By Shamindra Ferdinando
Derana Chief Dilith Jayaweera says the Port City Colombo could have given Sri Lankan economy the turbo boost it required but, unfortunately, the powers that be failed to handle it properly though the country accepted the modern concept. The mega project was in line with contemporary global economy, therefore Sri Lanka’s move received global recognition, Jayaweera said, calling it a progressive economic decision.
But Sri Lanka missed the opportunity for want of a cohesive strategy as well as destructive party politics that dealt a severe blow to the flagship Chinese project, the top entrepreneur who does not shy away from speaking the truth, he said.
Jayaweera questioned the failure on the part of Sri Lanka to properly manage the Chinese flagship project, with national interest at heart, and burying petty party divisions, for the country’s sake. China launched the project in late 2014 as the country was heading for early presidential elections.
Having sabotaged the project, the then Yahapalana administration (2015-2019) went to the extent of ridiculing even the concept, thereby undermining a mega investment that could have laid the foundation to give a turbo boost to the country’s image, as well as its economy.
Their utterly irresponsible actions caused rapid erosion of investors’ confidence in the project, Jayaweera declared, and the decision to revisit a project, launched by the previous government, caused chaos. “Calls for renegotiation of the agreement resulted in inordinate delay in the implementation and the loss of investors,” Jayaweera said, declaring that the Colombo Port City was yet to receive a significant investment, since those deliberate interruptions. The Yahapalana action tainted the project as corrupt and denied investors’ confidence, hence the difficulties in attracting funds. Let me stress: “Sri Lanka couldn’t attract large scale investments because we ruined the project.”
Jayaweera said so, in an interview with The Island, at his posh office at T. B. Jayah Mawatha, a few days ago. The controversial businessman, widely believed to be one of the close associates of ousted President Gotabaya Rajapaksa, discussed a spate of issues, ranging from the formation of ‘Aramuna’ meant to strengthen the business environment with the focus on Small and Medium Enterprises (SMEs), collapse of the national economy, foreign relations and interventions, as well as the hand of a jealous Rajapaksa family, in the ruination of Gotabaya Rajapaksa, elected with an overwhelming majority of 6.9 mn votes.
Asked about course correction, attempted by him in 2021, as the country was heading rapidly towards economic catastrophe, Jayaweera said that he discussed the issue at hand with the then Finance Minister, Basil Rajapaksa, right there. Jayaweera said: “The Minister couldn’t comprehend the crisis, regardless of my efforts. In fact, Basil Rajapaksa took things lightly, very lightly. Perhaps, the Minister simply didn’t know the situation he was dealing with and the implications, in case the Rajapaksa government failed to address the growing cash flow problem.”
So was Basil part of the grand conspiracy to topple that government by playing dumb at such a crucial juncture?
Basil Rajapaksa was sworn in as the Finance Minister, on July 08, 2021, at the Presidential Secretariat. It was soon after his second entry to Parliament, on the National List, though the circumstances were vastly different.
The Rajapaksas amended the Constitution to accommodate the US, Sri Lanka dual citizen in Parliament in spite of strong opposition from a section of the ruling party. Vasudeva Nanayakkara, Wimal Weerawansa, Udaya Gammanpila and Gevindu Cumaratunga opposed the move. Their concerns were disregarded.
Asked what really had prompted Basil Rajapaksa to visit his spacious office, furnished much better than ministerial offices, Jayaweera explained how the President arranged for the meeting after he brought the impending crisis to the notice of the head of State. Jayaweera strongly maintained that those who had been around the President deliberately furnished him with utterly wrong estimates pertaining to the economic status. “There is absolutely no ambiguity regarding their despicable strategy. As a result of a spate of uninformed and hasty decisions, the country ended up bankrupt and at the mercy of the International Monetary Fund (IMF),” Jayaweera said.
Commenting on Opposition accusations that the government intended to launch a domestic debt restructuring process, having repeatedly assured the people it would not do so, Jayaweera pointed out that this was to be done at the behest of the IMF. Debt restructuring was certainly not a national requirement at the moment though the issue at hand is why Sri Lanka shouldn’t subject itself to a domestic debt restructuring if the country expected relief from bilateral and multilateral creditors.
IMF bailout package not a panacea
for all our ills
Jayaweera accepted the writer’s suggestion that a domestic debt restructuring was a fair condition laid down by the IMF to provide the USD 2.9 bn bailout package, to be made available over a period of four years. Sri Lanka received the first tranche of the package at the end of the third week of March this year.
