The recent Supreme Court judgment, which attributed the collapse of the country’s economy to unsound decisions made by several individuals between 2019 and 2022, provides a comprehensive insight into the factors contributing to the crisis.
Key Revelations in the Supreme Court Judgment:
A five-judge bench, led by the Chief Justice, ruled that seven respondents, including former President Gotabaya Rajapaksa, Mahinda Rajapaksa, Basil Rajapaksa, former Secretary to the President P.B. Jayasundara, and former Governor of the Central Bank Ajith Nivad Cabraal, violated the fundamental rights of the public through economic mismanagement.
The judgment affirms that the actions of these respondents resulted in a breach of Fundamental Rights guaranteed to the general public.
The Supreme Court noted that the government, under Gotabaya Rajapaksa’s leadership, missed several opportunities to avert the economic crisis. One significant lapse was the failure to secure the final tranche of the 1.5 billion USD extended fund facility offered by the IMF in 2016.
Sri Lanka was supposed to secure the final tranche of 160 million USD in April 2020, and the IMF had expressed satisfaction with the country’s progress. However, the government, post-October 2019, did not take steps to secure the tranche.
The judgment reveals that, during this period, the government made substantial changes to taxation without consulting or seeking advice from the IMF, even as a review by IMF staff representatives was pending.
On April 8, 2020, then-Secretary to the President Dr. P.B. Jayasundara requested the tranche as an emergency facility, citing the adverse impact of the COVID-19 pandemic on the economy. The IMF responded, expressing willingness to support Sri Lanka but necessitated further discussion with other multilateral institutions.
The Supreme Court determined that the decision not to secure these funds was illogical and arbitrary, concluding that there were no documented steps taken by Sri Lanka to obtain the funds beyond the letter from Dr. P.B. Jayasundara.
