Lanka misses Lasantha Wickramatunge. They killed democracy by killing Lasantha. Ven Sobitha Thero also no moree. Hope more Lasanthas and Sobithas emerge from the majority to support the GOSL.

    • 0
      1

      Non PhD,

      “Mother Lanka misses Lasantha Wickramatunge. They killed democracy by killing Lasantha. Ven Sobitha Thero also no moree. Hope more Lasanthas and Sobithas emerge from the majority to support the GOSL”

      Yes ? PhD, this is one thought I used to think and which me impoverished swarmed by baldi-mouthed journos without any journalistic talents. Sri Lanka must be ashamed to have the kind of useless, bootlicking, corrupt journalist assholes filling the minds of the gullible masses with sheer nonsense and lies. The majority of the current set of journalists are an insult to the intelligence of the citizenry. Oh God! Had only Lasantha were alive today! What crime did we commit that you deprived us of that great asset that our country had! Oh! Why did you only leave us with a bunch of useless riff raffs from Madamulana and elsewhere?

  • 9
    2

    Dear Mr Hema Senanayake,

    I have read through this quickly, and realise that I am out of my depth! However, before even commencing my reading, I checked on other articles written by you in Colombo Telegraph, and found that there are many, beginning with the period when the Website had to be accessed via proxy servers! In other words, you are not a Rajapaksa stooge.

    The comments on your article are not many – again indicating that the layman cannot really make many comments on what you write. It could well be that my comment becomes the first; in which case, I hope that even “amateurs” give some thought to the issues raised, and make comments.

    We have obviously reached an important cross-roads. The cost of living HAS to go up, after being kept artificially low both by the Rajapaksas and by the present government owing to the need to win elections. Oppositions NEVER give up; rightly so, that’s the rationale for their existence. NOW they will go hard at “economic issues”, where the public display knee-jerk reactions. Guys like us try to understand what the professionals say, and read the “gossip” coming from contributors whom we have found to be non-partisan.

    So, over to Amarasiri, Native Veddah, Spring Koha, Dr R.N., Plato, Mano Ratwatte and the like!

    Comic Relief from K.A. Sumanasekera, Dayan Jayatilleke (that’s how low he’s sunk now!), HLDM, and RTF (actually she’s been improving lately!).

  • 5
    2

    Dear Hema,
    Wish you the best of luck, mate.
    Wonder how many read your open letter.
    You must be having lots of time on your hands, mate.
    We (99.99% of the population) do not have the time which you enjoy.
    We are working hard to take home the sole teabag for the day, day in day out.
    So, if you would like to write open letters to the [Edited out] (Rajaratnam Adviser), the New Gov of the CB, please continue mate.
    But please leave us alone because with Yahapalana VAT, the sole teabag per day will soon be 1/2 teabag per day.

    • 0
      0

      Thilak Maruwanpola,

      Hek..Hek… What the fuck? Are you a four-legged punnakku eater who for a change thought of trying human food? Eat thanakola, it will be good for you.

  • 1
    0

    You will be judged by 1) How you adhere and safeguard the principles you laid down as well as how you handle the exposing or covering up of nationally significant, politically explosive issues involving people of your class, creed and background

  • 0
    10

    But the Guy already said that he was going to work at Macro-economic levels.

    Hema Senanayake, you actually want him to work at Micro-economic levels (note Micro, and not Macro).

    Micro(with an i), is only what the JVP can implement.

    But a capitalist like Comarasamy only has the brain architecture to comprehend Macro-policies (with an a).

    (Tamil people are mostly for capitalism and caste-system which is Macro(a)…..Sinhala egalitarian people are more geared towards Micro(i) which is Socialism.)

    And the closest and most convenient Macro(with an a) – one that will make that power-that-be sigh with relief -, is the Indian-Commonwealth- -of-Nations Macro(a). And that’s right up Yahapalayana’s style.

    • 6
      0

      Dear RTF,

      Wasn’t I right? Comic relief.

      By the wa, I’d like your comments on THIS:

      https://www.colombotelegraph.com/index.php/the-whited-thomian-sepulchres-the-pharisees-who-cheat/

      I’m desperately hoping that I don’t have to write a third article on the subject. D-day is Tuesday, next: the 12th.

