charindra chandrasena 00:00 Hi Dana. Hi Jari. Hi Riyadh. Speaker 1 00:07 Hi Chari. Merry Christmas. charindra chandrasena 00:09 Merry Christmas in advance. Merry Christmas to everyone. How's the season going for you guys? Speaker 1 00:15 All right, all right. Nothing much to complain about. But I think everyone is taking a little bit slow because with the you know with Ditwa and all that, I think a lot of the Christmas parties and a lot of the office parties were like either cancelled or either at best they were like basically downsized. Dhananath Fernando 00:30 But I didn't realise if you want to look at how to boost the economy, it's actually the opposite that we need to do. Absolutely, to spend money because when you spend only that it helps economic growth because everyone, but again, you understand the sentiments around it. Yeah, charindra chandrasena 00:44 it's more of a more of a sentimental thing. More of a sentimental, not an actual practical thing. But I get your point. To stimulate the economy, you need to spend. You need to spend your party also. But yeah, everybody's taking it slow this season, but generally it has been a lot slower than some other years. Of course, in the recent past, we've had this this kind of years where where Christmas has been very muted. This time for for obviously the cyclone and its impact. Now, yesterday the World Bank put out its report on the impact assessment. Did you guys see that? Speaker 1 01:31 We kind of went through it. Yeah, yeah. I think Dana went through it in more detail than me. Yeah. So they have charindra chandrasena 01:37 said 4.1 billion USD, Speaker 1 01:41 roughly 4% of GDP. charindra chandrasena 01:42 Yeah, so 4.1 billion USD in physical damages. Yes, Speaker 1 01:48 correct. That is civilian and that is basically public and civilian infrastructure. charindra chandrasena 01:54 Yes, infrastructure and and you know housing, building, housing, all of that. Yeah, yeah. Anything physical. Yeah, that is the damage. Speaker 1 02:03 Yeah, charindra chandrasena 02:04 it doesn't account for non-physical damage. No, Speaker 1 02:07 this is only the brick and mortar damage. Exactly. Yeah. charindra chandrasena 02:09 Right. So initial thoughts on that is that the figure that you guys were expecting because I I remember you telling me that you're thinking about 4 billion at one point. Dhananath Fernando 02:20 Yeah. charindra chandrasena 02:20 So this is pretty close. Speaker 1 02:22 Yeah. Dhananath Fernando 02:22 Yeah. So how we did was, sorry. I mean, our estimation or rather the guesstimations was comparing it with the tsunami. Yeah. What was the damage at tsunami, and look at the damage then, and to basically considering it is equivalent to tsunami, what is the dollar value of that damage now? So I think it was coming approximately about 4 billion when we did it. So World Bank has also said it's about 4 billion out of that. The most damage they have, they have gone. I mean, they have done the assessment under a method called grade, yeah, grade model, which they have been doing it like for so many countries. And interestingly, I think we should invite our weavers to go and go through the entire import Ria. Speaker 1 03:05 Yeah, Dhananath Fernando 03:06 there is a table that they are going back to floods for 40 years, but you can notice is pretty much every year there is a flood. Speaker 1 03:13 Yes, Dhananath Fernando 03:14 and there is a damage line, not at this magnitude, but 100 million US dollars, 50 million US dollars. So that's a seasonal Speaker 1 03:20 flood. Dhananath Fernando 03:21 That's a seasonal flood Speaker 1 03:22 that comes now. For example, if you take if you take the what you call, I mean, we we get the two monsoons. So from that, we basically you know there is a little bit of flooding that happens somewhere in the country, right? So these are the low lying areas. So these are the seasonal floods, and a lot of the people in that area also kind of used to it, right? Probably the reason is probably the proximity to the CTO wherever they work with, or where they wherever they conduct business with. That is one. So that you find, for example, if you take the if you take the canoni, right on the low lying areas, on on on on on the low level road, you get the seasonal flooding which happens on and off. So that is something that happens if you like it or not. It happens every year. Dhananath Fernando 04:04 Absolutely, Speaker 1 04:04 right? I mean, you get these exceptional years where it doesn't happen, but then you get the other extreme. Then you have droughts. Dhananath Fernando 04:09 Yeah. Speaker 1 04:10 So because this is the thing, because we have some sort of a damage. I'm talking which impacts the GDP, which impacts the economy either way. Dhananath Fernando 04:17 Yeah. Speaker 1 04:17 Where we have flooding or either we have droughts. Dhananath Fernando 04:20 Yeah. Speaker 1 04:20 So very seldom you get that time where you don't you have the right amount of rain and you have the right amount of sunshine. It rarely happens, you know. It's like it's like it's like seeing hail is comet, you know. It doesn't you know it doesn't it doesn't happen every day. So because of that, now you need to figure out