11 August, 2022

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An Open Letter To Mr. President Ranil Wickremesinghe

By Hema Senanayake

Hema Senanayake

I wrote this letter before you ordered to attack unarmed citizens at Gall Face protest site. However, I submit it as it is.

One of my friends and I had a discussion about you recently. He is an engineer in USA with having a Ph.D. Usually for engineers everything is mathematics. He said that ego of senior Sri Lankan politicians, is inversely related to knowledge. This means with the age if they do not acquire knowledge, ego increases; and if they acquire new knowledge, ego decreases. This was happened to your predecessor Gotabaya Rajapaks. Once he said that what he says is the “circular” meaning it was the rule of governance.

In the very first month of your “Good Governance Government” you had the same “syndrome.” It was documented in the very first Board Paper of the Monetary Board which govern the Central Bank of Sri Lanka (CBSL). It led to the infamous “Bond Scandal” that happened in February 2015. You listened to a storyteller and made your opinion to appoint him as the Governor of CBSL even though a few Cabinet Colleagues opposed to it. It may be a point that your ego was high.

From the minutes of the above said Board Paper, we can now imagine what led to your decision of appointing Arjuna Mahendran as the governor of CBSL. We just can imagine it from circumstantial evidence. But it is you who knows what actually happened in making that decision to appoint him. It was a colossal mistake, and please do not do similar mistakes now.

I quote below the appropriate section from the Board Paper submitted to the Board Meeting held on February 23, 2015.

“The Board was of the view that issuing 30-year Treasury bonds would be favorable at this stage to extend the yield curve and re-profile the debt service as there is good interest shown by foreign investors. Accordingly, the Board instructed the Superintendent of Public Debt to conduct a 30-year Treasury bond auction during the week and arrange to list sovereign bonds in Euro Clear Exchange in future.” (Emphasis is from me). Interesting. Isn’t it? Now, let me show you how you were misled.

The target of the bond issue was foreign investors. If foreign buyers bought bonds, dollars would flow inward. It is a good thing as it helps Balance of Payment position and to increase foreign reserve levels. Now think that these rupee denominated bonds for 30 years are listed in Wall Street Stock Exchange or somewhere what would happen. Investors around the world would rush in and purchase our bonds in dollars and resultant effect is that dollars would flow into our country. What a great thing and an innovative idea. This is not my idea Mr. President; this was what Arjuna told you before he got his appointment. He identified “Euro Clear Exchange”, instead of Wall Street, that is why the Board instructed the Superintendent of Public Debt to “list sovereign bonds in Euro Clear Exchange in future.” Has the Superintendent of Public Debt ever listed those bonds in “Euro Clear Exchange?” Never. If this was happened Arjuna would have been a hero today. But it was a fantasy. Not only you Sir, but the then Monetary Board too would have been likened fantasies, or they just surrendered to the best buddy of you.

Not only this. You interfered in another policy of central banking in early 2015, perhaps your ego was high at that time because according to our equation ego is high when knowledge does not increase. You advised the governor of CBSL Arjuna Mahendran to cancel private placement when issuing bonds. To ensure transparency you advised that all bond issues must be through public auctions only. It is a sexy policy. In the U.S. when some policy is too exiting it is known as ‘sexy’ policy. Your advice was too exiting. Arjuna did it. Monetary Board went meekly. But within months CBSL had to cancel that policy.

As you may aware, there are some entities known as Primary Dealers. Sixteen of them were in existence at that time. When CBSL wants to issue bonds, they write to Primary Dealers to submit their quotes to purchase a certain number of bonds to be issued. This is known as private placement, no advertising, just an email. When Primary Dealers offered to purchase the bonds say Rs. 1 billion, CBSL would know the liquidity position of the monetary system from the volume of subscription and the interest rate sought by the dealers. Thereafter CBSL makes a public bond issue with an indicative interest rate. This public issue is not a public issue in real sense. Again, only the Primary Dealers can submit offers. If people want to buy bonds, they must go through Primary Dealers. By advising the governor of CBSL to stop private placement, you Mr. President cancelled the liquidity assessment run by CBSL before a bigger bond issue. However, within months CBSL abandoned your advice, they carried out private placements again.

