Let me try and explain the Uganda banknote mess as much as I can and how it relates to Sri Lanka and how it doesn't.

#SriLanka #SriLankaEconomicCrisis #lka (also tagging #GotaGoGama #OccupyGalleFace for the reach)

As I understand it, there are 2 separate issues here, which may be linked together in a way we don't yet know.

1. Uganda's own money laundering issues
2. De La Rue printing Ugandan money and SLA airlifting it

Lets start with Uganda's own issues.

Uganda has had money laundering concerns for a while, and especially terrorist financing issues. This is unfortunately true for some countries in Sub Saharan Africa.

So there's this organization called the Financial Action Task Force (FATF) that was made to for Anti Money Laundering/Combatting Terrorist Financing (AML/CTF) purposes.

One of the actions they do is provide guidelines for laws and processes countries should have.

Countries that have weaknesses in these areas, ie don't stand up to these standards, can get put onto a "Grey list". Think of this as being put on watch, and the teacher knows you're a bad boy, but you're not punished yet.

Uganda was put on this grey list sometime in 2012 mainly for money laundering reasons, and though the government put a new law in place in 2013, the implementation was considered lacking. It took until 2017 for the system to be considered upto standard

However, after getting out of the grey list in 2017, they got put back in in 2020, this time for more of the terrorist financing side it seems.

They haven't made sufficient progress, and the FATF has warned if not enough is done by May 2022, they risk being blacklisted.

Being blacklisted is like being seriously punished. So far, just Iran and North Korea are on the black list, so it's a pretty hefty threat.

Now it's important to realise that this process happens for many countries, and it's primarily driven by how good the laws, criminal processes, etc are against money laundering/terrorist financing, and not necessarily whether it's actually happening.

Sri Lanka was on the grey list for a few years as well, 2017/18-2019, until we fixed some of our criminal processes.

Pakistan, Myanmar, UAE, Albania, are all countries that are currently on the grey list.

Now, Uganda, in addition to having bad processes according to the FATF, also seems to have actual terrorist financing and money laundering issues.

But saying that Uganda has stolen billions of dollars has zero evidence for it.

Seen things like "Uganda's reserves increased, while ours fell" - that's unrelated. We know why our reserves fell, we used it to pay for imports and debt

Uganda's imports fell during Covid and their commodity exports grew in the following period=reserves growth

So while Uganda has money laundering issues, and while individually, politicians could be involved in that, that is not anywhere close to the magnitude of the economic trouble we're in. That's a separate accountability and theft issue.

So what about this De La Rue printing Ugandan money business?

To be honest, it looks quite standard. Not my expertise, but a minting company minting notes in 1 country, then taking them elsewhere seems quite standard. That alone shouldn't be cause for concern

But there are two things here that can cause suspicion, especially in the low-trust environment we are currently in.

The first is why DLR printed it here as opposed to in Kenya.

Second is why SLA was so goddamn fishy about it.

On DLR minting here, an obvious answer could be security. Given Kenya and Ugana share a land border and all the terror issues, not inconceivable it's safer to do it here and send to Uganda

But I don't know for sure - and in the low trust environment, this looks fishy

However, Occam's razor, it's probably just something like that or just like the order being sent here, office politics, or some mundane reason. Though I could very well be wrong.

SLA being suspicious is a whole other story. But from what I know, you're not supposed to divulge minting flows anyway for obvious security reasons. What's more surprising to me is why they TWEETED what happened of all things.

Again, we're in a low-trust environment. But the simplest explanation for me is: SriLankan Airlines is incompetent. I mean, this is the same airline that lost some 370 billion rupees and is now trying to lease planes.

Of course, I can be wrong here too.

There are other things of course, such as whether MR went to Uganda to stash money. That is very possible, but crucially, I think there is little evidence to suggest that the DLR or the FATF listing is related to that. So actually, 3 different issues.

The reason I thought to explain this is that while we protest and fight for our future, doing it based on incorrect information can easily backfire one way or the other.

If it's not real, who benefits from attention going there as opposed to what's really happening?

In the end, dealing with theft and corruption, though a definite part of Sri Lanka, isn't alone going to get us out of where we are.

We shouldn't fall for the trap of easy solutions. Fight against corruption, yes, but be realistic in what we can expect.

