Book launched to commemorate life of assassinated Tamil journalist

Tamil press clubs in the North-East launched a book in Batticaloa and Jaffna to mark the 18th anniversary of Tamil journalist Aiyathurai Nadesan's assassination. 

The book is a collection of essays by Nadesan's family, colleagues and friends, compiled to remember Nadesan and his work. The book was scheduled to be released last year on the 17th anniversary of Nadesan's murder, however it was delayed due to the coronavirus pandemic. 

The commemoration event in Batticaloa was organised by the Eastern Journalists' Union, who also co-published the book alongside the Sivaram Memorial Forum based in Switzerland. The Jaffna Press Club also held a memorial event for Nadesan in Jaffna, which was attended by his colleagues and activists. 

Flowers were laid and lamps were lit to pay tribute to Nadesan, a profile journalist and a columist for local Tamil dailies and international news agencies, who was shot dead by a paramilitary group on his way to work on May 31 2004. 

In the months leading up to his killing, Nadesan had been threatened and harassed by military personnel. On June 7 2001, he was summoned by the army for an inquiry where he was warned to cease reporting on human rights abuses.

The commemoration event was organised by the Eastern Journalists' Union, who also co-published the book alongside the Sivaram Memorial Forum based in Switzerland. 

See photographs from Batticaloa and Jaffna below: 

Batticaloa 

 

 

Jaffna

 

Call for interventions: Release environmentalist & human rights defender Ven. Wekandawala Rahula Thero

Tuesday, 30 May 2022 

Sri Lankan human rights community, especially those who are associated with youth led peaceful campaign for Freedom, Democracy and Justice under the slogan of  #GoHomeGota urges interventions from concerned sections and person against the arbitrary arrest and detention of Wekandawala Rahula Thero. He is among the hundreds of  protestors arrested and detained in Sri Lanka.

1. Background as a human rights defender

Ven. Wekandawala Rahula Thero is the Chief Buddhist Monk at the Bodhirukkārāma temple in Kudabibula, near Weeraketiya in the Hambantota district. This is very close to Medamulana, the stronghold of President Gotabaya Rajapaksa, former President and Prime Minister Mahinda Rajapaksa and the Rajapaksa family.

Ve. Rahula Thero had started activities related the environment around 2005. He was engaged in environmental related activities at the national level after following a course conducted by the Centre for Environment & Nature Studies in 2012 under the guidance of Dr. Ravindra Kariyawasam.  He was an active member of the Centre for Environment and Nature Studies and turned his temple into a place for dialogues of ecological and socio-political significance. The concept of ‘Community School’ became a reality in Sri Lanka with the leadership of Dr. Kariyawasam and Rahula Thero. The ‘Nature School’ was established at his temple and it paved the way for education of many regardless of age and religion. With the participation of people representing various fields, Rahula Thero had organized programs on various topics including environment, law, literature, art, media, politics and human rights.  Discussions on the above topics were held at night and on holidays for adults and separate programs were held for monks. In addition, a computer lab and a library were established at the temple to provide education to children in the area. Academics, artists and various professionals were invited for workshops and special discussions on various topics each month.

Ven. Rahula Thero stood up against the massive environmental destruction taking place in various parts of Sri Lanka.  Amongst the significant campaigns he was involved in was in relation to the construction of a road through the Sinharaja, Rathupaswala water contamination issue, the destruction of Rilagalayaya, the Uma Oya, Galbokkayaya and Gommunnawa environmental concerns. While many environmentalists took a racist approach during the Wilpattu environmental crisis, Ven. Rahula Thero intervened to expose the real environmental issues in Wilpattu. For many years, Ven Rahula Thera fought against the human – elephant conflict and deforestation in Hambantota district.  In 2021, Rahula Thero played a prominent role in the struggle launched by the farmers demanding a forest reserve for elephants to resolve the human – elephant conflict in Hambantota, which the government was compelled to gazette.

