Former Central Bank of Sri Lanka (CBSL) Governor Dr. Indrajit Coomaraswamy piled up over $ 10 billion in debt through International Sovereign Bonds (ISBs) during his tenure at the Central Bank between 2016-2019 to ensure Sri Lanka’s dependence on the International Monetary Fund (IMF) in the future, charged Independent MP Wimal Weerawansa.
Speaking at a rally held on Sunday (11) in Kegalle, he alleged that Dr. Coomaraswamy, who is now a member of the Sri Lanka team engaged in discussions with the IMF, allowed the country to fall into a pit of debt by incurring a substantial amount in ISB debt in a short period of time with high interest during his tenure as CBSL Governor.
“By increasing the ISBs to $ 17 billion (from $ 3.5 billion in 2015) in a short period of time, he allowed the IMF to tie the country by the neck as the repayment would be difficult and the country (the economy) would get stuck,” he alleged.
“Couldn’t he (Dr. Coomaraswamy) understand, as an economist, that taking such a large amount of debt in a short period of time for such an interest is unsustainable? If he didn’t understand that, then it is very dangerous,” Weerawansa further claimed.
All attempts made by The Morning Business to contact Dr. Coomaraswamy for a comment on the matter proved futile.
Moreover, Weerawansa alleged that the reason for the country’s economic crisis is the lack of a future forecast for the country’s economy with the means of reducing the trade deficit and reducing debt.
He added that though exports have increased through Free Trade Agreements (FTAs), Sri Lanka’s trade deficit has widened over the years.
Addressing an event in Colombo in June, Dr. Coomaraswamy said ISBs raised during 2015-2019 were to reduce short-term borrowings and convert them into five- to 10-year tenure ISBs, adding that $ 5 billion in ISBs were raised specifically for the aforementioned reason.
Also, he said that short-term swaps were reduced to $ 500 million from $ 2.5 billion, while volatile portfolio capital in Government treasury securities was reduced to $ 2.9 million from $ 3.5 billion.
He claimed that although ISBs were not cheap, they were still cheaper than short-term borrowings. Moreover, he added that $ 2 billion was borrowed by issuing ISBs in 2019, predicting uncertainties and instability that generally arise during an election period.