As you may understand from the above, I do not have the full trust in Monetary Board. They mostly bend to the views of higher political authorities. Still, Mr. President, do not interfere into monetary policies, just listening to fantasies. If you want to interfere, I agree it is something necessary for a President, please do that by having a ‘public hearing.’ Specially, listen to the rationale of opposing views.

Why, I remind all these now? Because I know, you in your previous administration promoted the idea of “Independent Central Banking.” Another sexy idea which is sometimes advocated by IMF and also, by the Foreign Relation Committee of the Senate of the U.S. Your, previous administration drafted an amendment to the Monetary Act regarding it. Dr. Indrajith Coomaraswamy (a person I respect mostly) former governor of CBSL recently defended it saying that if the amendment had been enacted, Gotabaya Rajapaks could not have been reduced taxes which reduction of taxes is identified as a main culprit for current economic crisis. The argument flows as follows.

The proposed amendment prohibits the purchase of treasury bonds directly. This means if the proposed amendment to the Monetary Act was enacted, the CBSL can purchase treasury bonds only from the market to execute the monetary policy. Again, this means if the amendment was ratified by the Parliament as a law, President Gotabaya Rajapaksa’s government could not reduce taxes due to the loss of revenue cannot be met by selling of Treasuries to the CBSL directly. But this is not a good argument or good reason to justify the passing of proposed amendment, because taxation is a structural policy adjustment to be made to ensure the production of common interests in a society from the deprived distributable (or consumable) output to consumers. In turn consumers are benefitted when common interests are produced. This has nothing to do with the execution of monetary policy which helps to construct the essential monetary infrastructure upon which market mechanism functions efficiently, ensuring a stable currency that penetrates into every produce to reveal its relative value so as to exchange in the market. Without this market mechanism fails, as is happening now. This is a complex mechanism, but what is true is that you Mr. President must understand that no efficient central banking is possible without the strong backing of a taxation authority which means the Treasury. Therefore, independence of the Central Bank must mean that there is no undue influence on its Board and to the governor of CBSL. Let the Board members and central bank officials come before a parliamentary oversight committee regularly to explain the rationality and effect of their decisions made. Let other professionals outside parliament assist in oversight committees. Let the knowledge level go up and ego decreases.

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Latest comments

  • 7
    1

    OC, any comments. I know you had defended the Bond issue and asked for explanation. Not sure this will help in estimating any / real loss.Though I understand the essence of this article not qualified to comment. I will wait for you and others. I am familiar with US system which the author suggest, not sure where things went wrong ( if at all) . But definitely I will not term it as scam which was created by Rajapaksas and their media.

    • 8
      3

      Chiv,
      It seems these fairytales about a Great Bank Robbery won’t be going away anytime soon. Sri Lankan Airlines annually loses 60 times what the bond issue theoretically loses, but Srilankan is supposed to be a “national asset”!
      I seriously doubt the reasoning capacity of many Sri Lankans. That’s why we are in this mess, right?

  • 8
    2

    “The Board was of the view that issuing 30-year Treasury bonds would be favorable at this stage to extend the yield curve and re-profile the debt service as there is good interest shown by foreign investors. “
    It is surprising how even economists like the author keep flogging this dead horse of a “bond scam”. The basic fact remains that the government at the time borrowed 10 billion rupees at a measly rate of 11%. Now it pays 20% or so. In hindsight, Mr. Senanayake, wouldn’t it have been better for the government to have been even “sexier” as you put it, and borrowed 100 billion?

  • 10
    2

    We cannot expect more knowledge or new knowledge from those who have contributed towards bankruptcy for many decades. They had enough opportunities at least from 2009 towards economic recovery but Mahinda, Ranil, Sirisena and Ranil had some other priorites (Power Greediness) all played their role perfectly to make the country into bankruptcy and fully dependent on economic invaders. We cannot think outside of this circle that is the fate of this country.

  • 6
    1

    Primary Private bond investors : The certain Disapora?……yes, that explains it! Proof that Ranil desires Secession and/or Land-Bridge….easy way out for him&gota to show success in monetary matters.

    Yes, working with public bonds and taxations and things for common interest that give the true value of country resources and assets are too complex for him&gota. Yes, high ego and damn stupid people.

