While politicians who have presided over the destinies of this island nation for the last 77 years have almost always taken credit for economic success whenever it occurred under their watch, more often than not it has been a committed and dedicated bureaucrat/technocrat who has actually been behind such success – although the credit for it has never accrued to them. Ask someone who the Central Bank governor or secretary to the Treasury was during a given period, chances are that few would know.
But if one were to change the question as to who was the president or prime minister during such and such a period, chances are they would say exactly who it was. Efficient bureaucrats and technocrats have almost always been sacrificed at the altar of political expediency by politicians of all hues, as a result of which they have been strategically shielded from the limelight, leave alone being acknowledged for their contributions, however great they may have been, which territory has thus far been considered the exclusive preserve of the politician.
While the previous Ranil Wickremesinghe regime is credited with having rescued Sri Lanka from the brink of economic ruin, the crucial role played by two technocrats – Central Bank Governor Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardana – has largely been underestimated. Incidentally, both of them were appointed by the same man accused of being responsible for triggering the economic crisis, President Gotabaya Rajapaksa. It was Rajapaksa, who, towards the tail-end of his ill-fated regime, as a desperate measure to halt the slide to the point of no return – with the country already officially declared as unable to repay its debt and therefore, bankrupt – appointed the duo in April 2022, just a few months before his infamous exit.
Despite their boss’s fall from grace, the duo stuck to their task. A little-known fact is that when Gotabaya Rajapaksa tapped Weerasinghe to run the Central Bank – a career Central Banker who had risen up the ladder – he had made a request, or rather a demand of sorts, that if he were to take up the job, Mahinda Siriwardana – another career Central Banker – should be made the Treasury Secretary. With hardly any option left and the writing on the wall, Rajapaksa agreed and, as the saying goes, the rest is history, albeit a painful one.
When Wickremesinghe took over following Rajapaksa’s exit in July 2022, there is no denying the fact that he too toyed with the idea of replacing the duo in keeping with the tradition of appointing party loyalists to key posts, preeminent among them being the Central Bank governor. But, despite the two not seeing eye to eye and the ghosts of 2015 still very much around, mercifully for Sri Lanka, Wickremesinghe acted the bigger man and sanity prevailed in the midst of chaos, with the Rajapaksa-appointed duo being allowed to continue in their respective posts and, by extension, their rescue mission.
The present regime, the National People’s Power (NPP), having done its research, more or less replaced the entire bureaucratic set-up but has been careful enough to keep their hands off this duo, notwithstanding the fact that while the party was in Opposition, both bureaucrats were the target of vicious attacks and called all sorts of uncomplimentary names, including being agents of the International Monetary Fund (IMF).
Therefore, during the period of the last four years, the Central Bank Governor and Treasury Secretary have been the only two officials who have retained their jobs through three very different administrations – no mean feat given the nature of the job and turbulent circumstances that necessitated their professional involvement in arguably the most important ministry during this time.
But now, with the economy having achieved a satisfactory level of stability, the Treasury Secretary has announced his retirement from active service at the end of this month, paving the way for the administration to fill probably the most important seat in the governmental administrative set-up at this time. Up until the time of writing, no successor had been named to the post but the delay itself is an indication of the importance of the appointment, which the President as Finance Minister will have to think about many times over, given the recent turbulent history.
In hindsight, it is pertinent to note that the only time the nation’s economy has sustained growth, or economic stability for that matter, has been when a professional Central Banker who has progressed through the ranks has held the post of governor as opposed to political parachutists, whose sole purpose has been to please their political masters.
As unpleasant as it is to recall, it was President Chandrika Kumaratunga who first broke with tradition and parachuted her chosen nominee, a top businessman, Sunil Mendis, to the post of Central Bank Governor in 2004. While Mendis excelled as a businessman, heading one of the country’s largest corporate conglomerates, his role in the Central Bank was less than exemplary.
However, it was the succeeding President, Mahinda Rajapaksa, who took the cue from his predecessor to a new level and appointed another parachutist to the post in the form of Ajith Nivard Cabraal in 2006. An accountant by training, Cabraal was a misfit in the role that was essentially the preserve of an economist. Why, because an accountant is trained to look inward, while an economist is trained to do the opposite, and the mismatch was obvious. But being the politician that he was, Cabraal’s enthusiasm to please his political master was all that mattered to help him retain that post throughout the Rajapaksa presidency, during which period rather than cautioning that Government on the dangers of unsustainable Chinese credit – most of which was on commercial terms – he chose to turn a blind eye in favour of artificially simulated economic growth, for which he took credit. Not surprisingly, the downward trend began as early as in 2013, pushing the then President to call an election well ahead of time.
The new Sirisena-Wickremesinghe Government of 2015 had the worst possible start as a result of appointing Arjuna Mahendran as Central Bank chief, which appointment quickly led to what is now infamously called the ‘bond scam,’ from which the regime never really recovered. The only saving grace was its choice of successor, reverting to the tradition of appointing a career Central Banker, Indrajit Coomaraswamy, to the top role in 2016. The replacement appointment paid dividends with the country recording a current account surplus – without any import restrictions – for only the second time in history in 2018. This year was significant for it was also a benchmark for tourism, which record still stands to date not only in terms of arrival numbers, but, more importantly, in tourism revenue as well.
The advent of President Gotabaya Rajapaksa to the presidency in 2019 resulted in a reversal of the status quo with a non-Central Banker, W.D. Lakshman, being appointed to head the Central Bank. Although a highly qualified career academic, his lack of practical experience was ultimately his undoing, with his theory of prolific money printing backfiring big time, irrevocably aggravating the economic crisis triggered by the massive tax cuts of his boss, President Gotabaya Rajapaksa. Thereafter, all it took was two short years for the economy to crumble. The rest is painful history.
Therefore, the lessons to be learnt are many and it is praiseworthy that the current regime has let sanity prevail in allowing the status quo of the previous regime – at least on the economic front – to prevail. But that partnership is now coming to an end with the Central Bank chief’s handpicked right-hand man in the Treasury deciding to call it a day.
The regime, which is already on a bad wicket with the IMF withholding its latest disbursement for the past couple of months pending electricity sector reform, among others, will have to think long and hard and work in tandem with the Central Bank chief, as did Wickremesinghe, in even grudgingly allowing the selection of a successor to Siriwardana who would see eye to eye with the Central Bank. Sri Lanka’s recent history has far too many examples of the perils of selecting misfits to these critical roles and therefore to ignore these lessons at this critical juncture is equivalent to committing political hara-kiri.