Jayaweera stressed that the country, as a whole, should deliberate whether debt restructuring should take place at the IMF’s directive or in line with Sri Lanka’s overall response to the current economic challenges. The media and business tycoon underscored the responsibility on the part of the government, and all other stakeholders, to examine the impact of such an exercise on the economy with the focus on the money market and the banking sector. The stakeholders should be sensitive to the developments, in case a far reaching debt restructuring process was undertaken, Jayaweera said, calling for a dialogue on the contentious and possible consensus without imposing debt restructuring as a prerequisite.
Asked to compare the latest IMF bailout package and the 16 previous ones that Sri Lanka obtained from it, Jayaweera said those engaged in talks with the lending body as well as other creditors, should be extra cautious as the country was now in the worst possible situation. “On all previous occasions when we sought IMF interventions, the economy was in a much better condition. We were in a much more comfortable environment then. But we are in the worst possible situation, today.”
Jayaweera stressed the responsibility on the part of the government to be vigilant in ongoing talks with lending bodies and other creditors. The businessman quite rightly asserted that the country was in such a precarious situation and therefore it could become vulnerable to various machinations.
During the nearly 90-minute long interview, Jayaweera was not interrupted by calls on his hand phone or the intercom, though a smartly dressed woman brought a tall glass of iced tea for the writer. Sipping the delicious iced tea, with a straw, the writer asked whether President Gotabaya Rakapaksa inadvertently did something good by refusing to seek IMF intervention in 2020. Otherwise, the country would have obtained more loans to settle debt and interest and continued the farce, perhaps for another decade, and placed the economy in an even far worse situation, Jayaweera was told.
A smiling Derana Chief responded that perhaps the President’s intention was good though he was ill-informed of how to implement it. The self-made tycoon pointed out the failure on the part of the then administration have alternative arrangements, in place, to do away with the IMF assistance. The need to meet recurrent expenditure couldn’t have been ignored under any circumstances, Jayaweera said, squarely blaming the then Secretary to the President Dr. Punchi Banda Jayasundera, and Basil Rajapaksa, for the crisis. The duo had been so reckless in taking far-reaching decisions, Jayaweera said, claiming that he didn’t believe even a small vendor would have been so irresponsible. Jayaweera cited a highly controversial Cabinet decision to do away with a spate of taxes at the first meeting of the Cabinet-of-Ministers, in the last week of Nov, 2019, less than two weeks after the last presidential election. So it looks as if the die had already been cast to doom the Presidency of Gotabaya Rajapaksa from the word go.
The government never made contingency plans to recover the losses caused by that fateful decision. The Treasury is believed to have lost as much as Rs 600 billion per year due to the abolition of taxes.
Rating agencies deliver knockout blow
Jayaweera explained how international rating agencies downgraded the country due to the significant loss of income. Once rating agencies recognized a country as a badly managed economy, that economy rapidly lost opportunity to raise loans at reasonable interest rates, Jayaweera said, emphasizing that President Gotabaya Rajapaksa shouldn’t be faulted for believing that Sri Lanka could stop taking further loans. Jayaweera again stressed that Dr. PBJ and Basil Rajapaksa should accept the responsibility for their failure to manage the economy. Instead of taking remedial measures, the government challenged those rating agencies, he said.
When the writer pointed out that Basil Rajapaksa re-entered Parliament only in the first week of July 2021, Jayaweera hit back: “That was how you viewed the situation. But what really happened? Soon after Gotabaya Rajapaksa’s victory, Basil Rajapaksa and the clan appointed Dr. PBJ as the President’s Secretary. That was done to take over the management of the economy. In spite of Basil Rajapaksa not being a lawmaker at that time, he received the appointment as somebody who managed the economy from behind the scene. And Dr. PBJ, though only the Secretary to the President, got the de-facto control of the economy.”
We don’t for a moment question the capabilities of Dr. PBJ, the former Central Banker had been seconded to the Finance Ministry, even before the time R. Paskaralingam (Pandora Papers’ fame) was the Treasury Secretary in the Premadasa regime because of his capabilities and served virtually under all regimes before and thereafter as far as we can recall. Dr. PBJ also scored big by managing the economy deftly especially during the last phase of the war as Treasury Secretary and thereafter. But the question is did he double as an “economic hitman” as alleged by some.
Jayaweera accepted the writer’s suggestion that it would be better to assert that grouping took control of the economy than blaming an individual. Jayaweera alleged that the group took advantage of the then Prime Minister Mahinda Rajapaksa, who also served as the Finance Minister (Nov. 2019 to July 2021) as he was not in good health. Jayaweera explained how interested parties exploited the much deteriorated health of the former President, particularly periodic loss of memory. “I had no option but to take up this issue with President Gotabaya Rajapaksa. The President accepted the ugly truth.”