okay on the physical infrastructure and the things that you need to do in the future, right? Because lot of the work that is there, not lot most of it, or at least I would say 50% of it, there is I think an engineering solution which you can do. Which means you know you know the things like you know city and town planning is not something that has happened in this country. There's lot of ad hoc buildings, lot of ad hoc infrastructure. Houses are in the wrong places and all that, right? And there are, and some places where you know you get flood plains, where the water when it rains very heavy, where the water gets filled up. Those plains have been some of them legally or illegally. We don't know, and I don't want to commit about it. But they have got filled up and they built houses there. So obviously that water has to go. That water body or that volume of water has to go somewhere, then it will creep. I mean, the classic case is actually water's edge. So there is a you know people in Bathuramal area. They will talk back in the day when water's edge was built. Lot of houses got flooded because the reason is the mass of water's edge, which was a water body. That's why you have the name water's edge, right? Part of that got filled up, right? And then the water body amount of that X amount of water, there's no place to go. Then it will creep onto a road and eventually into a house. So this is this house and town planning is something we really need to kind of really figure this part out. Dhananath Fernando 05:54 Yeah. Speaker 1 05:54 So even in the you know Dhananath Fernando 05:55 even in the World Bank report, actually they have categorised under grade models. They have like four categories. So just for charindra chandrasena 06:00 just for just for our viewers, grade is global rapid post disaster damage estimation (GRADE) Dhananath Fernando 06:09 GRAD. Absolutely. Thanks, Jarik. So basically, they are calculating the total residential damage, the non-residential damage, infrastructure, and agriculture, and they have done it for all 25 districts, so that's how they have calculated. So accordingly, I'm just quoting it straight from the report. The highest damage is about approximately estimated of 1.7 billion on mainly on the infrastructure, civil infrastructure, which is about 42 percent, and then 24 percent is the residential building damage, which is approximately about a million dollars, and then another agriculture is about another 20% which is about another 814 million. Again, approximately a million dollars, and basically the non-residential is about 14% which is about half a billion dollars. So that's the damage. And out of the districts, I think most affected, of course, candy. The least is Kirinochi. Speaker 1 07:12 Kilnochi, yeah. Yeah, and I think surprise, surprise for to everyone. Everyone would have would have thought that Badula would have been next. No, it's Putalam. Speaker 2 07:20 It's Putlam. Yeah, because Speaker 1 07:22 Putalam, I think Debra Web, and you get Mahavib. So when those get flooded, it it what actually comes up to Nikambo, right? So it comes, it spills over to the Ampaha, and then it just keeps on keeps going Speaker 3 07:33 north. Speaker 1 07:34 So I think what has happened is a lot of the coconut, you get a lot of coconut estates, yeah. So probably there's a lot of damage there, and plus there's a lot of agriculture in the sense vegetation and plus paddy fields, and the other one is the big hit is going to be the prawn farms, right? So those who have got basically what I heard there was an article about a gentleman who owns a prawn farm. He said basically he got washed out to sea. Dhananath Fernando 07:54 Yeah. Speaker 1 07:55 So those are the big ones. That's why I think Putalam is number two after candy because everyone is going to be like preplexed, like you know how is Puttalam impacted so bad. Putalam is impacted. Only thing is number of deaths in Puttalam. I don't think. I think it's very lower. It's it's it's negligible compared to. I'm not saying any life is this thing, but it's it's much much less. I mean, because that's flooding. That's flooding. Exactly. Yeah, because in in in in the in the. I mean, Putalam is mostly fratland, so water just gushes through, right? It's not like where water comes down and you know takes your house with it. So yeah, I mean it's devastating, but yeah. So this is basically the damage that that has happened. Yeah, and I think Dhananath Fernando 08:36 another thing that the report highlights is it has disproportionately impacted more the poorest of the poor. Absolutely, because if you look at Badullah, poor province is the poorest province, and the it's not an advantage. But luckily, the Kalambo contributes largely for our GDP. You know, so that impact has been in a way minimal. While the total damage is about 4% of the GDP, 4 billion, it has affected the poorest of the poor, and mainly in the report says the female-headed households. So they are being most vulnerable. I think the good news is, I think India and China is stepping up for a lot of relief. And we discussed about the donor offers. But before that, charindra chandrasena 09:18 Dana, now you say that Colombo has been Colombo has been least