      By the way, I’m a poor villager who’s never had the opportunity to visit the prosperous Firs World Countries which you live in, and then criticise. A funny world this is!

      • 1
        7

        Sinhala_Man ,

        I’m a plebian in these countries……you on the other hand must be sitting on a lounge chair with a sarong and baniyan, eating a huge plate of rice and curry, and lording over the villagers.

        (still trying to understand the gist of the Whited Thomian Sepulchres story).

        • 7
          0

          Why would anyone want to listen to Ramona Therese Fernando’s racist views?

          It is quite well known that she has had a sheltered life in Sri Lanka, thinking that Tamils and Muslims are there to suck her toes (as evidenced by her desire to have a lion flag that has a green and blue ‘saatakaya’ according to her FB page. She also doesn’t want the ‘Hindu India’ caste system to invade our shores despite turning a blind eye to the disgusting caste system that is in place among the sinhalese buddhists, who still believe they are descended from a lion. However at first opportunity she ran off to the USA to live as a second class citizen towards the white man. She and those of her generation are much like the white british folks of the pre 1960s who thought the world revolves around them. Sri Lanka is better off without such people corrupting our innocent and impressionable youth.

          • 0
            3

            Grandpa Fernando,

            Not al all racist. Me and my family went around in crowded buses in Sri Lanka. Went out of Sri Lanka at 9 months….so it’s not my fault…..live here as an average class citizen.

            The green and blue ‘saatakaya’ is for the Lion to carry, and not brandish the sword at.

            Not much caste system amongst Sinhala Buddhists (ok…maybe some, but they couldn’t help learning that from the Hindus).

        • 0
          7

          The Headmaster shouldn’t have gone to Hawaii for 6 weeks! He should have invested the money in Sri Lanka by going on a Sri Lanka vacation.

          By going on the expensive Hawaii vacationing spree, it created a culture of feeling inadequate within the mere Lankan common man money.

          And when all is suffering with the India after-effect, we will find that we cannot eat money.

          • 3
            0

            Dear RTF,

            As predicted of you so many times, you’ve gone off at a tangent. I too feel that there wasn’t really any need for that Headmaster to go off on such an expensive trip (he had told us that school money was not used – but I agree that you are more correct on THAT point than him). However, that issue is not only extraneous to what I had said, but also it will become one of all too many red herrings. Also, the claim was that it was a very useful educational workshop – not a vacation. Just semantics – it is true. That was the ONE Headmaster who had played straight on the issue in question.

            I don’t lounge in a verandah chair with legs on those extended limbs, if that’s what you mean. I work pretty hard for little reward. And I tend to eat very little rice – with as much vegetable as possible; but let me also confess that I am sinful enough to consume a fair amount of animal protein (contrast being with TWO vegans of my acquaintance). Those vegans I hold as morally superior to me.

            I do NOT “lord” it over any villagers; I’m a villager myself.

            Now that I’ve disposed of those irrelevancies, may I ask what you make of the central issues raised by my article? While all this is good humoured, I also assert with great seriousness that you only provide comic relief by posting hilariously irrelevant observations.

            I agree with Native Vedda and Celeo.

            I ask you once more to tell me what you make of education in Sri Lanka given the observations that I have made. I don’t want to complicate matters by bringing in all that happens in the nearly ten thousand state run primary and secondary schools. I won’t say more ‘cos it is YOUR views that I want!

            • 0
              5

              sorry…not interested your queries….

              • 3
                0

                Dear RTF,

                Fair enough.

                You have every right to live your life as you think fit.

                However, that being the case, please contribute as much as you can to the society which tolerates you, even if it is only as a pleb. Well, come to think of it, I guess I don’t have the right to advice you even on that.

                HOWEVER, please recognise our right to ask you not to interfere in how we are trying resolve the problems which beset our society, to which you have ceased to belong.

                Best wishes, and Good Bye!

                • 0
                  5

                  Sinhala_Man,

                  Awww…sorry to have been curt with you when you asked me about the education issue…..I’m into the bond issue these days. You should ask Native Vedda and Cleo however, as you agree with them.

                  From my vantage point, and as a Sri Lankan by birth and ancestry, I am glad that I too, the little person, can contribute to save the Motherland. It is my bounden duty to do so. Thank goodness the CT forum is around.

                  • 4
                    0

                    “Thank goodness the CT forum is around.”

