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Saturday January 28th, 2023

Sri Lankans express anger, frustration over president’s tweet after cricket win 

Sri Lanka won the ODI series against Australia for the first time in 30 years. Picture Credit: International Cricket Council

ECONOMYNEXT – Hundreds of Sri Lankans, battered by the country’s worst ever forex crisis, took to Twitter to vent their frustration at President Gotabaya Rajapaksa this week when he tweeted a congratulatory message to the national cricket team which won a five-match cricket series against Australia.

A young Sri Lankan cricket team won the fourth game held in Colombo by just four runs to secure a series win after conquering the five-time world champions.

“Congratulations to Sri Lanka cricket team on the win against Australia in the one day series. The sportsmanship shown by the Sri Lankan team has been remarkable. People of Sri Lanka are also grateful for the support given by Cricket Australia to overcome the economic challenges in Sri Lanka,” Rajapaksa tweeted. 

Sri Lankans, who have been going pillar to post to feed their families and ensure essentials like fuel, cooking gas, medicines, food, and milk powder amid lengthy power cuts, took their frustration out on the president who had just turned 73 a few days prior.

It was the first time Sri Lanka had won a series against mighty Australia in 30 years.

Many Sri Lankans see Rajapaksa and his family as responsible for the current economic crisis. Thousands of young, nonpartisan protesters have been demanding Rajapaksa’s resignation for 76 days as of Thursday July 23 near the presidential secretariat in Colombo. Over this period, Sri Lanka saw a change in prime ministers as well as the resignation of the entire cabinet twice over.

However, Rajapaksa has said he cannot leave as a “failed president” and has vowed see his term to its completion in November 2025.

“You obviously never played any sport. That is why you do not know how to accept defeat. You are a failed President. Please GO,” responded one Twitter user.

“At least learn from cricket how to make way for someone more capable than you,” another tweep said.

“Please resign and make this moment even better to give some relief to the grievances of the nation,” said another.

Some of the tweeps used abusive language in response to the president’s congratulatory tweet, and many demanded that he step down due what they called his abject failure.

“No. This is victory for the cricket team. Your dismissal is the real victory for all Sri Lankans,” said one tweet.

“Please Mr President keep out of this. The SL cricket team is the only entertainment and [source of] pride we are left with,” said another.

“How can the Australian cricket team help to overcome economic challenges? Did they bring dollars in the plane? Pls don’t take credit for our team’s win,” another tweeted.

Some more tweets are reproduced below:

“Dont think people will be delusional with this win and forget to remind you about the most important message…..” GOTAGOHOME”

“Namal went, Cricket prospered You go, Watch how the country will prosper.”

“A young team of cricketers put us back on the winning streak. Please handover the reigns to a team that can win – we as a country need to rejoice and winning back our lives we had.”

“Please don’t try to get involved in this [and] screw this one up too. Just let it be the way it is. You are NOT needed.”

One Twitter user had used crossed out images of President Rajapaksa, current Prime Minister Ranil Wickremesinghe, former prime minister Mahinda Rajapaksa and former finance minister Basil Rajapaksa with the line: “There is no point of cultivating without removing weeds”.

Thousands of Sri Lankans started spontaneous protests over the looming economic crisis early in March when Rajapaksa’s government started to impose power cuts and struggled to import fuel and cooking gas due to a crippling dollar shortage – a shortage that experts have blamed directly on ill-advised policies of the government.

Rajapaksa is also blamed for his disastrous ban on chemical (inorganic) fertilizer without providing any alternative to farmers. As a results, the country has seen record high food prices due to a shortfall in farmland produce and lack of fuel to transport agricultural commodities.

The president also appointed himself as the Defence and Digital Technology Minister and appointed his elder brother Mahinda as Prime Minister. His oldest brother Chamal was made Minister of Irrigation while younger brother Basil became Finance Minister. His nephew and Mahinda’s son Namal, meanwhile, was appointed Youth and Sports Minister, while another nephew Shasheendra Rajapaksa, son of Chamal, was named deputy agriculture minister.

The powerful political dynasty controlled the country through the ruling Sri Lanka Podujana Peramuna (SLPP) even as the economic crisis turned into a full blown political crisis by early April. Since then, Rajapaksa was forced to remove his family members from key position due to strong protests by the public.

