UNP draws guns on “military control” of Rupee

Thursday, 28 June 2012 02:07 -     - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe  

As the rupee weakened further, the United National Party (UNP) yesterday discharged a fresh salvo against the Government’s economic management, insisting that the rupee’s decline was being “militaristically controlled” and called for greater transparency.  

Referring to reports that banks stopped quoting spot prices after what dealers said was a request from the Central Bank to stop trading the ailing currency beyond the 133 level, UNP MP Dr. Harsha de Silva termed it the “military control” of the economy.

Censuring the Government for its low exports and high loan portfolio, de Silva insisted that new ways to earn dollars had to found before the country’s economic situation becomes more tenuous.

He also insisted that the Budget deficit, which the Government is targeting to be 6.2 per cent this year, could end up at “an explosive level” of 11.2 per cent according to first quarter data released by the Treasury.

“We don’t have dollars. The dollars that we get from exporting our mothers and sisters to the Middle East is insufficient. What has happened is that the export sector of Sri Lanka has shrunk and it is important that we understand this because 10 years ago this country exported 38% of what we produced but now we export 17%. We are not bringing in sufficient dollars,” he said.

De Silva pointed out that for the first four months’ exports have fallen by an accumulative figure of three per cent and for April it had fallen by as much as nine per cent. That has translated in the trade deficit further expanding by 32 per cent.

Expected Foreign Direct Investment has been low, stressed de Silva, summarising that in the next six months Sri Lanka will borrow a minimum of US$ 2 billion to maintain its economic momentum.

“The only option is to borrow dollars, which we are doing as if there is no tomorrow. In the next six months this country will borrow a minimum of US$ 2 billion from international markets. This is in addition to loans for development projects and bilateral investment.”

This US$ 2 billion will be comprised of the last tranche of the 2.6 billion Stand-by Agreement with the International Monetary Fund (IMF), the US$ 1 billion dollar bond raised by the Government and an estimated US$ 500 million, on which the Central Bank and the IMF are having discussions. So how are we going to pay this back? The problem of lack of dollars is a result of the wrong economic policies of the present regime.”

Quoting Al Gore, he said: “Everything that ought to be up is down and everything that ought to be down is up.”