There was no need for debt default - former CB Governor

• Says bridging finance was forthcoming from China and India

 There was absolutely no necessity for the hurried, inexplicable and highly suspicious “debt default” of April 12, 2022 which was announced without any formal approval, former Central Bank Governor Ajith Nivard Cabraal said in a statement. He said with the bridging finance that was forthcoming from China and India as well as the issue of “Green bonds” and expected inflows from other sources, Sri Lanka would have been able to tide over the challenging period until the existing sources of “non-debt” inflows could have been strengthened, and new “non-debt” inflows introduced.

“Many business chambers have been vociferously asking for higher Government revenue while some chamber leaders had even specifically called for Sri Lanka’s forex debt to be defaulted. Many also clamoured for an IMF programme which generally leads to a depreciated currency, higher interest rates, price increases in public utilities, sale of government assets, and the removal of subsidies. Almost the entirety of the above “wish-list” has now been fulfilled by the government, probably as “pre-conditions” for the impending IMF programme, and therefore, the business chamber leaders should be happy, although it is doubtful whether their member entrepreneurs are pleased with these measures. In any event, whatever may be their preferences, as a result of these recent measures, several outcomes have occurred. Personal and business incomes have reduced drastically. Interest rates have risen to over 36%. Inflation has surpassed 70%.  To make matters worse, a recent news report stated that the IMF is pressing for a “more effective debt resolution mechanism & common framework, with equal treatment to all creditors”.