2. Involvement in “Gota Go” protests in 2022

The Thero was present from the beginning of the Galle Face Struggle on 9^th April 2022 as Gota Go Gama, calling for resignation of President Gotabaya Rajapaksa (Gota Go Home). He was a pioneer to form the ‘Gota Go Gama Environmental Unit’. With his leadership, a series of discussions on the village and education was initiated by taking books from Gota Go Gama library to various other areas. Rahula Thero actively contributed in a range of activities in Gota Go Gama” such as convening various parties involved in environmental struggles to Gota Go Gama, participating in various discussions and protests. When Rahula Thera heard about the attack on Gota Go Gama on the 9th May, he left his temple to come to Colombo, but due to curfew and lack of buses, he was only able to reach Matara town. The Thero went to Gota Go Gama in Matara, delivered a speech and spent the night at a temple in Matara. Later, he joined the Gota Go Gama in Colombo and participated in the struggle.

 

 Arrest and detention

Following the incidents on 9^th May, around last week, two individuals who had introduced themselves as policemen had gone to Ven. Rahula’s temple. He was not there at the time. When a person in the temple gave them the contact number of Ven.Thero, those two individuals have given their number instead of taking the contact number of the Thero.

Thereafter, another Buddhist Monk (Ven. Dewalegama Premaratne Thero) at Rahula Thero’s temple had been summoned to the Weeraketiya police station on the 26th May. Accordingly, Ven. Rahula and another monk has accompanied the monk who was summoned by the Police. The group had been at the police station from morning till evening and were finally informed that the other Monk would be arrested and produced before the court the next day. Rahula Thero and others had then left the police and started to return. As soon as he left, at the gate of the police station, Rahula Thero was asked him to return back to the police station and he had done so. He was then questioned about the destruction of the grave of father and mother of President Gotabaya Rajapaksa (and his brothers) graves, the burning of the house of the Chairman of the Pradeshiya Sabawa (local council) and several other incidents that happened on the evening and night of 9^th May. Police had informed that the son of a politician had informed them that Rahula Thero was present at the site of the burning of a house.

Rahula Thero had explained that he was in Matara at that time, and this could be ascertained by the Budhhist Monks at that temple. But without an investigation, Rahula Thero was arrested and detained by the Weeraketiya Police on the night of 26th May. On 27^th May police had told he would be produced before a Judicial Medical Officer, but this was not done. But he was produced before the Walasmulla Magistrate’s Court on 27^th May. According to a lawyer who appeared on behalf of Rahula Thero, 7 cases have been filed against Ven. Rahula Thero in connection with incidents of assault and arson. Police requested that identification parades be held in relation to 5 of the 7 incidents and based on this, the Magistrate ordered that Ven. Rahula Thero and others be remanded until the 31st of May.

Several lawyers from Colombo and Walasmulla Magistrate Court appeared on behalf of Rahula Thero on 27^th May. A protest was held outside the Magistrate court on 27^th May when the case was taken up, calling for his release. A complaint was lodged to the Police headquarters by a Buddhist Monk on the 27^th. On 28^th May, there were calls for his release during the large protest held in Colombo in connection to 50^th day of Gota Go Gama. On 29^th May, two press conferences were held at Gota Go Gama in Colombo and a Buddhist temple in Matara, explaining circumstances and calling for his release. Social media campaign for his release is also ongoing.

The case will be taken up again on 31^st May at the Walasamulla Magistrate Court, along with an identification parade. Several lawyers, journalists and human rights defenders will be present that day inside and outside courts on behalf of Rahula Thero, and a protest is planned outside the courts.