                    CT forum considers you as a forum jester, a good laughing stock, the female version of Andare the court jester.

    • 7
      1

      ramona therese fernando

      “Tamil people are mostly for capitalism and caste-system which is Macro(a)…..Sinhala egalitarian people are more geared towards Micro(i) which is Socialism.)”

      I never understood the difference between Micro and Macro. Are you discussing the size of your brain?

    • 5
      1

      Micro(with an i) is very similar to ramona’s tiny little brain, cannot see/comprehend anything beyond her nose.

    • 4
      0

      The biggest joke is, Ramona who [Edited out] after going to the US she thinks she knows more Economics than a person with a PhD in Economics. LOL!

      Absolutely hilarious… the CT is fortunate to have a few forum jesters to entertain us.

      • 0
        5

        It’s not the PhD that matters, but the commitment towards country sovereignty, and the patriotism towards the common man’s money.

        • 4
          0

          Ha, ha, ha…

          Patriotism??? Country sovereignty?? Common man’s money?

          So says a hypocrite who ran away to the white man’s land as a slave (surviving on the bones they throw at) leaving everything (patriotism, etc.) the moment her spouse won a lottery visa or whatever the reason/excuse.

          I have observed very clearly that these are the kind of people (bogus patriots/nationalists) who pretend to be the champions of Sinhala Buddhism. The common man never pretends like these bogus scoundrels.

          • 0
            4

            Not like that at all…..

  • 10
    0

    Once again Hema Senanayaka insists on dictating terms to people who are probably more aware of the ways of the world than him. Having access to academic databases, I cannot find a single peer reviewed or other journal article this Hema Senanayake (or ‘economist’) named Senanayake has written. Only two books that have not received any review and are not available in any university library I can find. I have no idea why this man who clearly has an axe to grind against the central bank and monetary board (perhaps he has been shafted by the central bank at some time in the past) doesn’t give us his credentials so that we can judge what merit he has to make such statements, rather than make sweeping generalizations like ‘you know what that means’ and then proceed not to explain it.

    Is Hema Senanayaka an economic advisor to the Galleon Fund? Has he ever run a central bank or any organization in his life? Or was he chased away by each government like DJ?

    • 0
      10

      Bagehot,

      All we want is to understand the little man’s money for Sri Lanka, so our financial system will be honorable. We don’t want to betray our beloved Motherland for Raj Rajaratnam’s 7-billion pieces of silver.

    • 4
      0

      Bagehot,

      I wonder why MARA did not pick Hema for his Sellam Cabinettuwa! The gist of what this man says is: control credit growth which means increase interest rates for loans and make people unable to afford enjoyment of free market based economy! I am afraid he can sell his cow to RW but he can give it a try with Putin in Russia!

  • 7
    0

    A case of ‘ Trying to teach grandma how to suck an egg’!

    Dr.Rajasingham Narendran

  • 5
    0

    Before Jan 8th 2015 no one attempted to teach Cabral how to suck eggs.
    If someone attempted to do so Scrambled Eggs would have been served in the WHITE VAN drive!

  • 6
    0

    Mr. Hema Senanayake,

    Read your article and you are a budding economist
    and may be in a position to take over from Dr.Indrajit, once he leaves CB. Unlike Dayan, who starts praising a person in the initial paras and
    criticise him severely in the ending paras, you have spoken well of the
    current governor and his knowledge in economics in your whole article. This is the first time after a long time,I have seen an article written
    by a Singhalese person praising a Tamil Govt. servant.
    This I presume, is due to great efforts made by the duo The President and the PM and senior ministers of the govt. who are sincerely trying
    to put an end to communalism/discrimination and build up reconciliation
    among the major communities.

    • 0
      6

      Lanka Watch,

      I agree! Hema Senanayake is for the securing the money of the Lankan Masses and building the Island intrinsically from within her soul.

      And let’s hope Dr.Indrajit goes away very soon, for otherwise little Sri Lanka will soon become an integral part of Tamil Nadu, with Colombo Elites as the sole representors of Lankan heritage.

    • 2
      1

      Lanka Watch,

      Don’t let premature ejaculation set in and spoil your pleasure! It is yet too early to judge Hema’s riding talents against Indrajith!

