As Sri Lankan rupee slides further, Rajapaksa and Wickremesinghe slug it out

As Sri Lankan rupee slides further, Rajapaksa and Wickremesinghe slug it out

Colombo Correspondent,
Former President Mahinda Rajapaksa.

Following the consistent plunging of the Sri Lankan rupee throughout last week and the government’s plans to increase expenditure, former President Mahinda Rajapaksa on Saturday demanded that the coalition regime of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe resign and hand over governance to him and his newly-formed Sri Lanka Podu Jana Peramuna (SLPP) party.

“Hold elections and give us power. We will show you how to manage the economy. I have managed the economy better than the current state it is in, even when the country was at war with the LTTE,” Rajapaksa said while addressing a special press conference related to the prevailing economic condition in Sri Lanka. Along with Joint Opposition members, Rajapaksa insisted that if he was in power he would have managed the currency issue more efficiently. The former president and his colleagues charged the government for running short of ideas on managing the economy and called on the coalition regime to resign if it is unable to prevent the depreciation of the Sri Lankan rupee.

Sri Lanka’s Central Bank Governor Dr Indrajit Coomaraswamy and Finance Minister Mangala Samaraweera warned last Friday of the rupee’s depreciation against the US dollar over the next few weeks, resulting in the cost for forwards for foreign currency swaps going up by 20 percent. The Rajapaksa group maintained that for a government to helplessly claim that they cannot manage the rupee depreciation was not governance.

“We do not need a government and Finance Minister who declares that they are helpless in the face of a steady depreciation of the rupee and blame it on global factors. We urge the government to hand over the country to us to manage the economy,” Wimal Weerawansa, a member in Rajapaksa’s coalition, said. The rupee has weakened 4.5 percent so far this month after a 1.2 percent drop last month and has declined 9.9 percent so far this year.

Sri Lanka’s leading financial newspaper, the Daily FT was recently criticised public claims by the finance minister and the Central Bank chief that they cannot defend the rupee. “When both the finance minister and the Central Bank chief publicly say we cannot defend the rupee, two things happen immediately. Foreigners invested in rupees immediately look to bail out and locals having USD oversees don’t want to bring their dollars back and look to convert their rupees to USD. Overall it ends up in a disaster for the economy,” the FT said in a commentary last Saturday. Following Central Bank intervention, the rupee closed at 168.50/70, compared with Thursday’s close of 168.65/169.00. Samaraweera will present the 2019 budget in the second week of November, according to finance ministry officials.

Meanwhile, Sri Lanka is to seek IMF assistance to tide over the appreciation of the dollar, according to a public statement by Prime Minister Ranil Wickremesinghe. Addressing a school event in Nattandiya in North Western Sri Lanka last Saturday, Wickremesinghe took refuge in the currencies such as the sterling pound and the euro weakening as the dollar appreciated.

“Depreciation of the rupee is not something peculiar to Sri Lanka,” Wickremesinghe insisted, adding that the quantum of foreign loans repayable next year was $400 million.

The government is in discussion with the IMF to obtain some relief amidst the current appreciation of the rupee, the PM said, maintaining that the government would not cut down on essential expenditure, including those on education and health. He also insisted that his government was prepared for any crisis that might unfold in the near future.