Jayaweera said that he sought a meeting with President Gotabaya Rajapaksa to discuss the forex crisis, about 20 months ago. Having explained the looming crisis on the basis of the widening gap between government income and expenditure,
Jayaweera had got involved in an argument with President Gotabaya over the latter’s accusation that the Derana Chief misinterpreted facts as he was in dispute with Dr. PBJ. “I denied that allegation, insisting that my assessment was entirely based on official figures, also made available to the President. The President regretted the situation but scolded me. But, three or four days later, the President called me again for a meeting. I was provided with a cash flow statement. I quickly pointed out how unrealistic the income column was.”
The President’s economic team quite conveniently failed to explain the impact of rising crude oil prices at that time. That lot provided the President with unsubstantiated and unrealistic figures therefore the decisions taken on such advice caused the crisis, Jayaweera said, referring to the silly bloated assessment of USD 6 bn from tourism, whereas we know not even one bn USD income was realistic, after the Easter carnage, followed by the unprecedented COVID-19 pandemic.
Jayaweera said that he contacted the President again as he couldn’t bear the impending catastrophe. Jayaweera recalled how President Gotabaya Rajapaksa suggested that he discuss the situation with Finance Minister Basil Rajapaksa and the meeting took place at the very place where we met last week.
Basil Rajapaksa’s simple dismissive reaction had caused fear and anxiety in the Derana Chief, especially pertaining to the direction of the national economy, Jayaweera said, adding that over dinner, too, he tried to convince the Finance Minister of the threat due to the frightening cash flow problem.
Jayaweera quoted Basil Rajapaksa as having declared that the public wouldn’t come to the streets to protest scarcity in goods though they demonstrate against high cost of living. “I suggested that fuel consumption should be cut by 50 percent. The need for a realistic pricing formula was also suggested. But, the Minister simply dismissed my suggestions. President Gotabaya Rajapaksa himself told me Basil Rajapaksa and Dr. PBJ managed the economy. Therefore, they couldn’t absolve themselves of the responsibility for the current crisis.”
Jayaweera didn’t mince his words when he alleged that President Gotabaya Rajapaksa’s first major fault was accepting the family nominee Dr. PBJ as the Presidential Secretary. The President did so in spite of knowing it would be the end of his presidency, Jayaweera said.
In this context, ‘Aramuna’ that had been established years before the public protest campaign against the Rajapaksa administration, in March 2022, was making representations on behalf of the affected communities, Jayaweera said. When queried about the recent declaration in Jaffna that they should pursue talks with banks as a group to secure much needed relief, Jayaweera explained the discussions they had with top level management of state and private banks. “We are trying to obtain as much relief as possible. But, overwhelming challenges cannot be surmounted without political will,” Jayaweera said. The outspoken ‘Aramuna’ initiator found fault with the government for shrinking the economy. That was disastrous, Jayaweera said, comparing the current situation with that of a gravely ill person deprived of medicine.
Citing the deterioration in the construction industry as a case in point (From 10 percent of the GDP to just one percent), Jayaweera said that import restrictions badly affected the export sector for want of intermediary goods. Volatile foreign currency market undermined all sectors as they found it difficult to furnish a proper quotation.
Acknowledging that certain restrictions were necessary, Jayaweera, however ,insisted that it was the responsibility of the government to properly manage the crisis by ensuring the sectors which contributed to the growth of the GDP received the support they deserved.
Jayaweera emphasized that one of their key missions was to motivate what he called human capital. If human capital lost confidence a country could face catastrophic consequences, he said, pointing out that professionals and others alike wanted to migrate in the absence of a proper strategy. Obviously, they felt concerned and not sure whether the country could overcome the unprecedented mess, Jayaweera said.
“In response to the challenge, we intended to promote entrepreneurship among the population. But, it would be important at least now to recognize the shortcomings, failures, mismanagement and unproductive investments by way of loans,” he said.
Jayaweera explained how unbridled use of loans for consumption and not sufficient returns for investments contributed to the current mess while flaying the powers that be for failing to adopt course correction even after the declaration of bankruptcy.
Responding to another query, Jayaweera said that the latest IMF intervention, too, hadn’t been sought in line with strategy to uplift the country but simply as a reaction to the crisis. He declared that nothing had changed as the existing political party apparatus continued to do the same.
Jayaweera denied any similarity whatsoever between ‘Aramuna’ and Gotabaya Rajapaksa’s ‘Viyathmaga’ while insisting the former didn’t promote political strategy at all. Pointing out that at the time they established ‘Aramuna’, four years ago, it didn’t have a political outlook, Jayaweera explained in response to the current challenges, the outfit now operated on the premise that the issues at hand couldn’t be addressed without a ‘political solution.’