affected. Yeah, relatively. Relative. I won't say least. Not least. No, but less affected. Less relative. So if you Speaker 1 09:29 go through. Yeah. charindra chandrasena 09:30 What is the hierarchy in terms of? That's Dhananath Fernando 09:32 candy buttlem, badula, kegal, kurunaigala, gampa, nuvareli, Ratnapura, Anuradhapura, Poland naru, and then Kalamang. So what's under Colombo? What's charindra chandrasena 09:41 below Colombo? Dhananath Fernando 09:41 Trincomalee. charindra chandrasena 09:42 Only Trincomal. Triumkomayo, Dhananath Fernando 09:43 Maatale, Batty Close. It goes on. Right, charindra chandrasena 09:46 right. Yeah. Okay. So we can say in the second half, no. Yeah. Colombo. So that's the point you were making as well. That Colombo has not been that badly affected. Yeah. So Dhananath Fernando 09:57 approximately value. It's about 150 million US dollars. Is the damage for under 50 million US dollars opposed to candy? It's about 700 million. Yeah, charindra chandrasena 10:04 yeah. So the fact that districts like Kandy and and when you say candy, it's not Kandy Town. It's the candy district, the suburbs of Kandy, the outskirts of Kandy, all of that. Yeah, rural areas. So the fact that so many rural areas have got affected, and Colombo has not got affected, and also female-led households have got affected. Isn't that just going to widen the income disparity that that we have? You know, is it is it actually good news in that sense? It's Dhananath Fernando 10:39 not good news. It's not definitely not good news because it will be very harder for them to rebuild. Speaker 1 10:43 Yeah, Dhananath Fernando 10:44 because you know, poor rest of the poor really they don't really have any means, and you know this is not we are only speaking about the physical property damage. They have lost their lives, and the chief, I mean, main income earner and all their education disruption is massive, so I think we have to strengthen it from the social safety net angle. I think so. In charindra chandrasena 11:06 that sense, the government's relief package, along with the CBSL, does it not make sense? No, it Dhananath Fernando 11:15 makes sense. It makes absolutely sense. That's why we have also been saying basically, Chari, this is the time that you have to spend because you have fiscal space, so you have to spend, but you have to spend it responsibly by repurposing some of the other capital expenditure because some of it anyway would be capital expenditure, and there are two parts. While you are rebuilding them, if you are you are to strengthen the connectivity because that's also in a way rebuilding their livelihood because that's how they do their agriculture. Whatever the thing that they do, it's easier for them to commute and all that. So you have to strengthen both sides. So absolutely, I think what what government spending package was good, good in the sense like they around 5 billion additional. So I think they are going to change the Speaker 1 12:03 yeah, and they have the fiscal and Gandana. The thing is, they have the fiscal space now. For example, they have already allocated 500 billion, but they have without raising the debt ceiling, they actually have the fiscal space to go to a trillion. I mean that that go to what to to a trillion, like it's 500 billion, right? So they have the fiscal space. I mean, if they really want to? They can. So the thing 100 billion, yeah, yeah, 500 billion. So if you do, like for example, if it's $4 billion, right? 500 billion is one and a about 1.6 billion. So already out of the 4 billion, about 30% of the money is already there. It's within the budget of the government. So when the donor agencies and all that, because if you take the tsunami and all that, it is a different story. We were expecting a lot to come. In other one was the tsunami actually hit private investments because it was mostly hotels and fisheries and all that, which were more more or less they were insured. Like if you are running, let's say a resort or a hotel or something, definitely you are going to have some insurance cover. So that insurance cover probably would have given you the money, and you would have recovered from that, and then rebuilt your business, and you would have been up and going, which you didn't have to depend on the government. This you have to depend on the government because the reason is a lot of the lot of the infrastructure that got destroyed is private infrastructure, that is houses, houses, businesses, and all that. And the other one is more importantly is the public infrastructure, which is 100% under the government, which nobody has to, nobody will be giving money out. So that is something. The good now, I'll say these are all the bad parts, right? The good part, what I see is lot of Sri Lanka's efficiency and all that in public transport, public infrastructure. Lot of that can be addressed because in Singala what they say is, you know, Makalahadha na, right? You can actually erase the past and build it all together and make a better design, better build, better quality, have better standards and all that. Because even if you look at the roads that have got got wiped off, or the thing is, a lot of the RDA roads actually didn't get didn't get