- President raps banking regulator for being ineffective and lacking in basics in stimulating COVID-19-hit economy and other ills
- Charges CB is sleeping; not done anything similar to peers elsewhere or used multiple tools at its disposal
- Gives time till today morning for CB to come up with effective strategy to revive economy
- Says it has failed to support SMEs, neglected its role in properly regulating finance and leasing companies
- Stresses cannot let health crisis lead to economic catastrophe
- Insists CB must strategise as per policies of President
- Recalls people gave him a big mandate to develop economy
- Says CB failure meant his and Govt.’s weakness
- Faults for helping previous regime to rob Central Bank
President Gotabaya Rajapaksa castigated Central Bank officials yesterday for failing to stimulate the economy hit by the COVID-19 pandemic, and gave the regulator time till this morning to come up with an effective strategy or to do things his way.
In what can be described as back-to-back barrage on the banking sector for its failure to revive the economy, the President did not mince his words apart from being visibly agitated during a lengthy drubbing on the Central Bank officials led by Governor and famous economist Prof. W.D. Lakshman.
“We cannot let the health crisis develop into an economic crisis. What we are facing is a global crisis. Many tools have been introduced by the central banks in the countries around the world. We have not received such a positive response from our Central Bank,” blamed the President.
He gave the Central Bank time till today morning to come up with what tools can be used and measures introduced to reinvigorate the economy. “Either accept my suggestions in this regard or reveal your strategies,” the President told the central bankers.
Rajapaksa charged that the Government had put forward its proposals for economic revival but the Central Bank has not extended its support towards it thus far. President asked them to explain the reasons for their failure to do so.
It was revealed that the Central Bank had ignored the proposal made by the President to provide Rs. 150 billion worth of refinancing to banks by accepting the outstanding due as collateral. The Government will have to take the blame for the economic slowdown due to this serious negligence of duty on the part of the Central Bank, the President has said.
He said the Central Bank has been sleeping, lacking in basic economics despite having highly paid economists. “It has been eight months since my appointment to the office. The people of this country have bestowed a great power on me to build this country... and I have been requesting you to revive this collapsed economy ever since,” the President said, adding: “Monetary Policy has to be formulated by the Central Bank in accordance with the economic policy of the President of the country.”
“The Government owes a huge sum of money to companies due to mismanagement in the past. Let this money be kept as a security for banks to release loans to them. Then they can run the economy. This is a money circulation process. This is a very simple tactic and this is a basic economic principle. But what are you doing? The Government has to take the blame for your conduct,” President told the central bankers.
He rapped the Central Bank for failing to help SMEs as well as in properly regulating finance and leasing companies. President also faulted the officers for helping the previous regime rob the Central Bank.
Secretary to the President P.B. Jayasundera, Principal Advisor to the President Lalith Weeratunga, Secretary to the Treasury S.R. Attygalle, Central Bank Governor Prof. W.D. Lakshman and officials of the Central Bank were present during the discussion.
The views expressed by the President during the meeting are as follows:
We cannot let the health crisis lead to an economic crisis. Not only have Central Banks in big countries but also in small countries have taken many crucial steps. The Federal Reserve in the US has formulated a $ 600 billion program. Today, the Central Banks in Australia and Japan too have joined. Similarly, Central Banks in small neighbouring countries of ours have commenced planned programs.
Look at this headline. ‘The AFED (Arab Forum for Environment and Development) commits to use a full range of tools to help the economy through unprecedented time’. What is the tool we have used? We have used nothing. Our Central Bank has not done anything towards this. Monetary and Fiscal Policy have been formulated by the Central Bank. That should be done in accordance with the economic policy of the President of the country.
You have several tools that can be used. Those tools have to be utilised. However, our Central Bank does not use a single tool. It just stays idle. We asked to release Rs. 150 billion to banks. This is not a fault of the business.
The Government owes a huge sum of money to companies due to mismanagement in the past. Let this money be kept as a security for banks to release loans to them. Then they can run the economy. This is a money circulation process. This is a very simple tactic and this is a basic economic principle. But what are you doing? The Government has to take the blame for your conduct. You do not monitor. Look at the status of finance companies.
It is your responsibility to regularise and monitor these companies. However, you have failed in your task. Leasing companies too evade their responsibilities. The ETI is not in a position to repay the people. The Finance has been closed down without informing. How are we going to pay for that? There is no management there.
All at the Central Bank are economic specialists drawing very high salaries. You have a responsibility. I have presented you a mechanism. If you are unable to follow it, present me your version of the mechanism by tomorrow morning.
Look at what governments of other countries have implemented to save their small-scale and medium-scale businesses. Do we see the same efforts over here? It looks as if you are here to hinder the Government effort and are trying to impede my duties. I do not have to assume this tone if you stood by your duties. It has been eight months since my appointment to the office, and I have been requesting you to revive this collapsed economy ever since.
I do not want to talk about mistakes of the previous Government. As all of you know, you were there when the Central Bank bonds scam was executed. If you supported them to commit this crime, there is no reason for all of you to not to join hands with me to deliver justice. The public must be made aware of the issue of how we move forward with this kind of officials. The people of this country have bestowed a great power on me to build this country. I request all of you to allow me to build this country.
The coronavirus has spread throughout the world. Now it has become a global economic crisis. Due to the firm commitment of our works in the health sector, Army, Intelligence and the Police, we were able to return to normalcy before many other countries in the world.
The restructuring of the country’s economy before it further collapses lies in your hands. Lend your support to me to achieve success in this endeavour. Either accept my suggestions in this regard or reveal your strategies.
In this context, a place like the Central Bank where the top economic experts are rendering their service, isn’t it your responsibility to present a proposal to conquer this situation? What have you submitted in this regard? What is the guidance you have given me? There is nothing and you have not come forward to support me.
If you are not on the same page with my suggestions, please give me your strategies to revive our economy by tomorrow morning. Give me your suggestions on how to strengthen the economy, how to assist banks under these dire circumstances, how to categorically assist small-scale and medium-scale businesses. If what I say is wrong, do not hesitate to let me know.