Asked whether ‘Aramuna’ would take a stand at the next national level election, particularly against the backdrop of the UNP propagating the possibility of presidential election before Local Government polls, the maverick businessman said that on the basis of a set of minimum conditions, meant to overcome national challenges, they would push for a consensus with most suitable party/alliance.
Need for infallible systems
Pointing out that the country suffered for want of infallible systems and recklessly having faith in people, Jayaweera was asked whether he believed in systems or politicians. This was raised on the basis of accommodating businessman Dhammika Perera on the SLPP National List, in early June 2022, and Ranil Wickremesinghe receiving appointment as President after entering Parliament on the National List, though rejected by the Colombo electorate. Jayaweera declared: “We need a system not a system change. We are in such an unstable situation, unless remedial measures were taken the country can be shut down overnight. That is the reality,” he said emphatically.
Jayaweera strongly denied the query whether he in any way influenced and benefited from the utterly reckless tax cut announced in Nov. 2019. “How could I benefit when that idiotic decision ruined our economy. What is the point in my enterprises receiving some benefits against the backdrop of economic annihilation? That decision cannot be justified under any circumstances,” Jayaweera said.
The Derana top honcho quoted the then Inland Revenue Chief having told him that there was no basis for assertion such tax cuts could trigger significant economic growth.
Jayaweera questioned the rationality in pushing for a new Anti-Terrorism law to replace the Prevention of Terrorism Act (PTA) at a time the government should fully concentrate on economic recovery programme. An irate Jayaweera said that the new anti-Terrorism law should be at the bottom of the list of priorities.
Commenting on the leasing of Hambantota port to China for a period of 99 years in 2017, during the Yahapalana administration, for USD 1.2 bn, Jayaweera said that shouldn’t have happened, under any circumstances.
The deal deprived Sri Lanka of its most strategic asset but USD 1.2 bn received was not even used to settle the loans procured from China for the building of the harbour.
Asked whether he supported constitutional restrictions imposed on the number of ministers (30) and non-cabinet ministers (40), Jayaweera ridiculed the concept. Such constitutional interventions had been made in response to a greedy political party system. The number of ministers should be entirely based on the requirement of the government of the day and certainly not to appease greedy lawmakers, Jayaweera said, asserting that the country could manage with a much smaller Cabinet if appointments were on a scientific basis. Jayaweera also dismissed the much-touted National Government concept, too, as a mechanism to appease a far larger number lawmakers by appointing an extra-large Cabinet.
The outspoken businessman, who does not fear to call a spade a spade, asserted that print, electronic and social media would have to re-examine overall strategy as their impact on the electorate, particularly the floating vote,would be much less in the developing political-economic-crisis. It would be a grave mistake to believe the electorate could be exploited the way they did before the 2022 explosion.
The indefinite postponement of Local Government polls has deprived the JVP of an opportunity to improve its vote. Pointing out that the JVP, at the moment had just three percent of the vote, Jayaweera said that even if it doubled that it wouldn’t make a big difference. But with the relatively improved ground conditions, the JVP couldn’t sustain its strategy, Jayaweera said.
The JVP based its campaign on the allegation that the economy collapsed due to Rajapaksa corruption. Against the erosion of JVP’s new support base, UNP leader Ranil Wickremesinghe has emerged stronger and acceptable to a section of the electorate, he observed.
Finally, The Island raised two vital questions (i) who would be the two major opposing parties at the next presidential or parliamentary polls and (ii) what should be our foreign policy whether to stand with China and Russia or Quad comprising the US, Japan, Australia and India.
Jayaweera asserted that the electorate would look at the two major alliances on the basis of their economic programmes. The better grouping would win but the electorate wouldn’t ignore the nationalistic views and those who voted for Gotabaya Rajapaksa at the last presidential election as a group remained a force to be reckoned with, Jayaweera said. In the current context, President Wickremesinghe could lead one alliance and the other spearheaded by the SJB. But, both camps essentially follow the same strategies pertaining to the economy et al. The issue at hand is whether President Wickremesinghe could follow the identical strategy while receiving the backing of the ‘Pohottuwa’ vote that represented the interests of what he called ‘jahikathwa’ kandawura.
Jayaweera warned the powers that be against taking sides in the continuing US-China battle. Stressing the pivotal importance in our relations with New Delhi, Sri Lanka couldn’t afford to pursue foreign policy strategy at China’s expense, Jayaweera said. The success of Sri Lanka’s short-medium and long term recovery depends on how the country manages foreign relations. Asked whether he backed signing of MCC and SOFA against the backdrop of entering into ACSA with the US in August 2017, Jayaweera said that as he said before there is no ‘yes’ or ‘no’ answer to that query, too. “We as a modern nation it is important for us to get into bilateral agreements. We need to evaluate the pros and cons of them along with a comprehensive country strategy and then decide.”