damaged that bad. It was the provincial and the rural roads that got basically annihilated. Because the reason is the RDA standard probably is better. Like you have a minimum standard knowing anything when you build, so I am pretty sure the RDA minimum standard is decent or it's pretty good. That's why the lot of the RDA main roads didn't get washed out. Lot of the roads that got washed out are the ones that were medium and sorry from provincial and local government roads. So I think those roads also you can improve a political arm. I mean, those charindra chandrasena 14:24 roads sometimes the the regional politicians just exactly put a little carpeting exactly tar job on top, and the next time the rains come, it takes it off anyhow. Speaker 1 14:36 So so that's the thing. So I think all those can be addressed with proper policy standard, and sometimes you even have the policy standards, policy standards, or the minimum requirements for standards. But the problem is, the system is corrupt. So because of that, what happens is the guy who comes to inspection sometimes might be on the take. So then what happens is he passes the road, and then the standards are not there. Where that money goes into. Certain people's pockets, so I think that can be arranged, and and and I think there wasn't enough uproar also from the public. I think the next time something happens, I think the people of the area will, you know, these are going to these are going to be be in their heads for a while. So they will go and definitely complain. Okay, the whatever the regional or the what you call the provincial or the local local government roads are not up to up to spec and all that. So, so that is at least the little light of the end of the tunnel. charindra chandrasena 15:28 Now, do we? Because now the opposition is saying that this is, you know, this is a bit too much of a giveaway in terms of the government. They are just, you know, overdoing this, and because of that, while it's necessary, next year that will lead to the beginning of the collapse of the government, and all of that. Now, are you are you do you endorse that view, or no? Speaker 1 15:55 I'll just do we have charindra chandrasena 15:56 the fiscal space for it? Is what I'm. I think we Speaker 1 15:58 do have the fiscal space. Other one is at a time like this. If you don't spend, then spend when. So, Dana, yeah, no, absolutely. Dhananath Fernando 16:05 So, I saw also. I think this was asked in another podcast as well. So, I think I I think Chari the if it's a collapse, the collapse will happen because if it if it change the main architecture of the reform programme, I I mean the reform programme was built on about five key pillars, which could have been better, but at least that structure is there. First is the debt management office and the new debt management act. There you have a separate architecture that being done to manage the debt. Second one is what we are speaking about the public fiscal management act. You cannot spend as you wish. Even now, for them to increase the primary expenditure from 13% to 14.4% there is a clear guideline provided. That's second. Third one is the full price formula, because if you do that, if you change it, problem. Then the Central Bank Independence Act. That it's a I mean, key legislation. So the central bank cannot print money. Still, they have room. It's not perfect, but it's better than it was before, in my view. The first one is the anti-corruption bill. So this was built on that. But of course, if they, if if we go back and change the central bank act, the debt management act, anti-corruption, and if we reverse it, there is a chance. But we should not looking at just because because you are spending what you have saved. Like as I said, primary balance from 2024 to 2028. It's almost 100% You have doubled your primary balance. That means you are basically except the debt servicing everything else. You have a saving of 100% increase, so you have to spend when people are rearranging. But of course, you have to bring the economics to it. You can't just distribute money. Yeah, to bring the incentive structures for them to rebuild and bring the transparency into it. But the the challenge would be I don't know about the politics, but on economically, if we don't print money, if we keep the fiscal stability, economy will stable. I don't know whether people from the government will crossover or that's not. We cannot predict. But of course, on the on the economic side, I think we are we are in safe at the moment, we are safe, but it doesn't undermine the reforms that are needed. Also, remains that we need to continue. charindra chandrasena 18:26 Yeah. So, so this this is this is not an excuse for the government to stray from the reform agenda. They have to keep to it. Yeah. But then also spend. Dhananath Fernando 18:38 Absolutely. In fact, this is a golden opportunity for them to again accelerate the reforms because you get another 100-day window that no one will go on strike and all that. Yeah, it's inhumane to do that. So, so actually, charindra chandrasena 18:52 on the on the you said you won't don't want to talk about politics. So I'll talk about the politics side, right? What I what I like about