4. Contact person

Mr. Tharindu Jayawardena +94-77-7661417 (Sinhalese)

Ms. Jayani Swaris +94-76-6971726 (English and Sinhalese)

–Preliminary note – 30^th May 2022

 Additional information about Rahula Thero’s activities

https://economynext.com/sirisenas-chainsaw-ban-wont-stop-deforestation-43513/

https://www.youtube.com/watch?v=ag4QA61-ic8

https://www.facebook.com/right2lifesrilanka/videos/ඔළුවිල්-වරාය-කිවන්නේ-ශ්රී-ලංකාවේ-සංවර්ධනයේ-අසාර්ථකභාවය-පෙන්වන-හොඳම-උදහාරණයක්/1752474938388885/

https://www.youtube.com/watch?v=_qwpsEp2joQ

http://sinhala.adaderana.lk/news.php?nid=102034

http://www.nethnews.lk/article/27662

https://www.lankaviews.com/ambilipitiya-protest/

https://lankatruth.com/si/?p=67581

https://sinhala.srilankamirror.com/news/17465-sinharaja

https://lankadaily.com/latestnews/item/9119-2016-02-18-06-16-56

https://www.lankadeepa.lk/latest_news/උඩවලව-කඳු-විකීමට-එරෙහිව-ගම්මු-පාරට-බසිති/1-608708

https://lankaweb.lk/archives/39153

https://www.lankadaily.com/latestnews/featured/item/9156-2016-06-12-11-37-08

 Sri Lanka Tamils: No Choice But To Join GotaGoGama, Stay Put Or Go Abroad

By S. Ratnajeevan H. Hoole –MAY 30, 2022

Prof S. Ratnajeevan H. Hoole

I wrote a public letter on 22 April 2022 to the IMF and the Indian government asking them not to support the Sri Lankan government with loans until there is transparency and accountability. My point was that the failed regime had robbed and milked the country so dry that more loans would mean they would rob more and leave us worse off. So, until we have a transparent and accountable regime, no loans please. I stand by that despite Mahinda Rajapaksa’s harangue against me in Parliament for doing what I did.

The IMF at least seemed to say on 23 April 2022 at the conclusion of the IMF Executive Board 2021 Article IV Consultation with Sri Lanka, leaving aside the fluff:

[IMF] Directors also called for a prudent management of the Colombo Port City project, and continued efforts to strengthen governance and fight corruption.

Very diplomatic language indeed against Port City mismanagement, calling for strengthening governance and fighting corruption!

However, as reported in The Hindustan Times, the statement included a lot of spin to not embarrass Sri Lanka: that the IMF had “fruitful technical discussions” with crisis-ridden Sri Lanka on its loan request. Fruitful as deliberately intended, can be interpreted in a multiplicity of ways. Perhaps the talks were fruitful in making friends with the Sri Lankan team. It was certainly not fruitful in getting Ali Sabry what he went all the way to Washington for.

The irony is that Ali Sabry was sent to negotiate with the IMF on strengthening governance and fighting corruption in exchange of the loan. While a member of the Election Commission, I am aware that Ali Sabry in a video recording I still possess threatened Muslim voters that they would get thrashed (he used the word Ambaanai) if they did not vote for Gotabaya Rajapaksa because however they vote he is going to win. I lodged a formal complaint, and the Election Commission suppressed my complaint.

It was the very same Ali Sabry who brought Gotabaya Rajapaksa to the Election Commission before the presidential election with a letter purporting to be from the US Embassy claiming that Rajapaksa had renounced his US Citizenship, whereas a subsequent letter purporting to be from the State Department said his renunciation was ongoing and no US official was to talk about it.

The IMF in negotiating strengthening governance and fighting corruption with Ali Sabry should know what he has done, and any talk with him on these matters is a charade. I hope they are being diplomatic in their silence rather than foolish.

While Ali Sabry asked for $3-4 billion as bridge financing, his spin was to talk about $500 million “being considered” from the World Bank. In reality actually only $10 million as World Bank’s emergency response package was on the table to be made immediately available for the purchase of essential medicines. These were funds shifted from our ongoing COVID-19 health preparedness project. Even the $10 million was therefore not new money. It would have come to us anyway for other needs for which it had already been assigned.

The IMF Mission Chief for Sri Lanka, Masahiro Nozaki was harder in his statement on 17 May 2022 (Colombo Page): “Because Sri Lanka’s debt is assessed as unsustainable, approval of IMF financing, including through a Rapid Financing Instrument, would require adequate assurances that debt sustainability will be restored”.

