By W.A. Wijewardena –

Dr. W.A Wijewardena

Iconic banker no more

The iconic banker Rienzie Wijetilleke has left us forever. Naturally, his departure leaves a lot of sorrowful feelings in our hearts. Yet his gentlemanly disposition and professionalism to the letter leaves us with awe and admiration. I have already penned his contribution to the banking industry in a previous article in this series. This appreciation draws heavily on that article.

Banker as a friend

During my long attachment to the Central Bank, I had a close association with Rienzie. He had started his banking career in the Bank of Ceylon but later joined the fledgling Hatton National Bank or HNB. He rose progressively at HNB to occupy its highest managerial position as the Managing Director. After retirement, he was made its chairman.

Rienzie T. Wijetilleke

Rienzie’s support to banking industry

When he started a novel banking arm for the rural sector of the country, Gemi Pubuduwa or Rural Awakening, I was the Director of Rural Credit of the Central Bank, and we had to refinance his agricultural loans under the scheme. Then, in late 1990s, when the Central Bank introduced the forward purchase scheme for farm products to ensure an assured market and a guaranteed price for farmers, HNB under Rienzie’s leadership was a leading partner of the scheme.

When I was the Chairman of the Institute of Bankers of Sri Lanka and when we sought to get its qualifications accredited by the reputed Chartered Institute of Bankers or CIB, London, Rienzie extended his full support to the initiative as the Chairman of the Sri Lanka Banks Association. This was not because he himself was a lifetime achievement awardee of that prestigious professional body but because of his firm belief that Sri Lankan bankers deserved opportunities for quality banking education.

Creation of LankaClear

Rienzie’s support to the modernisation of the country’s banking became more prominent when the Central Bank was planning to convert its automated clearing house to an independent institution owned by the country’s banking sector in early 2000s as part of its modernisation project. The late K. Sivagananathan and I were commissioned by the Central Bank to steer this project. When banks were hesitant in coming forward to join the new institution, the project seemed to be getting stalled.

I recall meeting Rienzie and convincing him of the need for setting up this novel institution for the benefit of the customers as well as the banking institutions. Rienzie, having realised its long-term viability, undertook to speak to fellow bankers and get them on board. He was true to his word, and we were able to setup LankaClear, the name it got at the inception but now renamed LankaPay to represent its multifarious obligations.

Two biographies

Rienzie’s biography has been written by two prominent Sri Lankan authors, Gaston de Rosayro in 2007 and Savithri Rodrigo in 2019. The first publication was titled ‘The Banker, The Man, The Legend’ aptly describing him. Savithri’s biography was a continuation of Rosayro’s work and titled ‘Rienzie Wijetilleke Revisited’. The latter work is more of a penetration into his intellectual professional wisdom rather than a run-through of his personal life. I also have followed Savithri in appreciating this legendary banker.

Personal life philosophy

In the Preface to ‘Revisited,’ Rienzie has pronounced his life philosophy. He has said: “I do believe that every person is placed on this earth for a purpose. The path is not always easy, but the purpose is always clear. To me, it was simply to do my best for myself, my family, my workplace, my industry and my country.” His priorities have been in that order, as he has admitted. That is because, though each one is interlinked, “the nucleus to it all is oneself”. In other words, if one does not develop oneself, one cannot help all others in the chain.

Help oneself first to help others

A critic might question the order of Rienzie’s life philosophy. It is the usual social ethos that one should do one’s duty to one’s country first ignoring the self. If self is placed before the country or all others, it is normally condemned as an act of selfishness. What is being promoted in society is altruism, a social behaviour requiring one to make the utmost sacrifice for the rest. But, as Rienzie has correctly reasoned, self is the nucleus that connects all others in the social chain of relationships. This is in accord with what the Buddha preached in the meditational procedure involving compassion or Maithree Bhavana. In this practice, one should first wish that he should be free from sorrow and ailment and be vested with a state of happiness. Then, it is extended to close members of family, other relatives, those in the village, country and finally all species.

The logic is that one can give others only what one has and not ‘one does not have’. It is not unusual for Rienzie to have this life philosophy since the Buddha, as he has confessed in the Epilogue to the book, has been one of the four great personalities who had been responsible for shaping his life. The other three had been Mahatma Gandhi, Winston Churchill and Nelson Mandela. Learning from these great people, Rienzie first developed himself, then his family members, his business and finally thousands of fellow citizens.