not like, but I think if there is a silver lining to this, is that in the whole of the first year the accusation from the opposition has been that this government is continuing President Ranil Singh's programme, and and they are probably being even more loyal to the programme than President Ranil was, and that President Ranil is the one who, with the support of the parliamentary majority at the time, which was mainly SLPP, who saved the economy and brought it to the level where it could be continued safely by the NPP government. Now this is for me a reset because none of those recovery talks and all of that matter anymore. This is well and truly. The NPP's crisis. Therefore, there is the memories of Ranil are long gone. Ranil has no no fingerprint on this at all, and therefore this happened during the NPP government government's time. Whether it whether they are to blame for the scale of the damage or not is you know up for debate, but they are definitely the ones who will have to recover from this. There is no other government that's going to come and help the recovery. If they do recover, they can actually you know stand up and say, "Look what happened. This is not Rani's economy. We are carrying forward. We had a fresh crisis, and we have overcome it. And I like that. If they fail, Speaker 1 20:50 okay, charindra chandrasena 20:51 then the opposition can also say that. Look, I we told we said that these guys are elbowed. These are elbowed government, inexperienced. They were carrying on running as good work, but when they had to deal with something themselves, they failed. Speaker 1 21:06 So, Chari, I'll give a quick view on at least at least I'll give my view on this, right? So, the thing is, during the financial crisis where the country went bankrupt, I'm just going with numbers. The economy was at 87 billion somewhere there, right? It dropped to about 73 or 74 billion. It just dropped. All right. I mean, it lost about 13 billion. Complete got wiped out. Economy went into negative. That means it obviously it's negative. No, they went to negative 10 percent. I think one 10 percent or 8 percent or something. It went one particular year. Was it how much? I can't remember the exact number. Yeah, number, but yeah, it contracted. Yeah, it was it was contracting. It definitely was more than 6% I can't. Yeah, even I can't recall the number, but it was bad. And the economy contracted. The number was 87 billion. It dropped to about 74 or 73 billion or something like that. So that is a wipeout of 14 billion. All right, not growth or anything. This is just a wipeout of the economy, which means completely negative. This one, this crisis economy, I don't think will go into negative because until the third quarter it was positive. We have to wait and see how much a fourth quarter hit takes, which will come out in a month or so, month and a half months. It will come out, right? And still, I don't think it will go into negative, right? And the economy is currently at 100 billion. So if you look at just if you're if if you're blindfolded, if let's say you're a blindfolded economist, and these numbers are just placed using there was a natural disaster. These are the numbers. There was a financial disaster. These are the numbers. Numerically, the financial disaster was more severe on the economy than than the natural disaster. Of course, right. So that's no question there, right? But the thing is, what Dana was pushing about, you get these reforms that need to go through, because the problem. So you have to understand this. No, the natural disaster is of a less severe. By the way, I'm I'm completely discounting the human factor, right? Of course, the personal factor of houses and all. Or they say I'm some inhumane person. But I'm just saying, looking at a completely numerical scenario, it's basically the obviously the the financial disaster, the bad decisions are worse than a cyclone hit in the country, at least on a economy, on a on an economic sense, right? So the scenario is then you have to do particular things to get it back contract. Yeah. So those reforms are fundamental to get it done, right? So if those reforms don't come, we are going to have another financial tsunami. Oh, sorry, we are going to have another financial tsunami, or we are going to have another financial cyclone, which is severely worse than the physical cyclone, at least numerically, at least on economic sense and economic. So that is something you really have to tread. So I mean, the the charindra chandrasena 23:40 comparison or the equivalent one would be COVID and the economic crisis. Yeah. So this is the cyclone, and then exactly whatever happens after that. So Speaker 1 23:50 because if you take okay the tsunami assessment of the damage was how much there are 2 billion, no? Dhananath Fernando 23:55 2 billion. Yeah, Speaker 1 23:56 but roughly around there, one and a half, 2 billion, right? No, this is assessment is 4 billion. Both put together 6 billion, right? And this is done on US dollars. So currency fluctuation, interest rates, all you can mitigate because it's on US dollars. The financial crisis we lost 14 billion, more than double of the tsunami and the what you call cyclone detox put together. No, no, I