IMF pointed out reasons for economic collapse – Harsha
The International Monetary Fund (IMF) representatives who visited Sri Lanka has pointed out six reasons for the economic crisis with the main reason as arbitrary tax cuts in 2019, MP Harsha de Silva said.
The Samagi Jana Balawegaya MP was speaking at a media briefing held at the Opposition Leader’s Office in Colombo today (16).
He said that the main issue was how the country’s economic woes could be solved with the government divided as ‘Team Basil’ and ‘Team Cabraal’.
Noting that the IMF would be signing agreements with both the Finance Minister – Basil Rajapaksa and the Central Bank Governor – Cabraal to solve the prevalent crisis, MP de Silva said that the IMF representative is yet to meet with Cabraal despite meeting the finance minister and Treasury secretary on the first day of their arrival.
“On the second day, they have met the President, his secretary and advisor. Usually, two parties sign while sealing agreements with the IMF. One is the minister and the other is the CBSL governor. However, they haven’t even yet met with the CBSL governor,” he added.
“Now an internal issue had arisen from this. What could be seen in social media by yesterday was that the Rajapaksa family had already decided to sack Cabraal,” he added.
Rs. 1.5 trillion printed!
Simply put, this government cut taxes arbitrarily in 2019. At least 500-600 billion rupees a year was lost to the Treasury, creating a huge gap.
To fill that gap, they resorted to printing banknotes, completely overlooking the the modern currency theory. When they came to power, only Rs. 75 billion was printed. Today, this figure has increased to around Rs. 1,535 billion. That means they have printed around Rs. 1.5 trillion. In this backdrop, production stagnates. It increases the price of goods. We saw that the government had printed over Rs. 100 billion since last Friday (11).