  • 9
    1

    People, stop wasting time writing these nonsensical “open letters” to Ranil forthwith!! He doesn’t read letters. He hasn’t even read the hundreds of thousands of books that were sitting in his house. If he did, he would have left politics 40 years ago because then he would have realized that he didn’t have any sense of empathy to understand the pulse of people so he was not the politician that people needed!!

  • 16
    17

    OC ,you mean Aloysius gave all those bribes unnecessarily, if there was no fraud ? Interest rates keep changing, during Cabrall time it was even lower. Should Cabrall have borrowed more and built more white elephants ?

    Like Ranil, you are no economist.

    Ranil is a guy who says one thing but what happens in just the opposite. Ranil says go for auction method-but only Perpetual at the auction !

    • 4
      2

      DS,
      Aloysius gave all those bribes so that he would be the sole bidder.
      If YOU know something, why don’t you explain exactly how much the state lost, and how? I have challenged you before and you have always run away. Do you really enjoy doing that?

      • 6
        8

        Codger, A fool can ask many questions which a wise man cannot answer.

        Can you tell how much exactly Rajapksas’ have stolen from the State?

        Can you tell exactly how much the state has lost due t Ranil’s stupid attack on the protestors and subsequent outburst with the ambassadors? Hear that World bank and IMF will not come. we may even lose GSP +

        Can you tell exactly how much we lost because ranil blocked the work at the Port City in 2015 ?

        • 3
          2

          DS,
          Just answer the question, since you’ve made the accusations. If you can’t, it means you know nothing about it. Case closed.

          • 1
            2

            Codger, you will make a fine judge ! You argue with me and then declare yourself the winner !

            No wonder you follow ranil ! He is also like that. Thinks he is very smart .

            • 2
              1

              DS,
              “He is also like that. Thinks he is very smart .”
              Is it my fault that you don’t even know what a bond is, but write sermons about them?
              You still haven’t answered the question.

          • 3
            2

            DS,
            I’ll give you a hint, to put you out of your predicament.
            Unlike the cases you mentioned, the facts and figures here are wellknown. Start with10 billion@ 11%.

            • 2
              5

              All knowing old codger, No other loss ? Weren’t the interest rates adjusted to help Aloysius ? Didn’t that impact the economy ? What about the loss of confidence when one broker( son in law of the governor) gets all the Bonds ?

              In your foolish way you kept saying I am a supporter of Rajapaksa. Where is your Ranil now ? Are you also with Ranil ?

              • 3
                0

                deepthi desperate silva

                I am sorry I am not educated nor am I familiar with High Finances nor am I fluent in Finance.

                Please educate me in Bond transactions.
                How did Ranil and his gang made billions of dollars through Bond scam?
                Please explain the methodology.
                How much in total did Ranil and his gang steal?
                How did they withdraw their loot from Bond scam?

                Doesn’t Central Bank maintain paper trail?

                If you do not understand how it was done its okay, this is one of many things you are being ignorant of.

          • 1
            0

            (Part III)
            I proffered an answer, in exchange to your question to fast track the solution??!!
            Therefore you please prove it as factually incorrect by CBSL and Treasury banking details???
            If you could, but I am sure, that was not the case??!!
            Rest, prosecution of this case beyond, as It proves that SL Government wasn’t defrauded?!
            Commissions paid to people or insider trading, may be; Proof of it, is unavailable??
            Why don’t you pursue the case of 20% commission demand by the then 1st citizens from the envoy of a foreign mission by declaring that without that payment as demanded the ‘Project’ was not going anywhere?? After signing the contract??!!
            The supplier, resolved apparently, by DISMANTLING AN EXISTING PLANT IN CHINA AND SUPPLYING A REFURBISHED “SECOND HAND” UNIT AS ”NEW” – Tender required ‘NEW’ and installing, commissioning the power plant stage 1??
            Stage 2 Plant, NEW AND PRICE ADJUSTED ‘as needed’ prior to contract signing as in EXPRESSWAYS?!
            The very reason Stage 1 plant had frequent failures, major critical components as against Stage 2?!
            Invested in African countries infrastructure by looters!! Ugandan Planes??
            Another “Glib talk by the ‘Pohottuwa’” and R Bros., Inc., acolytes to confer Power on ‘Rascals’??