think I charindra chandrasena 24:20 think maybe you misunderstood my point. My point is that now the government has its own crisis. Speaker 4 24:28 Yes, charindra chandrasena 24:28 it's not a comparison of whether Dhananath Fernando 24:32 someone else is President Ranil's charindra chandrasena 24:34 Ranelagh crisis is bigger than President Anurag's crisis or anything like that. I am saying now President Anura has a crisis of his own, yeah, which is nobody else's. You're Speaker 1 24:45 talking about the politics of it, is charindra chandrasena 24:46 it? Yes. Oh, okay. Which is nobody else's, right? Right. Nobody else was in power when it happened, and nobody else is going to be in power when it's either resolved or when it when when when things hit the. When it Speaker 1 25:01 when it snowballs into something even bigger, yes, exactly. charindra chandrasena 25:04 So this is absolutely AKD's crisis. Speaker 1 25:10 Yeah, the the ball is completely on his course. Yeah, and charindra chandrasena 25:12 the success and failure of the recovery will be also on AKD purely. Therefore, I'm saying finally we can take the Ranil fact out of this, right? Because AKD owns this, right? If it wasn't a cyclone, if it was something slow building, then AKD can say it came from Ranil, right? But this cyclone didn't come from Ranil, and it's a good opportunity for the government to now show that look, you called us an elbowed government. Look what we did. This was arguably the worst natural disaster Sri Lanka has faced in terms of nationwide impact. Speaker 1 25:54 Yeah. charindra chandrasena 25:54 Right. And look how we have emerged from that. No, Dhananath Fernando 25:58 what you're saying is very interesting because during Chandrika Mandarin Mayaka's time, it was a tsunami, but that came towards the end charindra chandrasena 26:05 of her term. Yeah, Dhananath Fernando 26:06 and then during Mahindra Japasa's time, I think his crisis was the war and all that. It was at you know at a critical juncture. charindra chandrasena 26:13 The the resumption of the war. The resumption of the war exactly. So Dhananath Fernando 26:16 it was quite tight period, and during President Sirisena's time, it was the Easter attack and the constitution, which was quite a man-made in a way, but that's what they have to meet with. And President Gotabi, it was a COVID crisis, and President Ranil Bikram Singh was, it's a economic crisis of it, and now President Dizanak has this crisis. So it's interesting that every president had their Speaker 1 26:39 own crisis, all sort Dhananath Fernando 26:40 of crisis. Some are man-made, some are natural, some are you know unavoidable circumstances. But it's interesting to see how all of them. And and that's charindra chandrasena 26:50 what really that's what tells you really about a president's character. Yeah, Dhananath Fernando 26:55 you know how charindra chandrasena 26:57 he or she deals with a real crisis. Yeah. So we'll see. I mean, it'll be it'll be interesting to watch. Yeah. Speaker 1 27:04 But only thing is, Shari, just want to reaffirm something that not charindra chandrasena 27:08 comparing on scale. No, no, no. What I'm Speaker 1 27:10 saying is, forget about the scale of anything. Whatever reforms that were going on, those some of those reforms only actually pulled us out, and there are a lot of reforms that have to go. If those reforms don't continue, then again at some point you are going to get bogged down. That's what I think both of us are trying to say, right? Forget about the natural disaster. Forget about the tsunami. Forget about. But to the charindra chandrasena 27:28 government's credit, I think they have so far stayed the course. No, right? You can disagree if you. No, Dhananath Fernando 27:37 I think Charlie. How I see this. Speaker 1 27:38 Yeah. Dhananath Fernando 27:38 Even to continue the right reforms. Speaker 1 27:40 Yeah. Dhananath Fernando 27:40 That's also a way of like character, no? Because you should not be like a complete idiot to completely reverse something and get into a deep trouble. Someone has done the hard work. Absolutely, it's your role to basically take it forward and get further things done and actually claim like you know what others couldn't couldn't do for like 510 years, like I did it in like you know six months or something like that. So I think it's also shows that what you need to do and you know being pragmatic about it. charindra chandrasena 28:07 Yeah, pragmatism and and also leaving your ego aside. Yeah, right. Because that's important. AKD could I mean he would have maybe fallen in trouble afterwards, but he could have said no no this has Ranil's fingerprints all over it. I don't want anything to do with it. I'm going to go my own way. Speaker 1 28:24 Yeah, charindra chandrasena 28:25 he didn't do that. He didn't do that to his credit for whatever reason. Dhananath Fernando 28:28 Yeah, charindra chandrasena 28:28 right. So I think I think I think they deserve credit for staying the course. We have about 10 minutes, but I want to also touch on the visit of mr. Jay Shankar, External Affairs Minister of India. He's here, and he has pledged 450 million. Yes, 450. Yeah, 450 million and 350 is concessional, and other 100 