Main milestones of life

In ‘Revisited,’ after presenting a brief overview of the main milestones in Rienzie’s life, his philosophy on life, career, country and fellow citizens has been put forward under four main categories. The first category has been on his national mindedness. Then, it is followed by the bigger view he holds on to banking. The third category has portrayed how a leader should be made, while the fourth one has dealt with the art and science of inculcating social consciousness.

After completing his school career at CMS Ladies College and Wesley College, the young Rienzie had had a brief stint as a teacher at the Pembroke Academy and the Central College, Polgahawela. He had taught at Pembroke while studying for the Higher School Certificate there. Then, his passion for banking got ignited which was to remain burning throughout his later life.

He joined the Bank of Ceylon as a trainee and was posted to its Kollupitiya branch. His work was so commendable that the Bank’s management chose to post him to its London branch. Rienzie had then joined HNB as an executive and served in many branches of the bank. Whilst at HNB, he had got a place in the British Bank of the Middle East located in Dubai.

But his fate had closely been linked to HNB and from Dubai he joined once again HNB but this time as one of its Deputy General Managers. This happened in 1987 but within one year, he was elevated to the post of the Managing Director of HNB. He had continued in this position till 2004 when he was suddenly offered the position of Chairman of the Bank. He could not refuse it and had remained as its chairman till he stepped down in 2011.

Sharing wisdom and experience

Rienzie’s banking career spanning over five decades had been strictly in accord with his life philosophy. He had gained in wisdom and experience but did not want to keep it only for himself. He gave back what he had earned to his family, bank, country and society. He introduced the novel scheme of Gemi Pubuduwa to help the downtrodden villagers, especially their womenfolk, to stand on their own feet without depending on handouts to be given by government or society.

Philanthropist

He had used his personal money to develop many temples which had been in a state of dilapidation. He contributed to uplift the country’s cricket as interim Chairman of the Sri Lanka Cricket. He had served on many company boards. His service has been not only to business but also to the community and society. Having joined the Rainbow Foundation, he had worked tirelessly to eradicate the menace of addiction to narcotics which had not only degraded human beings but also destroyed their productive capacity. He also worked toward the formation of Sri Lanka Stroke Association and held its chairmanship for two years. This he had done without expecting a reward in return. Thus, Rienzie gained, gave and shared.

But Rienzie’s philanthropy was different from what many believe as just showering people with money. It is more of like what the 6th century Chinese philosopher Confucius is said to have told a beggar who had asked for a fish when the former was returning from a fishing expedition. Confucius had told the beggar: “I won’t give you a fish but give you a fishing rod and teach you how to catch a fish.”

Accordingly, Savithri makes the following observation about Rienzie: “He brought with him a self-awareness and experience that he translated into a shared social identity with his team at HNB, urging them to think responsibly and act accountably. His idea of philanthropy was not simply to present people with money, but rather to tackle the root cause of the problem and find a long-term solution, as he did in his boardroom.”

CSR and being together

What is more important, according to Rienzie, was the feeling of togetherness among the members of a group engaged in official, business or social work as described by ‘Us’ rather than ‘Me’. It would help people, preached Rienzie to his fellow workers, to understand the diversity among them which in turn would help them to build a sense of unity, a must for long-lasting relations among people.

Rienzie’s version of the corporate social responsibility or CSR was much wider than what was normally believed by firms in in the capitalist world. For them, CSR was to have some project that would help them to pass out a fraction of money they have made for some social work. In an interview with Lanka Monthly digest or LMD, Rienzie had pronounced that CSR goes beyond this narrow version. It requires a firm to look after well all its stakeholders that include employees, immediate community and society. If a firm has done what it is supposed to have done for them, then, it has met with its obligations for meeting CSR. He had further elaborated on this as follows: “CSR now goes much deeper; it can involve wider issues including gender equality, women’s rights and data privacy.” But corporates would do this only if they are confronted by an educated and well-informed group of people. In the absence of such an atmosphere, the corporates would go to sleep and confine themselves to the narrow version of CSR as practised by many business firms today.

Rienzie had pronounced: “In Sri Lanka, the lack of information and education is a challenge, where an informed and educated public will only hold corporate to higher standards. The public is sometimes guilty of only observing their immediate surrounding and not beyond that periphery, which insulated thinking can lead to unchecked corporate greed”.

Need for competent leaders

When translated from corporate world to the nation, Rienzie believed that the national leaders should have a genuine wish to bring prosperity to people. But the problem in Sri Lanka, as well as elsewhere, people do elect those who are incompetent to rule them. Before coming to power, they project themselves as incorruptible saints. But their real nature comes out only after they have started devouring the taste of power.

