By Rusiripala Tennakoon –

Rusiripala Tennakoon

The above observation, though strongly worded, reflects a growing concern now spreading across many sectors of the country regarding the alarming and rapid deterioration of the Sri Lankan rupee.

Within a relatively short period, the exchange parity of the US dollar has increased sharply, placing enormous pressure on the national economy, businesses and the ordinary citizen. While external global developments and international market trends undoubtedly exert pressure on developing economies, the present crisis in Sri Lanka cannot be explained solely on that basis. Domestic policy failures and inconsistent fiscal management have substantially aggravated the situation.

Several contributing factors are now becoming increasingly evident.

The absence of a coherent and visionary national strategy to strengthen inward foreign remittances has weakened a vital source of foreign exchange inflow. Simultaneously, arbitrary revisions to customs duties, taxes and import regulations have encouraged unhealthy exchange practices and unofficial transactions outside the formal banking channels.

Equally disturbing has been the apparent dismantling or relaxation of certain regulatory safeguards and control mechanisms that had previously helped preserve foreign reserves and maintain relative exchange stability. Whatever criticisms were directed against earlier controls, it cannot be denied that they contributed in some measure toward conserving scarce foreign exchange resources during a period of severe economic strain.

The sudden expansion of vehicle imports without a carefully phased foreign exchange management strategy has also sharply increased the demand for US dollars beyond anticipated levels. Predictably, this has exerted additional downward pressure on the rupee.

What is most troubling, however, is the absence of any visible, decisive and coordinated corrective response from those entrusted with managing the economy. Instead, the country is being subjected to contradictory and often confusing public statements emanating from different authorities, including segments of the Ministry of Finance and even certain quarters connected to the Central Bank. Such conflicting signals only deepen uncertainty and weaken public confidence in the country’s economic direction.

Adding further concern are the recent disclosures and allegations relating to large-scale foreign exchange irregularities and questionable transactions reportedly connected to institutions within the banking sector, government agencies and other state-linked entities. Whether all such allegations are ultimately proven or not, the very emergence of these controversies has intensified public suspicion regarding the integrity, transparency and discipline of the country’s foreign exchange management framework.

Currency depreciation is not a mere technical expression to be casually dismissed through academic explanations or political rhetoric. A rapidly depreciating currency carries severe hidden consequences. It erodes purchasing power, fuels inflation, increases the cost of imports, raises debt servicing obligations, discourages productive investment, destabilizes business planning and gradually weakens national economic sovereignty itself.

Unfortunately, sections of the public are repeatedly being offered palliative assurances and superficial explanations by certain so-called financial “experts” who appear more interested in managing public perception than addressing the underlying structural weaknesses.

Economic stability cannot be restored through propaganda, selective statistics or optimistic speeches. Sound fiscal discipline, transparent governance, prudent exchange management, credible regulatory safeguards and long-term national economic planning are indispensable if confidence is to be restored.

The people of this country deserve honesty, clarity and responsible leadership — not comforting narratives designed merely to pacify the gullible while the foundations of the economy continue to weaken.