It may take six months for IMF money said Sabri (4 May 2022, Economy Next). Given the use of the word “may,” we may have to wait for next year! Only Ranil Wikremesinghe has been frank about what is to come.

India

So Sri Lanka will work with smaller amounts from the World Bank even as India helps with larger amounts to ease social tensions from lack of electricity, medicine, gas etc. India has foolishly released over $ 1 bn, a likely target for our robber rulers. Even as I write, 15,000 litres of kerosine have arrived from India for fishermen in the islands.

The people in the South Block may think themselves rather clever for the intrigues they indulge in in Sri Lanka, but are they not aware of the implications for the rule of law in India when their diplomats hobnob with criminals wanted for murder there, and help them electorally by implicitly projecting the kerosine as a gift from the wanted criminals?

GA Mahesan (2nd from left), Raakesh Natraj (Consul General, 4th from left), and Douglas Devananda and Oorhaavatthurai DS Manjula 6th, 7th from left,)

Crooks and Communalists Everywhere

The Sinhalese polity is so badly gone that it is impossible not to spot crooks and communalists in the new government. From Bond Scam to everything bad, the perpetrators are ensconced in the new government. I do not think they are reformed. I cannot even believe they will ever be punished. The law will be used to let every crook escape. A good example is Sashi Weerawansa. She was sentenced yesterday (27th) for 2 years in prison for passport fraud. But she has applied for bail because she has appealed. I believe she will go unpunished. It is how our justice system works. The conviction shows that laws are applied. What follows usually leads to the criminal being let off. A classic example of that is Punchi Banda Jayasundara. Colombo Telegraph gives the full story of how Jayasundara and the AG were accused by Naganada Kodituwakku, the case was postponed umpteen times, and collapsed when Kondituwakku fled to the UK under death threats.

Read More

 

Monetary Board collectively accountable for imprudent policy decisions

 

Tuesday, 31 May 2022 

The ill-conceived monetary policy measures adopted by the Central Bank of Sri Lanka (CBSL) since November 2019, which included excessive currency (notes and coins) issues, interest rate ceilings, fixed exchange rate, direct credit controls, and foreign exchange rules, have caused irreparable damage to the economy. This is reflected presently in the sky-rocketing inflation, rapid rupee depreciation, high interest rate costs, near-zero foreign reserves, consumer goods shortages, depleting pharmaceutical products, and long queues for fuel, cooking gas, and other essentials. 

Eventually, Sri Lanka has become a bankrupt country with the Government’s declaration of its inability to service foreign debt last month consequent to the drying up of foreign reserves.

In this background, the nitty-gritty of the key policy measures taken by the Monetary Board (which is the governing body of CBSL) surfaced at the meeting of the Parliamentary Committee on Public Enterprises (COPE) held last week.

Revelations at COPE meeting

Giving evidence before the COPE, the appointed member of the Monetary Board, Dr. Ranee Jayamaha stated that she and her counterpart Board member, Sanjeeva Jayawardena were vehemently opposed to fixing the exchange rate at Rs. 203 per US dollar and depletion of CBSL’s foreign reserves for the purpose. She mentioned that their objections were minuted at the respective Board meetings. She further noted that the Government was of the firm view that the exchange rate should be fixed to portray favourable debt ratios. 

Dr. Jayamaja stated that despite their objections, the Monetary Board decided to adopt the fixed exchange rate policy stance, as the other three Board members – Prof. W.D. Lakshman (Chairman of the Monetary Board and Governor of the Central Bank), S.R. Attygalle (Secretary to the Treasury and Ministry of Finance), and Samantha Kumarasinghe (appointed member) – voted in favour of that option, Dr. Jayamaha mentioned that this decision was taken on the basis that the concurrence of at least three members out of five is sufficient to adopt Board decisions. 