is as a ground, as a ground, right? So, alongside that, this week we are also getting, and he's supposed to come today with this delegation, This Chinese very high-level Chinese delegation. Yeah, Dhananath Fernando 29:30 you mentioned it's like the third in the making. So so yeah. charindra chandrasena 29:33 So but but I mean the latest reports are that it's not going to be him, and it's going To be the the delegation is going to be led by Wang Junzenc. I hope I've got the name right. Speaker 1 29:48 Yeah, charindra chandrasena 29:49 a member of the 20th Central Committee of the CPC China, the Communist Party of China. Speaker 1 29:54 So that means from the political committee. So that means very high official from the Politburo. charindra chandrasena 29:59 Yeah. But I don't know in terms of ranking who ranks higher because the Chinese system Speaker 1 30:05 is a charindra chandrasena 30:05 you know for example whether the prime minister actually is the second most powerful person in China is it could be debated that's questionable Speaker 1 30:13 yeah charindra chandrasena 30:14 so it's not exactly ranking so I don't know but I know that this is a high level delegation Speaker 1 30:19 so I'll bring I'll give you a good analogy on this. Comparing Russia, so do you remember that when President Putin, you know, there's so many terms that he can stay as president, and then I can't remember his name, who was the prime minister became the president. Medile became the president. So the CIA used to have a code name for both, right? Putin was Batman and Middle Ave was Robin. So even when 14 became prime minister and middle life became president, still it was 14 was Batman and Middle Ave was Robin. charindra chandrasena 30:49 Absolutely. Speaker 1 30:50 So that's like a funny analogy to bring in this because everybody charindra chandrasena 30:53 knows that power is not purely title. Title in a country like Australia or China. Absolutely. Yeah. Actually, China in China the power really comes from being the I mean heading the CPC party yeah Speaker 1 31:09 the social part charindra chandrasena 31:09 and not necessarily from the title of the so Speaker 1 31:12 the thing is with the CPC with the party is simple there's simple reason for China doesn't have elections it's not a democracy it's a single party state so obviously anyone who leads, who holds a very senior-paced position in the party, obviously holds a senior position in the country. I mean, it's very straightforward. So if he is a high-ranking official, so much the better for us. I mean, that means you know certain decisions and all that will be very clear and it'll be very well communicated. So it's a good thing. I don't know, sir. You are just checking on it, isn't it? Yeah. So yeah, yeah, no, because this this is charindra chandrasena 31:41 new, but either way, it is a high level delegation. Yeah, absolutely. Yes, it is a high level delegation, and I just want to ask you in terms of geopolitics, is this not an opportunity for us to, you know, almost advertise the crisis and get help and see who is, who is running to us faster. You know, if we are in the middle of that, you know, vast open garden like Peroglinic Gardens, and there are like those in the Bollywood movies like the Two Lovers on the side, and we are the girl in the middle who runs to us faster and carrying what? Dhananath Fernando 32:23 Yeah, charindra chandrasena 32:24 right. Is it is not an opportunity for that? It Dhananath Fernando 32:27 is absolutely absolutely an opportunity, and you can see like India's response and why a senior official like Dr. Jaya Shankar is arriving. Actually, he's arriving. I mean, he has arrived as a special envoy of the prime minister. charindra chandrasena 32:40 Yeah, and it doesn't get any higher than him, really. Absolutely, there cannot be any higher. Even if the President comes, it won't have the same impact. Absolutely, yeah. Dhananath Fernando 32:49 So yeah, I mean, this is a golden opportunity, and even if you look at the numbers that he's pledging, because the IMF report, sorry, so Charlie, even if you look at the IMF report, they have also done a balance of payment impact. Even what they are looking at is about 400 million coming from the development partners. Now, purely 450 million is coming only from one country, which is mainly in the form of cash, like concessional or as a grant. So we don't know about the form of support from China. Hopefully, it will be somewhere equivalent or somewhere close by. No, yeah, Speaker 1 33:24 they would at least match it. Match it, no. So, Dhananath Fernando 33:26 so, so with that and with the donor conference, so out of like, let's say 4 billion damage, already like we are. Hopefully, we'll get about closer to about a billion now. Is 25% of Speaker 1 33:37 the target. And plus, on our on our on our budget side, we have another 500 billion if they wish to spend it. Dhananath Fernando 33:44 Yeah. Speaker 1 33:44 So the thing is, yeah. So if they like get really super desperate, there's still another one and a half billion from internal funds which they can draw. Dhananath Fernando 33:51 Correct. So so absolutely there is an opportunity, but here's the trick. We will get this money