Sri Lanka has therefore been eternally marred with a sluggish economy with no hope of growth. When her peers have overtaken her in leaps and bounds, she had remained a laggard among them. This is unusual when private companies in Sri Lanka had flourished year after year. The secret lies in the quality of management whether it is a nation or a private business. Hence, Rienzie argued convincingly that Sri Lanka should be managed by a team of competent people. His frustration has been so high that he had even suggested that Sri Lanka should be handed to such proven world leaders like Lee Kuan Yew of Singapore or Nelson Mandela of South Africa.

Rienzie’s heroes

To build a disciplined nation, Lee applied rule of law to everyone including his close family members or Cabinet colleagues. What is found in the behaviour of Sri Lanka’s leaders is the complete opposite. When a correspondent from Time magazine asked Mandela why he chose to have an early retirement from politics, he quipped: “Leaving at the appropriate time is also leading.” Such a quality is absent among the Sri Lanka’s politicians and even after they are well past the age of 70, they still clamour to hold on to power. Rienzie followed Mandela and retired from active banking service when he reached the age of 70.

Grooming young generation

Rienzie believed that in the case of a business, its continued success depends on selecting and grooming a young generation for leadership and handing the baton to them at the appropriate time. He did so at HNB. True to his word, he left the Bank in the hands of a more competent group of people. That is Rienzie, The Banker, The Man and The Legend Revisited.

I do not wish Rienzie that he should attain the supreme bliss of Nibbana. He does not need our wishes. He has done enough by himself to reach that goal.

*The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

The post Appreciation: Rienzie Wijetilleke Is No More But His Name Remains In Our Hearts Forever appeared first on Colombo Telegraph.

By W.A. Wijewardena –

Dr. W.A Wijewardena

Colombo forum on road to recovery

In a recent forum in Colombo on Sri Lanka’s road to recovery with special reference to debt and governance participated by the country’s top policy leaders, IMF’s leading managers and select private sector top brass, President Anura Kumara Disanayake is reported to have stressed his Government’s commitment to continue with the ongoing reforms to improve economic conditions and assure lasting stability, while expressing his desire to make the current IMF program the last one in Sri Lanka’s history.[1]

Offering IMF’s response to this, its First Deputy Managing Director Gita Gopinath is said to have appreciated the country’s commitment to reforms, while cautioning against the possibility of reverting to policy errors, a pitfall to which a country falls due to its failure to manage successfully the ailment known as ‘policy fatigue’.[2]

This forum was timely because it helped the country to assess its gains, identify policy errors, and make the necessary amends to keep the recovery program on track. It also provided an open forum for the three parties to meet and discuss the issues faced by the country when it takes the next step for consolidating the gains so far made to ensure sustained economic growth and stability. However, the wishes expressed will become a tall order in a background of adverse global shocks over which Sri Lanka does not have control.

External shocks

I wish to emphasise on two such external shocks which Sri Lanka should tackle immediately to keep the recovery program on track. One is the unilateral tariff hike by USA which is Sri Lanka’s largest export destination. The other is the sudden breakout of the military conflict between Israel and Iran dragging USA also as an active party to the conflict. Sri Lanka is not a party to either one, but these shocks have far-reaching implications on the country’s road to recovery.

Origin of tariff issue

The harsh tariff rates imposed by US President Donald Trump on all exporters to USA have squarely hit the poor countries that export mainly items like apparels and rubber products. The list is long, but the main victims are in Asia like Bangladesh, Sri Lanka, Myanmar, Vietnam, and Cambodia. Trump had imposed very high reciprocal tariff rates on these countries because they had been running a trade surplus with USA. Though the tariffs so imposed have been given a pause for 90 days, it has not removed the uncertainty surrounding Trump’s tariff reforms. The apparel buyers have first asked the exporters to absorb the high tariffs. Since the high tariff rates were above the exporters’ affordability, they could not accede to that request. Then, the orders have been cancelled, or placement of new orders have been postponed by buyers until the situation becomes clearer.[3]

In Sri Lanka, both the apparels and rubber products that had been exported to USA in large volumes have suffered from this pause in buying. Trump has created uncertainty in the global markets by his flip-flop tariff revisions and that has pushed the market participants to keep wondering what will happen next. While small voiceless poor countries are suffering in silence, the large exporters to USA like China, Canada, and EU have chosen to fight’s Trump’s tariff policy with equally unaffordable retaliatory tariff rates. This has led to a never-ending tariff war.

Issues with Trump’s tariff policy

I have two issues with Trump’s tariff revision plan. One relates to his wrong interpretation of the trade deficit which USA is having with most of its trading partners. The other is the irrelevant and misleading formula he has used to calculate the magnitude of the amount alleged to have been robbed from US citizens by countries which have a trade surplus with USA.

