The legacy of Mahinda Siriwardana

The illustrious former Central Banker cum technocrat Mahinda Siriwardana will end his highly impressive three-year-tenure as Secretary to the Ministry of Finance at the end of this month to assume duties in the post of Alternate Executive Director of the Asian Development Bank, representing Sri Lanka and six other countries. When the outgoing Treasury Secretary took over the coveted post in April 2022, Sri Lanka was going through the worst economic crisis in its post-independent history. At the time he took helm of the Treasury, Sri Lanka’s gross official reserves stood at $ 1,827 million while the usable reserves recorded a ridiculously low value of $ 50 million.

Prior to his move to the Treasury, the highly professional and soft-speaking bureaucrat functioned as the Deputy Governor of the Monetary Authority. When the former President Gotabaya Rajapaksa invited Nandalal Weerasinghe to take over the governorship of the Central Bank (CB), the latter insisted the former to assign the task of providing administrative leadership to the fiscal policy to Siriwardana as both erstwhile colleagues saw eye to eye on the reforms that were needed to rescue the economy.

The country’s public finances were in a pathetic state due to the reckless and politically motivated tax cuts that were implemented in late 2019 at the time the ex CB Deputy Governor took over the leadership of the Treasury. His predecessor S.R. Attygalle was severely admonished by the Supreme Court, as his short-sighted actions were deemed responsible for the calamitous economic predicament the island experienced three years ago. Moreover, the unconventional monetary policies championed by the former CB Governor Professor W.D. Lakshman and continued by his successor the ever controversial Ajith Nivard Cabral, had resulted in inflation reaching 28%, causing a huge burden to the masses.

The unassuming senior public official ended his 33-year-long career at the CB last year. His last few years at the active service of the CB was a distressing experience for him personally. The Kelaniya University Economics graduate tried his best to persuade Dr. P.B. Jayasundera to seek relief from the IMF given the dire situation of the economy. However, instead of acknowledging his well-sound advice, the most powerful public official of the Gotabaya Rajapaksa administration berated and sidelined him for disclosing the harsh reality. Last year, in his farewell letter to the officers of the CB, Siriwardana alluded to the painful times he experienced during the governorships of Lakshman and Cabral. “However, my life at the CBSL was never easy. I particularly remember the internal and external pressures, stress and some unfair treatment that I went through at the CBSL from early 2020 in the run up to the deep, unprecedented and most complex economic crisis in Sri Lanka’s post-independence history. I also remember some harsh criticisms that I got from some segments in the CBSL on the subsequent corrective measures implemented to overcome this complex economic crisis. I believe time will decide on the appropriateness of such policies.”

Upon his retirement from the nation’s foremost financial institution, his service as Secretary to the Ministry of Finance was extended by one year quite rightfully by the former President Ranil Wickremesinghe, as the veteran politician recognised the value of Siriwardana’s presence in terms of carrying out the vital reforms in the realm of fiscal policy/taxation in particular. The former President’s strong political will to go ahead with the unpopular yet unavoidable remedial policy measures despite tremendous political costs immensely helped the former IMF Alternate Executive Director to be successful in his challenging assignment.

Delivering a speech at a public event a few weeks ago, Siriwardana had opined that Sri Lanka can prevent another default as long as it maintains the current reform trajectory. Nevertheless, he had warned that there would be a risk of a second default materialising if the country deviates from the prevailing reformist path.