Sources: FATF, Reuters, WaPo, and my knowledge of SLA's stupendous track record

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Chayu Damsinghe

Chayu Damsinghe Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @ChayuDamsinghe

Apr 16
I promise I'll try my best to make this not-boring, but let's talk taxes in Sri Lanka.

#SriLanka #SriLankaEconomicCrisis #lka (also #GotaGoGama #OccupyGalleFace #අරගලයටජය #GotaGoHome2022 for reach)

Our tax revenue before 2019 was about 11-12% of GDP. After the tax cuts, this came down to around 8%. Both in comparison to around 12-14% in non-debt expenditure (about 16% in 2019 due to election goodies)

Explained how this was a problem here

In an attempt to make this easier to digest, going to bring back Rehan (our rich guy), Pasan (who I've made less poor than he was), and a new fellow Ayesh who's basically in poverty.

Rehan earns 500k a month. Pasan earns 50k. Ayesh earns 15k.

Read 24 tweets
Apr 15
I'm going to do a single political thread on the #GotaGoGama #GoHomeGota #OccupyGalleFace protest and a threat it faces. Might be contentious, but please give alternative views.

#SriLankaCrisis #SriLankaEconomicCrisis #SriLanka

Starting off with a few disclaimers.

I think the protests are great for Sri Lanka, I think they've done permanent good already, I think they should continue.

I'm also not a political/social expert - so take this from that POV.

The response to the poll confirms something I was concerned about - that there is space for the protest to be attacked based on perceptions of elitism

If a Twitter poll of what protestors think is like this, I feel actual sentiment might be worse


Read 20 tweets
Apr 13
What will happen to Sri Lanka, economically, over the next few months, especially to its people?

The answer isn't pretty, but it's something to prepare for.

#SriLankaProtests #SriLanka (Also tagging #GotaGoGama #GoHomeGota #OccupyGalleFace #අරගලයටජය for reach)

Let's assume there's some sort of political stability at some point. What that is doesn't really matter too much to this thread's outcomes, it just extends the timeline if it's delayed.

With that out of the way - what will SL need to come out of this?

As long as we keep engaging with the IMF and our creditors, it should hopefully bring enough confidence that there will be some inflows (bilateral, remittances, export conversions, aid) that allow the urgent essential shortages to ease across the next month or two.

Read 11 tweets
Apr 13
Going to explain depreciation, how the official market failed and the unofficial market took it up, and what's needed for the two to come together.

#SriLankaEconomicCrisis #SriLankaCrisis #SriLankaProtests

Exchange rate is basically the value of a currency in terms of other currencies. Eg- 1 USD is worth XX LKR and vice versa.

Depreciation is when 1 currency loses value against another. Eg- 1 USD going from 200 LKR to 300LKR

Appreciation is opposite.

What determines this value?

Simplified, this is through a demand and supply mechanism. The more demand for a currency, the stronger (appreciation) it will get. The less demand for a currency/more supply, the weaker (depreciation) it will get.

Read 21 tweets
Apr 13
Let me go through how remittances work and make a plea, please send money to Sri Lanka.

#SriLankaEconomicCrisis #SriLanka #ProtestLK #EconomicCrisisLK (also #GoHomeGota #GoHomeGota2022 #GotaGoGama for reach)

Think of remittances as when money from outside SL comes into SL on a personal basis.

This can either be

A. From a foreign account to your own local account


B. From your foreign account to someone's local account.

Let's take A first.

In this case, your dollars are sent to a bank account held by a local bank. Now, as long as those dollars are there, the bank can allocate those dollars for other purposes, ie for an outflow of dollars.

No Rajapaksas involved.

Read 11 tweets
Apr 13
Going to quickly explain what reserves are and how corruption can/cannot play into it.

#SriLankaEconomicCrisis #SriLanka #ProtestLK #EconomicCrisisLK
Think of reserves as a "portfolio of assets" owned by the Central Bank. It'll have cash, some bonds, some gold, some other assets with the IMF, etc.

Often denominated in USD or another global currency. Ours is USD.

So reserves are used for 3 broad purposes.
1. To bridge any dollar income/expenses gap the country has - release money from reserves
2. To intervene in foreign exchange market to affect the currency
3. To show confidence internationally that the country has backup money

Read 9 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!