      The way to judge is to compare the merits and qualifications of the two: AM vs IK. Can Hema come out with a tabulation comparing the two and then justifying his present claim? The job is not done yet. He and we then have to wait and see IK will follow quite a different approach to that followed by AM in central banking. Hema will have to keep his cons table (because he never said AM had any pros) of AM in his computer and then build, one by one, the pros and cons table of IK. Then after a year or to Hema can write like he did today and claim his present article is correct: “Hay there, I told ya! yes! do your remember? on July, 2016 I said this!” Like that.

  • 2
    0

    Who the hell is this Hema? This bugger tries to teach everybody in the country about central banking! Last time when he wrote his harang I proposed him to write a mechanism on how to prevent insider trading, but the bugger is dead silent and wrote something else. Can you prove AM has cheated in Bonds and if so prove how he did it using your “super intelligence?”

    • 3
      0

      Dont take him serious he himself does not know from what end he is talking about … these are the majority in the country. I hate to see it but there will be no much progress so long these idiots have the word.

  • 2
    0

    sinhala man.

    Be thou forever!
    By the way what is young Chrishmal doing with the JVP?

    • 4
      0

      “Young Chrishmal” is a man of many parts!

      I saw your comment in the morning and immediately called him on his Etisalat phone. He responded immediately and chirpily. He’s waiting and watching the situation; being a lawyer , he says that both elections were “flawed”. I’m just not bothered about Prabhath Jayasundera’s election as OBA Rep. of the Branch Schools.

      My problem with the Staff Rep. is that the teachers were given just no chance to voice their preferences. I told Chrishmal that you had asked after him, and also “apologised” for musing upon the number of votes he got at Gurutalawa; I told him that some JVP inclined young graduates from the Ruhunu University had campaigned for him, and there was nothing wrong with that!

      Of course YOUR question is slightly different – well, you’ll have to ask him! No, he isn’t the typical JVPer, is he? I believe he was asked for legal advice by the Party, and apparently they ended up enamoured with each other!

      Christo Gonawela is kept extremely busy distributing raw plastic to manufacturers, so it’s me doing most of the pleading for fair play. I’m hoping that all this can be settled with the Bishop when he declares open the up-graded pool in Gurutalawa on Tuesday, the 12th. Such a quiet resolution would be so desirable for many reasons that I don’t want to jeopardise that possibility by saying anything harsh at this juncture.

      The great event after that will be the Bandarawela AGM on the 13th of August. It looks as though there’ll be an unprecedentedly large turn out there – and many are determined to talk. Poor Christopher Balraj; he’s such a nice guy! I feel sorry for him – but what to do? He’s brought all this upon himself!

      I wish you would establish telephone or email contact me; I just haven’t got clue as to who you are! However, it is comments like yours that help me persist – so thanks!

      • 5
        0

        Sinhala Man

        At risk of hijacking this topic, I don’t know why you are ignoring the fact that the bishop is essentially corrupt, while the Headmasters are nicely being taken along for a ride. There are no nice men here, only opportunistic men in robes.As for plato’s question, I believe Chrismal and JVP had a public falling out sometime back, when the JVP chose to appoint Sunil Handunneti and Bimal from the national list at the last election despite them having run (and lost) at the general election. He was supposed to be 2nd on the list. The statement he made was all over the media and on CT as well. Now the JVP also have turned into class A jokers in parliament.

        Sinhala Man I am looking forward to your next article on the Thomian Saga. Perhaps you should look into the goings on in the branch schools

  • 3
    0

    Sinhala Man.

    I am honoured to be asked for contact details.I will certainly do so for a fellow Blue Black and Blue in due course.
    My days were mostly in the college boarding[Miller-Chapman] 7 years or so and subsequently became a Day Scholar[?] for the A-Levels.
    I am quite ancient like the reader above.
    Young[?]Rajan Hoole a confirmed Vegan offering you Omlettes is a break in Protocol,again perhaps the old school tie!

    • 3
      0

      There are quite a few new comments on the “Whited Thomian Sepulchres” article. If a few pungent comments can be posted tonight they may help sway the BoG at their meeting beginning at 10.00 a.m. tomorrow.

      If you see this later, hold your fire! If a THIRD article becomes necessary I need expressions of outrage. I can’t understand the reasoning of guys who want me to adduce yet MORE facts.

      What can one do if others are blind or cannot reason?

      Thanks for your generous comments.

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