Thursday, February 9, 2023


Thursday, February 9, 2023

Mahendran tells CNN reasons for Sri Lanka’s economy collapse

Former Central Bank Governor Arjun Mahendran points out that the main reason for the economic crisis that has affected Sri Lanka is the wrong policies of the Government of President Gotabaya Rajapaksa.

Speaking to CNN Philippines from Singapore, Mahendran, who has been accused of the Central Bank bond fraud and absconding, said Sri Lanka from about 2019, pre-Covid had its domestic problems.

He said the Easter Sunday attacks by Islamic militants adversely affected the tourism industry and the 2019 Government of Rajapaksa cut taxes very abruptly, creating the inflationary pressure because most of the Government spending has been funded by the printing of new money

Finally, the change in agricultural policy regarding the fertilizer where there was a switch from chemical to organic fertilizer overnight and that deeply affected the agriculture, plantations and export of tea.

Mahendran said the economy was already faltering when COVID hit Sri Lanka and this is why the country has been affected much earlier than the other countries.

The ex-Governor further said that to emerge from the current economic crisis, the government needs to revert to previous taxation rates and agricultural practices. “It would be a gradual Process,” he said.

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