Monday, June 11, 2012
The expression of economic policy by a Leader who is ignorant
Sri Lanka is beset by a complete breakdown in economic and financial policy with an impending implosion in Balance of Payments, Exchange Rate Policy, and loss of Reserves, all leading to a huge financial crisis with many already engaged in a flight of funds outside the country reminiscent of the Asian financial crisis of the 1990s.
We however have a Finance Minister who happens to be the President who has absolutely NO clue in managing anything! He has been a consummate servant of the state for nearly 40 years and has no idea how to balance a budget let alone a piss up in a brewery. So he instructs the Treasury Secretary one marginally more responsible than him and the Governor of the Central Bank who is prone to issuing lies hoping some Genie will convert it into truth, to set the Exchange rate at Rs125 to the US$. How crazy is that? For someone who does not understand inwards funds flows to make such a statement.
The end result of this stupid behavior is that the country has sold 80% of its Gold Reserves, or US$2Billion to prop up the rupee at an unrealistic level. Further the IMF is in town to give the final tranche of the promised borrowings, but that is only on condition that there is NO intervention in the currency markets to prop up the rupee, one that has already been broken continuously!!! We are about to waste that money also.
Why can’t the citizens of the country realize that we are being sold down the drain, by a government that has NO idea about running an economy and instead is bequeathing a mess to the next government to solve and resurrect. Very soon, the exchange rate will collapse to between Rs150 and Rs170 and with that a HUMONGUOS increase in cost of imports, from fuel to food stuffs, which will send the people reeling to gasp!
Immediate action now can only prevent a flight of capital, and arrest the impending disaster. It is not too late, but it calls for common sense and acceptance of the gravity of the situation rather than being in wasteful denial. Who can take this responsibility? In an absolute dictatorship it is only one person who must. His advisors owe it to the country to show him how misguided he is and convince him to change his ways. The opposition is merely waiting for him to fall, to crush him, and is in no mind to help him out of his bloated pedestal.