Crunch time for Sri Lanka

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Crunch time for Sri Lanka

Sri Lankan Lion_960.jpg
Illustration: Barry Downard

The profligate island’s economy is in meltdown, but authorities appear clueless about how to fix it. The government has consulted the IMF, but a bailout is by no means assured.

Barely two weeks after Sri Lanka’s long-ruling Rajapaksa government appointed their trusted long-time aide, Ajith Nivard Cabraal, to be central bank governor, he published a glossy document describing what ailed his country’s failing economy.

Part mission statement, part nationalist manifesto and part soothsaying, the 85-page paper published last October was titled The Six-Month Road Map For Ensuring Macroeconomic and Financial System Stability.

It was long on censure and finger-pointing: at the Covid-19 pandemic, errant Sri Lankans, the unfavourable sovereign credit ratings of foreign agencies and a hostile media.

Cabraal blamed the economy’s collapse on nearly everyone and everything other than the Rajapaksa family, who have held power in Sri Lanka for all but four of the last 18 years, including the 10 years when Cabraal previously led the central bank.

Instead, the opposition’s “doomsday reports” were responsible for the island’s woes, as were the Sri Lankan exporters who held back scarce foreign exchange, and the importers who stockpiled goods.

Although Sri Lanka has been independent for 74 years, Portuguese, Dutch and British colonials were also cited – the “challenge” of the island’s “443 years of foreign rule” as the paper called it. But, as Cabraal rousingly declared, “as a nation, we have always overcome”.

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