Prime Minister Mahinda Rajapaksa resigned after his supporters brutally attacked unarmed and peaceful protesters in Colombo on May 9. A court has ordered that he surrender his passport and police has questioned him over a meeting with his supporters held just before the attack. May 09 saw violent clashes, with over 70 ruling party members’ houses and assets either damaged or burnt.

The president later appointed Ranil Wickremesinghe as prime minister, but analysts say nothing has been done to supply essentials to the public with the crisis now getting worse.

Sri Lankan Twitter users had some choice words for their head of state.

“It’s time to go home”, “What do you know about sportsmanship”, “Devil, we are at fuel queues. It’s better if you go even now”, “Don’t screw up the little happiness the fans enjoy, pls leave”, and “OK, now you resign. Then it’ll be the perfect day” were among the responses that saw much engagement. (Colombo/Jun22/2022)

Comments (4)

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  1. Expat says:

    Politics is different from cricket or any conventional game of play; it is like hitting a volley ball with a cricket bat. Here, the batsman does not hit the ball with a bat, rather he hits the bat with a ball. He does not run but the audience has to run after the batsman. Even if you run you can catch him only once in five years! Miss-catches and run-outs are the faults of the audience! People in developing countries who make comments do not understand the game but lament; why? They play without understanding who the real players are. They think President is the player. When will they understand that he is only a football in cricket!

  2. lanka says:

    Well done Mr president. What some idiots do not understand is that you have the human right as a person to express your own opinion regarding the SLC victory. Some bigots think that everyone must speak according to their views and opinions.

  3. Adrian Deutrom says:

    I agree with the general view of the public comments about the president.
    This present president is a laughing stock of this country and worldwide.
    As for his presidential powers, he is doomed to his powers and has nowhere to turn even to hide his face.
    He and his cohort has sucked the life blood out of this beautiful island with corruption, greed and manipulation and his so-called presidential power
    This man had no experience of how to run a country with twenty two million people.

  4. Malwis says:

    There is a very few percentages of mentally distressed people in the society, who are barking all the time at Hon. president. But main public body knows the president and his vision is to take Sri Lanka to the next level.

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Comments (4)

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Your email address will not be published. Required fields are marked *

  1. Expat says:

    Politics is different from cricket or any conventional game of play; it is like hitting a volley ball with a cricket bat. Here, the batsman does not hit the ball with a bat, rather he hits the bat with a ball. He does not run but the audience has to run after the batsman. Even if you run you can catch him only once in five years! Miss-catches and run-outs are the faults of the audience! People in developing countries who make comments do not understand the game but lament; why? They play without understanding who the real players are. They think President is the player. When will they understand that he is only a football in cricket!

  2. lanka says:

    Well done Mr president. What some idiots do not understand is that you have the human right as a person to express your own opinion regarding the SLC victory. Some bigots think that everyone must speak according to their views and opinions.

  3. Adrian Deutrom says:

    I agree with the general view of the public comments about the president.
    This present president is a laughing stock of this country and worldwide.
    As for his presidential powers, he is doomed to his powers and has nowhere to turn even to hide his face.
    He and his cohort has sucked the life blood out of this beautiful island with corruption, greed and manipulation and his so-called presidential power
    This man had no experience of how to run a country with twenty two million people.

  4. Malwis says:

    There is a very few percentages of mentally distressed people in the society, who are barking all the time at Hon. president. But main public body knows the president and his vision is to take Sri Lanka to the next level.

Sri Lanka utility to continue power cuts, regulator says no

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board has decided to continue power cuts, as the dry season hits the country despite orders to give 24 hours of power.

The utility said its Board “has decided to continue the demand management programme” and it has informed the regulator of this decision on January 27.

The Public Utilities Commission of Sri Lanka said it had not approved the power cuts “as it violate and affect the rights of 331,000 students sitting for the Advanced Level exams.”

Sri Lanka’s CEB has high running costs due to long term scuttling of planned coal plants by activists and lastly President Maithripala Sirisena.

‘CEB’s costs went up as demand went up since the last coal plant opening and steady collapse of the currency from 131 to 182 to the US dollar due to open market operations unleashed to suppress rates and operate a flexible inflation targeting by the central bank.

Even more aggressive liquidity injections after 2020 to target an output gap then busted the currency from 182 to 360 to the US dollar.

