The international research firm Research Intelligence Unit (RIUNIT) considered it important to broaden the debate and evolve beyond the ‘same old’ regurgitation of rhetoric which isn’t very useful in reaching solutions to the predicament faced by Sri Lanka. It was also felt that it’s important to share the lessons from Sri Lanka with the other nations facing a similar plight.
As a result of the pandemic, the war in Ukraine, global inflation that resulted from wanton money printing, supply chain bottlenecks, surging import prices, rising interest rates globally and years of economic mismanagement in the case of Sri Lanka, many emerging markets are now in default mode or on the brink of a sovereign debt default, or requiring an IMF bailout. Setting aside the global macroeconomic outlook, did the internal system of the island nation alone set the tone for its current economic downturn?
The webinar entitled ‘lessons from Sri Lanka’s sovereign debt crisis’ hosted by the Research Intelligence Unit (RIUNIT) on 22 February 2023 aimed at drawing international lessons from the current economic crisis of Sri Lanka.
An extremely high-powered panel included Yanis Varoufakis, former Minister of Finance, Greece; Dr. Indrajith Coomaraswamy, former Governor of the Central Bank of Sri Lanka; Prof. Jayati Ghosh, Professor of Economics at University of Massachusetts; Prof. Stefan Dercon, Professor of Economic Policy at the Blavatnik School of Government and the Economics Department of the University of Oxford, and Hon. Niranjan Deva Aditya, Presidential Envoy of Sri Lanka to the UK, EU and the Commonwealth.
Fusing the economic and political contexts, the causes, the effects, and the moral of Sri Lanka’s case and other cross-country cases were discussed during this webinar. Prof. Jayati Ghosh pointed out that it was not the domestic macroeconomic imbalance which caused Sri Lanka’s crisis, but rather it is the shift toward borrowing from the ‘predatory’ international sovereign bond (ISB) market during the past 10-15 years that has also fuelled corruption due to the fact that there are no provisions to ensure transparency with ISBs as compared with most bilateral loans. Prof. Yanis Varoufakis further explained that he saw the crisis as a geopolitical strategic issue rather than an academic discussion, drawing on his direct experience of negotiating with the IMF when Greece needed a bailout some years back. His position was that Sri Lanka would be better off exploring alternatives to IMF borrowing.
Former Central Bank Governor, Dr. Indrajit Coomaraswamy pointed out that the reforms flagged by the IMF were in fact urgently needed in order to bring about macroeconomic stability. This view was broadly shared by Prof Stefan Dercon who pointed out that many economies have emerged stronger post IMF engagement.
Hon. Niranjan Deva Aditya made a strong point that Sri Lankans needed to rally around the interests of the country and not party-political opportunism at this critical juncture in the island’s history. Earlier, Former Diplomat and member of the Research Intelligence Unit (RIUNIT) Advisory Board, Sir Peter Heap, said that Sri Lanka stall has great potential to succeed given its rich resources and potential to grow tourism. The webinar was concluded by Heidi Chow, Director of Debt Justice in London. She thanked the panel for an amazingly stimulating discussion and asserted that her organization will continue to campaign for debt justice for people living in countries that are in a debt crisis situation, including Sri Lanka.
CEO of RIUNIT, Roshan Madawela said that the purpose of this webinar was to broaden the debate, think beyond the confines of conventional options and to ensure that impending economic reforms consider the people’s welfare, in particular the economically vulnerable groups. Moreover, the webinar confirmed the notion that a wide-range of different economic policy strategies can succeed in navigating the ship to the desired destination despite stormy waters. However, the critical ingredients are the skill, competence and integrity of the captain and his crew.
The webinar was co-sponsored by Capital Trust Properties and is freely available on the following link: Lessons from Sri Lanka’s sovereign debt crisis – YouTube