'Sri Lanka becoming a failed state’ warns former finance minister

 

29 July 2021

Sri Lanka’s former finance minister, Mangala Samaraweera, warned of a likely fuel shortage in Sri Lanka as the economy continues to grapple with a crisis and fuel debt of 1.2 billion USD, was pushing the island towards becoming a "failed state".

“We are becoming a failed state isolated from the world," warned Samaraweera. "Before July 27, we must repay a billion dollars for a loan taken in 2011. In addition, around USD 1.3 billion in Sri Lankan Development Bonds will have to be paid in December this year.”

This statement comes as the US State Department warns investors of the risks they face in Sri Lanka and credit agencies such as Moody and Fitch to continue to raise the alarm of the state of Sri Lanka’s economy. According to a Bloomberg model, Sri Lanka’s default probability was the highest in Asia with the organisation estimating a 27.9% chance of one-year default.

Samaraweera further criticised the Government of Sri Lanka’s economic policy noting “severe shortage of fertiliser” and “serious shortage of imported medicines”.

Lanka Business Online reports that last year, Sri Lanka’s Central Bank was forced to print the largest amount of money printed in a single year to cover the growing budget deficit. In addition, the amount of new loans obtained by the government for the year 2020 alone has increased by another LKR 2 trillion.

Read more here.

Last year Samaraweera described how fragile Colombo's position was at present, stating that Sri Lanka was in "a sordid state" and had "lived beyond its means and did not undertake the reforms".

 

Samaraweera has previously criticised the Rajapaksas, accusing them of branding Sri Lankan soldiers as “war criminals” and of making "secret deals" with the LTTE and the Tamil diaspora. He has also persistently claimed that his regime’s actions have saved Sri Lankan soldiers, “restored military honour” and halted international action.

 

Samaraweera also has a long history in southern politics, having previously served as foreign minister under Rajapaksa. 

He started as the Sri Lanka Freedom Party's chief organiser for Matara in 1983 and Assistant Secretary of the SLFP Coordinating Secretary of the Mother’s Front.

As a leading member of the SLFP, Samaraweera also participated in several Sinhala nationalist rallies, including a 2003 demonstration alongside Mahinda Rajapaksa that marched against the "betrayal of Sinhala nation” by signing a ceasefire with the LTTE.

 

He then rose to the post of Mahinda Rajapaksa’s foreign secretary as the Sri Lankan military began a massive military offensive that killed tens of thousands of Tamils.