CEB has to use extra fuel from around February to April 2022 as the dry season hits reducing hydro power.

Sri Lanka’s Human Rights Commission has ordered the Ceylon Petroleum Corporation to supply fuel and banks to give credit for extra power.

Power Minister Kanchana Wijesekera has alleged that CPC officials agreed under duress and threat of jail sentence to supply fuel.

The CEB has to cut power in case demand outstrips supply to maintain frequency at 50 Hz to avoid cascading failures, according to sector analysts. (Colombo/Jan28/2023)

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Sri Lanka president suspends parliament till Feb 08

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has suspended parliament till February 08, according to a gazette notice.

Parliament will re-convene at 1000 am on January 08.

President Wickremesinghe told party leaders that he would make a speech, officially declaring his intention to give effect to the 13th amendment to the constitution on provincial councils.

Provincial councils, a power sharing arrangement backed by India as a solution to the ethnic Tamil have not yet been given police and land powers. (Colombo/Jan28/2023)

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Sri Lanka, other defaulting nations have widely differing debt indicators: Expert

ECONOMYNEXT – Sri Lanka other recently defaulting nations have widely differing debt indicators, and some other countries survive with even higher levels of debt, a US based analyst has said.

“If you look at the ratio of debt to GDP, the size of the economy the number is very high, mostly because there has been a lot of depreciation, so the debt in dollars keeps growing relative to GDP,” Sergai Lanau, Deputy Chief Economist at Washington based Institute of International Finance said.

“This is sometimes over-emphasized… but this ratio at 120 is a lot.”

He was speaking at a forum organized by the Bar Association of Sri Lanka.

“Just for a reference point about 6 or 7 years ago Italy’s debt was 120 percent GDP, there was a lot of concern in the Euro area and that is a country that has the ECB. So Sri Lanka at 120 is a lot.”

Italy however is in a monetary union with Euro which is a floating exchange rate without anchor conflicts and forex shortages and basic external payment problems.

Sri Lanka is trying to bring the ratio down to 95 percent by 2032 under an International Monetary Fund backed program, according to a leaked letter from India.

“Typically for many years there was as lot of emphasis on debt ratios, when people looked at debt restructuring – or at least economists,” Lanau said.

“And that is something that always puzzled bond traders who came from the corporate sector. For them it is all about the flows and gross financing needs.

“The IMF has shifted its focus a lot financing needs over the years and it is a less of a problem now.”

Ghana has defaulted and it is trying to reduce its debt from around 90 percent to below 60 percent by 2028. It is starting at a much lower level and correcting within a shorter period to an even lower level.

Sri Lanka’s debt ratio is high but it “may or may not be a constraint”, he said.

What the … was that?

The IMF’s default workout framework is a work in progress, which has changed over the years since mass defaults hit market market countries which were denied monetary stability through intermediate regimes especially in Latin America from the early 1980s.

Until 1980, when the so-called BBC policy (now called exchange rate as the first line of defence) where countries were encouraged to bust their currencies instead of withdrawing inflationary policy, sovereign defaults were not a problem.

“During the 1970s, the risk of sovereign default was not perceived as a major concern,” the IMF itself admits.

“Most “external arrears” generated by a country were created by exchange restrictions. For example, an importer might miss a payment because the authorities were slow to release foreign exchange.

“Sovereign default had not been a problem since the Second World War.

“Therefore, the IMF’s policy framework was not equipped to confront the complications that arose in the context of the sovereign debt difficulties that emerged in the 1980s.

“In fact, it took until 1980 for the IMF’s Executive Board even to agree that a default on sovereign debt should also be covered under the external arrears policy.”

Washington based policy circles began to prescribe, inconsistent, anchor conflicting intermediate regimes with aggressive open market operations to anyone who was willing to listen after the Fed floated, in the false belief that currencies fell due to ‘overvaluation’ and not liquidity injections.

Countries like Sri Lanka where there is no doctrinal foundation in sound money and no knowledge of classical monetary theory, were easy prey, critics say.

East Asia and Japan rejected such regimes. Malaysia is a prime example which despite not having a legal hard peg, fixed itself, repaid debt ahead of time, when tin and other commodity prices collapsed in the wake of Volcker tightening, while Latin America defaulted.

Elephant in the Room

A country with a soft pegged central bank (flexible exchange rate or intermediate regime) will see debt rocket each time it suppresses interest rates to target a policy rate and triggers a currency crisis.

