By Champika Ranawaka –
The state Minister of Finance and the Secretary to the finance Ministry are out boasting about the increase of Dollar reserves from 2.8 billion at the end of July to 4 billion. This was solely due to the replenishment of quota for 780 million dollars from the IMF and loan facilities by Bangladesh and China worth 400 million dollars.
How long will these reserves sustain the crumbling economy?
Loans obtained from China will be spent back on Chinese vaccine Sinopharm which was bought at a very high price. Approximately 900-1000 million dollars of loan premium is due before the end of the year. Once spent on Petroleum, Coal, Medicine, Milk powder and Fertilizer, these reserves will be vanished before the end of the year.
We have continued to point out that the economic crisis of the state will cause inability to repay debts and maintain essential imports. There is an even worse crisis looming around the corner. Due to the rapid depletion of foreign currency assets, the state banks and private banks are at the brink of collapse. When the foreign currency assets are depleted below the level to maintain overseas expenditure, even the Central Bank could collapse.
We wish to pose few questions to the rulers of this country.
1. What were the steps taken by this Government and the Central Bank when the foreign assets were shrinking up to a mere 50 million US Dollars?
2. How long can the Government drag this economy without finding remedies to the crisis?
3. What are the steps proposed by the Government to maintain exchange rates and maintain essential imports?
4. Are there any other “methods” used by the Government Other than printing money?
An emerging “black market” for foreign currency is set to thrive with the Dollar being exchanged for Rs 240/= to Rs 260 /=. Parents are struggling to send money abroad to their children for their day-to-day expenses. Commercial Banks are rationing the limited amounts of US Dollars they have among their customers.
There were no bidders for the petroleum tender. There are no foreign reserves to import Coal, Milk powder, Medicine and other essential gods. it is imminent that an era with hunger, poverty and unemployment will dawn upon us. The common man will be suffering resorting to firewood to cook and bullock cart to commute. The whole country will be reset at an economic equilibrium of half a century ago.
The lack of confidence in even the local currency is evident by the failure of the government to raise the desired amount of 30 and 20 billion rupees respectively via treasury bonds. Only 4 billion rupees (8%) was raised and the balance 46 billion will probably be replenished by printing money.
Grandiose political rhetoric cannot solve economic crisis. Gloating in pride after repaying just one instalment of the debt is nothing but silly. Shooting the messenger seems to be the preferred mode of addressing the issue. There are statements utterly irrelevant to the current situation such as “there have been situations much worse” .
The only way forward is by accepting that there is a crisis. What is necessary is genuine and transparent financial policy in order to solve the problem.
The Government have brought the country down to its knees by unscientific management of COVID-19. It is taking the nation to its grave by mismanaging the economy.
It is time for scientific management of the Epidemic and Scientific management of the Economy.