Wrong reading of trade deficits

Trump has claimed that the trade surplus which many countries have with USA is an indicator of the extent of plundering of US citizens by those countries through higher tariff rates. As I have pointed out earlier,[4] USA being the unofficial central banker nation to the world since 1971 has been able to command real goods from the rest of the world by exchanging a worthless piece of paper called the dollar. If that dollar returns to USA, the holder is promised that he could get a basket of real goods and services worth one dollar. If it is circulated as a reserve or exchange currency through the globe, the holder can command a dollar’s worth of real goods and services from the rest of the world.

Falling value of dollar

But these two promises are broken if the domestic value of the dollar falls due to domestic inflation in USA, on one side, and the fall in the international value of dollar due to loss of trust about the issuer of the dollar, namely, the US government, on the other side. USA’s Consumer Price Index or CPI which stood at 100 in 1982-4 has increased to 321 in May 2025[5] meaning that a dollar in 1982 is worth only 31 US cents today. The international value of the dollar should be gauged by reference to the price of gold since gold is the best substitute asset for the dollar. In 1982, a fine ounce of gold was traded at $ 376 in the world markets. The price of same gold has sharply increased to $ 3,324 in May 2025[6], implying that a dollar’s value in the international markets in 1982 has fallen to 11 US cents.

Hence, a foreigner who has acquired a dollar in 1982 by sacrificing a dollar’s worth of a real good or service has been condemned to hold a worthless piece of paper today. Therefore, by having a trade deficit with other countries, it is the US citizens who have got an unfair advantage from the citizens of those countries. Hence, there is a case for USA to compensate those dollar holders, instead of punishing them.

Use of irrelevant formula

The formula, as given in Figure I, used by Trump’s policy advisors to calculate the extent of the amount plundered by the countries with a trade surplus with USA is irrelevant for the purpose. It simply says that the percent of the amount so plundered is equal to the trade deficit which USA has with those countries is proportionate to the amount which USA has imported from them assuming that the import elasticity of US demand times the price adjustment in US market is equal to 1. To arrive at this result, Trump’s policy advisors have used a general import elasticity of 4 and a price adjustment factor of 0.25. These are two strange numbers since the same have been used for both consumer items like apparels, essential items like chips and pharmaceuticals, and discretionary items like components for producing military items or aircraft.

Naturally, this formula fails when it is applied to countries with a trade deficit with USA. Since the trade deficit is a negative number, and it is divided by a negative import elasticity, the outcome is a positive number for countries which have a trade surplus with USA, the ones which are being punished by the Trump administration. However, when it is applied to countries with which USA has a trade surplus like UK, Singapore, Australia, or the Netherlands, the outcome is a negative number meaning that USA should compensate them for the amount it has taken out from them.

Dispute of formula by a co-author

The formula used by Trump’s policy advisors has been disputed by its co-author, Brent Neiman, Edward Eagle Brown Professor of Economics at the Booth School of Business of the University of Chicago in a recent interview with Erin Burnett of CNN.[7] Neiman says that the policy advisors have taken the purpose and meaning of the formula out of context. The purpose of the formula was to identify how a country could determine the appropriate tariff rate to balance a trade gap when there is a difference in tariff rates by about 3 to 4%. It is not a formula to be used on a mass scale for countries. For instance, to a query by Burnett, he confirmed that it is not a formula to be used for a country like Sri Lanka which exports a lot of apparels but does not buy sufficient turbines from USA.

According to him, the application is totally wrong because even if Sri Lanka goes for zero tariff for the imports from USA, the trade gap cannot be eliminated. He also confirmed that the actual price adjustment factor should have been not 0.25 used by Trump’s policy advisors, but 0.95. When that factor is applied, the US’s imports from the respective country should by multiplied by 3.8 and not by 1 as had been done by Trump’s policy advisors. In that scenario, all the calculations made by Trump’s policy advisors to impose the reciprocal tariff on trade surplus countries collapse on themselves. For instance, Sri Lanka’s alleged plundering of Americans is reduced from 88% to 23%. And, a half of that is 12% and not 44% which USA has imposed on Sri Lanka.