in a foreign currency. Speaker 1 33:59 Yeah. Dhananath Fernando 34:00 But we are spending it in local currency, right? So we are not, you know, doing paying the contractor in dollars. So that's where the central bank monetary stability is key. Yeah. Because just because this money comes, it doesn't mean because ultimately we are spending it in our local currency by adding liquidity. That's why the central bank has to be very cautious to keep the monetary stability, because otherwise this foreign currency doesn't mean anything because it will add to reserves or it will add to imports. But if you increase the liquidity unnecessarily, we are heading towards another trouble. I hope the central bank. I'm sure there are. I mean, it's a institution with like many PhD holders, they know the risk of it. Have nobody to even comment. But we, I think, people should understand how it works. All Chinese money, all US money, all Indian money is coming in their currency. We are basically converting it into our currency. So when we, of course, even without their money, we have. The option by changing the law to add more and more currency, but that is not going to help because that will add as an inflation. So, where we have to absorb money, build our reserves, support our imports at the same time manage our liquidity. The monetary stability is very important because if you have inflation or if you lose the stability, that would be a big problem. So we have to be very cautious on this. Don't underestimate the the basics of the game. Speaker 1 35:27 Yeah, yeah. Just Charlie, just one more small thing. I want to just to quote into this. The only thing is now the world also is like going into a different order now. You see the U.S. kind of looking at very very domestic policy, and they are not looking out too much. So you see, U.S. kind of reeling back to pre-1942 because I think the U.S. Pearl Harbour was attacked on December 17th or something like that, right? So non-interventionist, yeah. So they also reeling back, inward looking, inward looking, and they are they are trying to protect their region. charindra chandrasena 36:00 Yeah, Speaker 1 36:01 that is the the content of America. That's why you see the U.S. 20% of U.S. What do you call naval assets are on the offshore of Venezuela? So there's a different thing that's going with the U.S. Plus the U.S. is also the world is kind of splitting up. You know, so U.S. India, and all they're going on a different, different kind of political political. Yeah, very charindra chandrasena 36:19 very interesting geopolitical developments, especially with India and the U.S. and and Europe and the U.S. we'll we'll we'll need a whole programme to discuss. That's which which we we might do in the next couple of weeks. Yeah, because very very interesting developments and and how it impacts Sri Lanka. Just to close off, I am going to quote The report, which says that this the the the World Bank damage impact assessment report, the grade report, it says that while this report provides a rapid estimate of the direct physical damage, recovery and reconstruction needs are expected to significantly exceed these figures, so we are looking at the tip of the iceberg. Really, in terms of holistic damage assessment. Correct. So I think I don't think anybody should consider this a 4.1 billion dollar disaster. Speaker 1 37:18 Yeah, this is charindra chandrasena 37:18 much higher than that. This is purely the built environment. Speaker 1 37:24 Going back to the basics. Yes, charindra chandrasena 37:25 going back to the basics of that. Speaker 1 37:26 Yeah. charindra chandrasena 37:27 So it'll it'll be interesting. We'll be watching out for you know how how the actual damage is estimated slowly from different different entities. Yeah. And then how the government deals with you Dhananath Fernando 37:44 can subscribe a programme and a Advocata Insider. Yes, so thanks, Shari. So if you haven't subscribed to Advocata Insider, this is the time to consider on subscribing for Advocata Insider. The insiders get a separate view on with data-driven view on vehicle markets, currency, and we are opening a new segment also on the stock market starting from January. Yeah, and these Speaker 1 38:11 all these all done all premium content. Dhananath Fernando 38:13 All premium content, and more than that, you are helping to build a community who support for economic reforms and content like this, which is free of charge for a broader community, because we are running our operation with your support, and importantly, we want to have a community who is who are standing for economic reforms. Because ultimately, the rescue is not on an IMF loan, not on a bilateral support. 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Also we are Advocata Plus in Singala and Advocata Kural. You will be amazed to see the growth of Advocata kural. So, if you are using content in Tamil, take a look at our Advocata kural and help us. Thank Charlie for my promotion time. charindra chandrasena 39:50 So, I wish the two of you Merry Christmas and to all our viewers also Merry Christmas and. Thank you for joining today, and we hope you enjoyed it. We will see you again next week. Transcribed by https://otter.ai