        • 1
          0

          (Part I)
          DS,
          “Can you tell exactly how much the state has lost due t Ranils’ stupid attack on the protestors and subsequent outburst with the ambassadors? Hear that World Bank and IMF will not come. We may even lose GSP +”
          That claim is true!! GSP plus is tracked to ‘go out’, not because of “Protestors being cleared from Aragalaya Ground’ by Ranil this month, but definitely because of doings of the Medamulana Rascals, who was occupant of the Temple Trees (Old Mynah), making initiatives for his clan and acolytes led by the Wennappuwa Thakkadiyas’ rampage at Aragalaya grounds on 9th May 2022!!!
          Old Mynah resigned discredited as PM soon after, but the damage was done!!
          The citizens of Europe have made it very clear through their elected representatives, who are strong in their views and dedicated democrats of liberalism, not resalable by “Monetary Bids”?!
          Repealing the PTA by the government in parliament, cause of all the atrocities in the COUNTRY being the main reason – as EU isn’t buying Professori G L P’s fairy tales and ‘SPINS’ as ‘DONE IT’??!!
          Tom Buffoonery, probably learned from the whites he tried in vain to use on the European Union!!
          (Continued)

          Get real??
          SLFP., PA, SLPP are very good at shifting the blame to others??

        • 1
          0

          (Part II)
          Big TALKER AND BIGGER FOOL ACKNOWLEDGED AS SUPRA LAW EXPERT BY THE LOCAL Veddha!??
          Architects of “Organic Agriculture Overnight” destroyed self sufficiency of Sri Lankan Staple food – crop failure – Rice and essential vegetables??
          In addition caused drop in Tea and Rubber production?? Get real??!!
          Why does one think EU and citizens are as stupid as the Sri Lankans – at least 6.9 million??!!
          No Way??
          Good guess is annually year on year, as at last year or 2020 – Euro 75 to 100 million per annum, of an established industry, with minimal new input in investment being required!!
          Probably, “Chicken Feed” for emancipated, starving citizen; comforted by the ELITE THOUGHT!???
          THINK ABOUT IT?? WHERE IS TOMORROW’S DINNER COMING??
          CBSL BOND ISSUE – the perpetrated fraud by then opposition and present government rulers, to be true – if it is so – could you or anyone enlighten us all, how much ‘money’ in USD or equivalent was short changed or not paid to CBSL or Treaury, at time of issuing the “Bearer Bonds” – basically the document representing the IOU to the subscribers, who would be eligible to claim the 10 Billion in USD at maturity???!!
          None.
          Full USD 10 Billion Paid!!!

        • 1
          0

          (Part IV)
          Fooling the masses in style, who (the citizens of SL) have proved all way from 1931, time and again, their utter and total incompetence to handle ‘Universal Suffrage’??!!
          Importantly to comprehend the ramifications and grasp the consequential direct and collateral damage, caused to this country!!!
          Except the infatuation of experiencing the ‘Regal Ambience’ of “¼ Bottle of gal, SL Rs 5000 currency note (perhaps now not worth the paper it is printed on) and Chicken Biryani Parcel”, until realisation dawned to an extent, with the present crisis of Fuel, Gas, Staple Food, Baby Milk Food and essential medications Shortages?
          Starvation – 1 meal instead of 3 MEALS PER DAY IN THE PAST??!! MONKEYING THE STATE AND MOTHERLAND??!!
          Treachery mistaken for Patriotic action??

    • 1
      0

      DS,
      “OC, you mean Aloysius gave all those bribes unnecessarily, if there was no fraud? Interest rates keep changing, during Cabral time it was even lower.”
      Well, there was “none other” with the necessary “wherewithal” – I mean SL Rs !) Billion to invest – either borrowed from BoC, Peoples bank or EPF??
      That was Aloysius business acumen and prudence??
      Yes he gave gifts with abundance, and no secret business in SL would grind to halt!!
      Is it a secret?? NO, not at all??
      Please remember, for starters, the primarily Sri Lankan people in whom the ‘Sovereignty’ lies would not vote the desired representative, if that guy may be ‘good as sovereign Gold’, without the manuscriptal menu or formulae for success, which I repeat for your sole benefit,
      “¼ Bottle of gal, SL Rs 5000 currency note (perhaps now not worth the paper it is printed on) and Chicken Biryani Parcel” as a Santhosam, which is a BRIBE by another name!!
      He did it and accomplished it and others did not want to risk the venture?
      When and where did business thrive without those 2 elements??