Middle East crisis

The recent conflict in the Middle East arose from the attack by Israel on Iran[8] claiming that Iran’s ambitious goal of becoming a nuclear weapons owning nation is a threat to its survival and therefore it should be stopped at the bud. These attacks were overtly and covertly supported by USA.[9] It culminated to an irreversible high point when USA decided to neutralise Iran’s nuclear warhead producing capability by bombing its three main uranium processing facilities.[10] This led to retaliatory attacks on USA’s airbases in the Gulf region by Iran.[11] A ceasefire was announced by President Trump with agreement from Israel,[12] but many critics have alleged that it had been limited only to paper and on the ground, there are still battles going on.[13]

Both Israel and Iran have been slow to embrace the ceasefire wholeheartedly forcing President Trump to express his dissatisfaction openly.[14] A ceasefire will be successful only if the underlying reason for the conflict is removed. In the case of the present conflict, the reason, namely, Iran’s desire to further enrich uranium and Israel’s animosity for Iran are still looming over them. Hence, the reigniting of the military conflict can occur at any time dragging the Middle East to a more protracted conflict. This possibility should be assessed every time a country reassesses its global risk profile.

Risks to Sri Lanka

If it is a protracted conflict with USA’s involvement, the global economy, specifically countries like Sri Lanka in the global south, will be subject to immense economic hardships. It will adversely affect Sri Lanka’s exports to the Middle East and USA, its re-growing tourism industry, and adverse impact on the overall balance of payments via increases in oil and cooking gas prices and reduced remittance flows. Therefore, though Sri Lanka is not a party to the Middle East conflict, it is a victim of a high proportion.

These two global shocks were not a subject matter discussed in the recent Colombo forum because it concentrated on debt and governance. But their lingering impact will undoubtedly derail Sri Lanka’s move towards recovery, sustained economic growth, and lasting stability. This is a cautionary message which Sri Lanka’s policymakers’ intent on building a safe road to recovery.

Essential requirements

Global economic shocks, whether favourable or adverse, are unexpected and unavoidable. The best a country can do to tackle them is the development of a space to absorb them painlessly. This space takes the form of ensured potential economic growth, undiminished export capacity and markets, and flexible public finances permitting a country to increase or reduce taxes and expenditure at will. In my view, these essential factors should be the main components of Sri Lanka’s Road to Recovery. They are the main risk factors faced by the country and its policymakers should be ever cognisant of them.

A negative external shock will derail the country from the potential growth path leading to income losses, unemployment, and an undue charge on the external reserves if the market shortages are to be met out of imports. At the same time, it will worsen the existing income gap by offering opportunities for the rich to get more and impoverishing the poor who do not get an equal opportunity to do so. This type of skewed income distribution in which the rich become richer, and the poor become poorer is a fine recipe for the onset of a dangerous economic, social, and political disorder in the country. Hence, measures should be taken by the country to reverse the dent in the growth by the negative external shock as quickly as possible.

The longer it takes to make the adjustment, the bigger the impact of the social disorder. This requires space for policymakers to operate to minimise the social and economic costs. In Sri Lanka when the country was hit by the negative fallout of the COVID-19 pandemic, the authorities did not have the needed space to operate and take the country out of the negative growth that followed. This was the trigger factor for the subsequent unprecedented economic crisis that crippled Sri Lanka’s economy.

Footnotes:

[1] https://www.ft.lk/business/Sri-Lanka-s-Road-to-Recovery-Debt-and-Governance-conference-recaps-successes-and-challenges/34-777991

[2] Ibid.

[3] https://www.tbsnews.net/world/global-economy/panic-grips-worlds-factory-hubs-after-trump-tariff-whiplash-1114681

[4] https://www.ft.lk/columns/Trump-dis-order-is-to-hit-Sri-Lanka-very-badly-with-limited-options-available/4-775230

[5] https://www.bls.gov/news.release/pdf/cpi.pdf

[6] https://tradingeconomics.com/commodity/gold

[7] https://youtu.be/XTwNUl-v57s?si=BQ3PX014mrwXiNJQ

[8] https://apnews.com/live/israel-iran-attack

[9] https://www.aljazeera.com/news/2025/6/23/israel-iran-conflict-list-of-key-events-june-23-2025

[10] https://www.bbc.com/news/articles/cvg9r4q99g4o

[11] https://www.bbc.com/news/articles/cdjxdgjpd48o

[12] https://us.cnn.com/2025/06/24/middleeast/middle-east-situation-tuesday-intl-hnk

[13] https://www.washingtonpost.com/world/2025/06/24/iran-israel-us-trump-ceasefire-updates/

[14] https://www.nbcnews.com/world/middle-east/live-blog/live-updates-iran-israel-trump-ceasefire-rcna214671

*The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

*To be continued..

The post Adverse Global Shocks & Sri Lanka’s Road To Recovery appeared first on Colombo Telegraph.