Tuesday, June 12, 2012
Crisis what crisis? Now I will be blamed for the crisis!
All the economic indicators are grim, the Govt. is in denial. Harsha de Silva MP pointed out basic anomalies in practice and governance and was blamed for causing a crisis. The Central Bank maintains that The Finance Co PLC- a company on the CSE, is solid, with negative Rs2B reserves that has not undergone a reduction in capital by an infusion of funds, so it is technically bankrupt. The State Bank, NSB with gilt edged security (Govt. guarantee) is buying into it to increase its already substantial holding in The Finance.
That said, it is just the tip of the iceburg. We just heard that there are 3 Finance Companies that are not acting according to the guidelines of the CB which regulates them. To add insult to injury the CB has not given sufficient teeth to its investigative staff to ask for immediate reports from those companies they regulate. They will show a 400% increase in “delay in making lease payments” on vehicles. That is unprecedented and the first indication that all is not well in the economy. People are NOT able to repay their obligations. The Companies dare not repossess the vehicles as they have no way of selling them.
The second hand vehicle market has just collapsed. Vehicles cannot even be sold at prices below the pre duty hike just announced, let alone post!! This portends worse to come, and if the Central Bank is unable to face reality is it because the bankers want the Governor buried alive for his talking through his hat? Do they not want to associate themselves with his “all is cool on the eastern front” attitude?
Whatever it is, for god’s sake come clean. Don’t wait for Cabraal to sink with you! Do not wait till the shit really hits the fan and the whole ship goes down. Even you guys will not be immune, as your pensions will be the first to be cut and their inflation proofing a thing of the past.
There is nothing worse than the failure of a finance company especially one of the biggest which has extended themselves too thinly with dubious leases, at high interest that the lessees just cannot pay. So to prevent a run on finance companies, assure them of a minimum guarantee of say R5M per institution per person. Then go about investigating the true situation today, you can take steps before it is too late and the whole pack of cards just crashes with no one to pick up the pieces. It is the savings of the people of Sri Lanka you stupid! that you are playing with.
The Central Bank has conscientious and perceptive people who are fully aware of the real situation. Please do not sit idly by, let your bosses know what is happening and if they do not take action, act on your conscience, that is the least the General Public in Sri Lanka expect from you.
It is time when leadership is sorely needed and no one is willing to take it. All those at the top just pass the buck and hope for the best! They are passing it to the wrong person who has no clue as to what to do. Just do it.