Why Should We Beg IMF? – When More Than $36 Billion To Be Recovered

By W. Vishnu Gupta –

A recent visit to Sri Lanka, confirmed that it was very easy to convert Rupees into US dollars at any banking counter in the departure lounge of BIA, and it is strange in a country where people are told there is no foreign exchange to import medicine, and other essential food items until IMF gives a loan. Furthermore, it appears that there is no truth to the claims made by the government about the lack of foreign exchange because every imported luxury item that the rich has got used to during last 75 years is readily available in the market. When a Sri Lankan rich man or woman is afflicted with any life-threatening sickness or even a minor skin irritation, they freely seek treatments in Singapore, Dubai, Bangkok, or India, and they appear not to bother about the foreign exchange mantra chanted daily by the politicians including the president in the parliament and in other external forums. Obviously, a few filthy rich fellows have stashed away, specifically US dollars in offshore accounts under various pretexts. Under this background, the recent wishy-washy statement made by parliamentarian Wimal Weerawansa about the loopholes in the foreign exchange management laws and the revelations of young women lawyers’ association in Colombo about the foreign currency stashed away in the offshore bank accounts by the exporters warrants further investigations. It appears every politician who entered the den of thieves and criminals, officially known as the parliament since 1952, elected and unelected presidents, and the CBSL are privy to this grand scheme of hoarding national wealth in foreign countries. The stories about alleged money laundering activities of Gamini Dissanayake’s family in Australia, Bandaranaikes in the UK, Aluthgamage in the UK, Rajapaksas in Uganda, Dubai, Seychelles and China, likewise other politicians in Singapore and the link between Ranil and Mahedran and Paskaralingam may be just the tip of the iceberg. All Central bank chiefs, particularly the political appointees of Prime Ministers and Presidents seem to have knowingly participated in the dubious act of letting the individuals and exporting companies siphon or stashed the foreign exchange that should be brought into the state coffers otherwise, for instance Panama Papers must be a hoax. According to Sunday Times of July 2022.

“An investigation carried out by the Global Finance Integrity (GFI); a think tank based in Washington, USA operating with government support. Its task is to keep an eye on the export trade of countries of the world. GFI observes whether money is properly exchanged between two countries during a trade. According to its observations, between 2009-2017, the Government of Sri Lanka (GoSL) has not received more than US$ 36 billion due from exports. The money is held offshore.” 

What a catastrophe, Sri Lanka is an $81 Billion economy and more than one-third or $36 Billion is hidden in foreign countries by a selected vile bunch of businessmen supported by correspondingly vulgar political leaders with willfully designed porous legislations approved by equally disgraceful parliament of the country. No government so far has taken concrete actions to bring this mind-boggling amount of money back to Sri Lanka, but they have forced the citizen to go through untold misery by cunningly and abruptly disrupting the supply chain of medicines, medical equipment, essential foods, energy products, and other critical raw material including fertilizer. Many have died and thousands of patients are in their death throes while temporarily elected government and the president appointed by 134 MPs are threatening the state with gloom and doom scenarios and instilling fear in the psyche of citizens with the possibility of energy crisis, food crisis and health crisis. The GFI report clearly says that they publish their conclusions after researching extensively and analyzing the data of Sri Lankan customs, export registers, and import registers of countries. Hence no one should claim that the findings are false or inaccurate. For obvious reasons, Ranil and Rajapaksas have never uttered about the excesses committed by their families and business buddies responsible for hording of alleged $36 Billion in foreign countries, but it should baffle the economists and the intelligentsia, why IMF has not raised this matter reported by GFI in Washington with the present government.

Sri Lanka officially records about $1.1 -1.2 Billion export earnings per month and similarly tourism earnings should average around $400-500 million per month excluding the millions of foreign exchanges earned by somewhat slippery and controversial entities such as SLC, Avant-Garde and hundreds of currency exchange shops in Colombo and Negombo. The citizens ought to know what happens to these enormous amount of foreign exchange earnings that comes under the jurisdiction of the state. Clearly, the central bank is inept, yet should we allow a bunch of unscrupulous businessmen, politicians, and sleazy organizations to live lavishly and enjoy tamashas while rest of the country is told IMF is the only solution. Unfortunately, neither Sajith, nor AKD, the front runners of the ongoing outlandish political campaign have ever spoken about this hidden wealth. What is the rationale behind begging for $2.8 billion loan from IMF while not taking any actions to retrieve $36 billion stashed away in foreign countries by a handful of embezzlers. 

As per the Foreign Exchange Control Act of 2017, the money related to export trade should be sent back to Sri Lanka without delay within a period of six months. It is a conventional law adopted by every legally established state in the world and the central bank, reserve bank or the monetary authority of the state is held responsible for managing this inflow of foreign currency according to the laws of the state. Central Bank’s primary objective is to stabilize the currency and economy while limiting inflation. Sri Lankan CB seems to have neglected its responsibilities mainly due to political interferences of Ranil and Rajapaksas. The present chairman Nandalal and all those before him, Coomaraswamy, Cabraal, Lakshman and Mahendran have done nothing innovative so far to manage affairs of CBSL, which possess privileged control over production and distribution of money and credit for the nation. As expected Nandalal a political lackey has trivialized and questioned the findings of GFI, at the Parliamentary Committee on Public Finance meeting on January 23^rd.   

“Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe has disregarded and trivialised the extent of illicit financial flows through trade mis-invoicing in instigating Sri Lanka’s ongoing foreign exchange and fiscal crisis.” 

The credibility of CBSL is tainted and highly questionable, CBSL chiefs have failed to ensure fiscal stability in Sri Lanka, bond scams and unsavory political links at the highest level do not add any credence to the policies and assurances made by politically contaminated highest monetary authority in Sri Lanka, hence one should not question the accuracy and integrity of GFI report on Sri Lanka.

Nevertheless, the state of Sri Lanka must hold these political minions responsible for not ensuring uninterrupted inflow of foreign currency (US dollars) earned through exports and other related business transactions in recent years. It is a forgone conclusion, that Nandalal, his predecessors and their political masters’ arrogant conduct and nonchalant answers to the economic and financial crisis has exacerbated the dire economic situation encountered by majority in Sri Lanka since 2019. Compared to politically independent CB chiefs in other Asian developed countries, the government cronies implanted to manage our central bank seem to carry the hallmark of economic bookworms sans practical knowledge but well versed in political trickery.   

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