    • 1
      0

      (Part!!)
      Now the interest rate is 22% instead of 13%?? Well you are not paying 22% and saving 9% in interest payment due to Aloysius, Mahendran and perhaps Ranil too???
      How can 7th standard educated good for nothing rascals in parliament understand or predict economic state and/or Macroeconomic policy to prophesy such changes?? They are specialists in 20% commission on project, supplying Premix asphalt and sand!!
      Pohottuwa grand bank robbery has the bottom ‘BLOWN OUT’, sadly for your information!!!??
      No case!!

      • 1
        0

        Mahila,
        Those who talk big about bonds, like DS, don’t even know that a bond is a loan taken by the state. If the fantastic amounts quoted as “losses” were true, then everyone who borrows money from a finance company is losing money!

    • 1
      0

      deepthi desperate silva

      I wonder why Gota and his clan did not take up Bond Scam issue with Singaporean authorities well in the past three and a half years?

      Did they too receive a share of the loot?

  • 8
    2

    All the sinhala professionals are intellectually dishonest.
    Main reason for current economic crisis nothing but Racism. It started in 1949 with defranchising the plantation workers. It continued with state sponsored and state terrorism against minorities.
    Until such time sinhala nation understands and accept this, Sri lanka can not prosper

    • 3
      2

      D
      Not in 1915?
      What made Sir P Ramanathan side with the offenders against the victim? Intellectual honesty?

      • 0
        0

        Why don’t you ask him?

        • 3
          3

          A
          Because he is slightly more dead than you are.

          • 0
            0

            Dead man tell no tales!

    • 2
      0

      D,
      that has got do with their own genetics. Not only dishonest, behave like no different to uneducated masses. Going back to the manner they joined the ques in order to collect ” Dhammika Paniya” proved the nature of our people. There were also MBBS holder among them.

      You talk about becoming prosper,.. almost everyone today is struggling to keep their head above water. No petrol, no gas, no milk powder, but security for Rajapakshe criminals, they waste millions of state funds ????????
      .
      Main reason for current economic crisis is nothing but MEDAMULANISM. This should be taught to school going children under ” SOCIAL STUDIES”. Teachers should have brains to feed the pupils with the truths.

      Whoever whatever being said and done, Rajaakshes ruined this nation/country. Being born and raised like stupid men, but took decisions for a nation whose school literacy rate is the highest in that region. School literacy is the highest, but our people behave no different to illiterate Pakistanies in each and every elections held sofar.

    • 1
      0

      Dilshan, Current economic crisis means lack of money, which means the money was robbed, be it from loans, commissions, vaccines, all other needed imports together with selling of national property. This nation has also suffered from many other issues including racism, religiosity, be it by parliament or velu or other rebels.

    • 3
      0

      This comment was removed by a moderator because it didn’t abide by our Comment policy.

      For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

  • 3
    0

    “Hambantota Port Deal” is a clear case of hood winking of egoistic Ranil by intellectually dishonest professionals , planted close to an ignorant politician; to commit another national crime.

  • 4
    0

    The administration system in Sri Lanka had been ruined since the presidentship of J. R. J, who brought people without any experience in the Public Service to manage the ministries, Departments, and Corporations with the view of favoring party supporters who worked in his election victory. J.R . Jayawardena, who commenced this abuse by appointing MR. Anantha de Alvis as Secretary to the Ministry of State and who later switched to politics as M.P., Minister, and finally as Speaker. This is widely happening even today as a speaker, ministers, Secretaries, etc. When political favoritism supersedes Public Service rules, regulations, and experiences, the country would suffer from fraud, bribes, and mismanagement. and finally, end up in bankruptcy as we face today, even under RANIL.

    • 2
      0

      Pon Lanka

      “The administration system in Sri Lanka had been ruined since the presidentship of J. R. J, who brought people without any experience in the Public Service to manage the ……………………”

      The destruction had already started with SJ’s darling politician Siri Mao’s time. J R took it to dizzying height.

      • 2
        0

        Pon Lanka

        By the way during Siri Mao’s time I was told Pali, Sanskrit, … graduates were appointed to planning and finance ministries in order to reduce unemployment among graduates.

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