'Govt. has failed' - Retired CB Deputy Governor at Bastiat Economic Forum

From Ceylon Today

Retired Central Bank Deputy Governor W.A Wijewardena on Thursday, lambasted the government, alleging that it had failed to set an example of good governance, contrary to what it promised, post January 8.

This government, by tolerating and also covering up questionable transactions by those in power, thereby allowed critics to level the same charges at the government, was an indication, that the present government also failed to fulfil the people's 8 January verdict.
Addressing the Bastiat Economic Forum in Colombo organized by the newly formed Bastiat Society of Sri Lanka, he further said that using budgetary, monetary and exchange rate policies to play popular political games, was a major curse to the nation.

Sri Lanka's economy was facing the same structural problems which it had, 35-40 years ago. It is infested with problems like a weakened institutional structure, lack of governance, non-observance of economic policy governance and rule of law. "There are several grave mistakes by the Rainbow Revolution Régime".

"Firstly, was their failure to conduct a comprehensive economic statistics and position audit at the time of coming to power and keep the electorate informed of the true situation, the former Deputy Governor said.

Signing the doubtful economic statistics as accurate in the Central Bank annual report 2014 at public fora by incumbent Central Bank Governor Arjuna Mahendran was a bad example, he remarked.
Over-concentration on constitutional reforms have delivered half-baked results to the almost exclusion of proper economic policies, he said.

According to Wijewardena, there is a growing budgetary crisis, which he summed up as declining revenue as a per cent of GDP, failure to generate savings having a surplus in the revenue account (current account), stubborn budget deficit above 5% of GDP, failure to increase government's investments, borrowing to repay maturing public debt and financing budget deficit, and growing non-concessionary and commercial foreign loans were some of the criteria.

There were many more disappointments due to inconsistent and illogical monetary policy, he said.
Central Bank incurring losses (2013 = Rs 39 billion; 2014 = Rs 22 billion), excess liquidity in the market due to commercial banks' not lending (Ranging between Rs 250 billion and Rs 68 billion in 2015), Central Bank's new monetary mechanism has resulted in paying out interest to commercial banks (2014 = Rs 17.7 billion; 2015E = Rs 15 billion) & pressure for prices to increase and trade deficit to worsen, he highlighted.

We have a very shaky external sector, Wijewardena said.
Exports as a % of GDP is falling (2000 = 33; 2005 = 26; 2013 = 15.5; 2014 = 14.8; 2015E = 12),Trade deficit untamed and high at around $ 8 billion over the last few years,Increasing reliance of remittances flows to part-finance the trade deficit, BOP surplus through borrowing adding to external debt and Foreign reserves build up through borrowed funds and is now falling
Pressure for exchange rate to depreciate and becoming unavoidable at the moment, he said.