Once a currency crisis hits, on one had the domestic currency value of external debt which is denominated in dollars protecting sovereign bond holders, goes up.

Interest rates of domestic debt also have to go up to stop the money printing and halt forex shortages which can widen the overall deficit in the short term.

The currency collapse also kills purchasing power and the real economy slows or contracts.

Once the credibility of the exchange rate has been lost, due to excess money injected the country loses the ability to settle both imports and debt repayment by exchanging domestic money for dollars.

The reserves (savings of past years) are used for current imports and debt repayments more money is injected to sterilize the interventions to maintain the policy rate, reserves collected over several years are run down in a few months.

Falling reserves, a depreciating currency then trigger rating downgrades (usually due to so-called exchange rate of as the first line of defence which saw downgrades in 2018 and 2020 in Sri Lanka) and sovereign bond as yields soar, and market access is lost, triggering a default.

As reserves dwindle further due to holding the policy rate with new money, more downgrades follow.

Countries with flexible exchange rates/flexible inflation targeting with market access can default at virtually any level of debt, critics say.

Market Access

Sri Lanka’s debt to GDP ratio shot up over 100 percent and lost almost all its reserves following a currency crisis in 2000/2001.

But at the time (or in earlier soft-peg crises in 1988/89 and earlier) the country did not have market access and bullet repayment debt.

In Sri Lanka bonds are big part of the country’s debt.

“Once you have lost market access there is virtually no level of gross financing needs that is sustainable,” Lanau said.

Analysts say the once market access has been lost, and the IMF declares that debt is unsustainable, which blocks the World Bank and ADB from giving loans, default is almost certain.

Argentina which has the archetypal soft-pegged Latin America central bank, which sterilizes interventions, strikes zeros off the peso at intervals and get into forex trouble.

“The country got into an IMF program in mid-2018, it was a very optimistic set of IMF targets, policy adjustments,” Lanau said.

“And this IMF program did not work and the situation got critical in August 2019 at which point Argentina defaulted.”

In March 2020 the IMF had presented a debt sustainability analysis where it was expected to to get its debt to 40 percent of GDP by 2030 and foreign exchange debt service to 3 percent of GDP, Lanau said, compared to 4.5 percent for Sri Lanka to make debt sustainable.

Ecuador which had a successful pre-emptive debt re-structuring, had debt levels of around 60 percent when it went talked to bond holders.

It was an ‘easy re-structuring, Lanau said.

It was a “lot about a bunch of maturities coming due in very few years as opposed to a very high debt ratio or a situation that was very unsustainable economically.”

Ecuador however is a dollarized country where its central bank effectively died in the 1990s after the sucre collapsed to 25,000 to the US dollar.

The Central Bank of Ecuador is no longer capable of creating forex shortages or driving the people to starvation and external debt is effectively in domestic currency.

Ecuador’s gross financing needs are now down to around mid single digits, while Sri Lanka’s has shot up to around 30 percent of GDP following the currency collapse.

Ecuador central bank was set up by Edwin Kemmerer, a US money doctor, with a gold peg (no obstinate policy rate) but was corrupted in 1947 by Robert Triffin, a US Keynesian who set up Argentina style central banks in several Latin America countries that frequently defaulted from the 1980s.

Sri Lanka’s central bank was also set up in 1950 by a US money doctor with broadly similar sterilizing powers.

Sri Lanka also started to depreciate the currency from around 1980 without withdrawing inflationary policy (an earlier re-incarnation of first line of defence strategy) triggering strikes, social unrest but no sovereign default due to lack of market access.

Sovereign defaults were mostly absent during the Bretton Woods era even in Latin America when countries maintained their pegs more or less with complementary monetary policy and the IMF also supported external anchors.

However after 1980 when the US tightened policy under Chairman Paul Volcker there were widespread defaults in pegged Latin American countries which did not hike rates in tandem or sterilized interventions (resisted the BOP) trying to operate independent monetary policy.

Now there are a number of market access countries in Africa and Asia with reserve collecting central bank which are trying to operate flexible inflation targeting, another monetary policy which are in conflict with the balance of payments which are ripe for serial currency crises and default.

Clean floating central bank do not use foreign reserves for imports nor collects them. (Colombo/Dec27/2022)

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