Playing the blame game

Although Dr. Jayamaha’s revelation is commendable at this critical juncture, the entire Monetary Board should take responsibility for its policy decisions, as very correctly pointed out by MP Dr. Harsha de Silva at the COPE meeting. In this regard, her revelation is tantamount to nonobservance of the collective responsibility of the Monetary Board.

It would have been more appropriate for the two dissenting Board members to distance themselves from the wrong decision of fixing the exchange rate by stepping down from the Monetary Board with dignity rather than immorally blaming others now when the ship is sinking. Both of them are continuing to retain their position on the Monetary Board up to now implying their endorsement of its policy decisions without any reservation. 

In contrast, the former appointed members, Dr. Dushni Weerakoon and Nihal Fonseka were reported to have stepped down from the Monetary Board previously due to differences of opinion.

Public officers unaccountable

At the COPE meeting, MP Patali Champika Ranawaka legitimately questioned who is responsible for adopting an unrealistic fixed exchange rate causing severe damage to the economy including a substantial loss of foreign remittances to the country. He said that unlike the public officers, the politicians are accountable to a greater extent as they can be sent home at periodical elections depending on their performance. In the present circumstances, they could even be assassinated on the road or their houses could be burnt, he said. 

MP Ranawaka rightly stressed that the entire Monetary Board which adopted wrong policies including the fixed exchange rate and money printing that led the country to bankruptcy should be held responsible.

In a recent FT article, I elaborated on how the two former CBSL Governors, former Secretary to the Treasury, and former Presidential Secretary along with the political authorities were instrumental in pushing the economy to the current predicament (https://www.ft.lk/columns/Economic-mess-looms-with-interest-rate-shock-and-debt-default/4-733537).

Accountability of central banks

It is widely recognised that in a democratic system, central bank independence must always be accompanied by adequate mechanisms of accountability. Accountability can be defined as an obligation owed by one person (the accountable) to another (the accountee), according to which the former must give account of, explain and justify his/her actions or decisions against criteria of some kind, and take responsibility for any fault or damage.

While too broad independence may lead to an unacceptable ‘state within the state’, too much accountability threatens the effectiveness of independence. Therefore, central bank independence and accountability need to be blended carefully when designing the relevant legislation.

Bank of England’s accountability and transparency

The Bank of England (BOE) has undergone a series of reforms and structural changes over the last two decades on the premise that “a transparent, accountable and well-governed central bank is essential not only for effective policy, but also for democratic legitimacy”. 

The BOE exercises accountability via several formal and informal mechanisms, including (a) parliamentary scrutiny, with the Governor and other BOE officials being called to testify in front of the Treasury Committee (TC), and (b) reporting requirements, such as the obligation to publish the minutes of the meetings of the Monetary Policy Committee and the publication of the Bank’s Inflation Reports on a quarterly basis (which inform also the questions posed to the Governor by the TC).

Since 1997, the BOE has been publishing the minutes and votes of the Monetary Policy Committee (MPC). In 2014, its transparency, accountability, and governance were further broadened by deciding to publish in part a transcript of the meetings of MPC. It was also decided to publish the minutes of the meetings of the Court of Directors (the governing body of BOE). 

CBSL’s accountability limited

It is evident from the COPE proceedings how individual members of the Monetary Board can conveniently evade accountability for ill-designed monetary policy decisions that plunged the country into bankruptcy and washed their hands of past sins. As rightly pointed out by MP Ranawaka, it is unknown who is responsible for such unwise decisions. 

A Monetary Board member can easily escape from his/her responsibilities in such a manner as the Monetary Law Act (MLA – the law under which the CBSL operates) does not contain any specific clauses concerning the accountability of the Board members.

Money printing to continue

Prime Minister Ranil Wickramasinghe announced a few days ago that the Government will raise the upper limit of Treasury bill issues from Rs. 3,000 billion to Rs. 4,000 billion shortly to mobilise money to pay public servants’ salaries and to meet other urgent needs. He also mentioned, therefore, that printing large quantities of new money is inevitable. It means that the CBSL will have to purchase the bulk of the Treasury bills issued causing further rounds of increase in the money supply and consequently, the general price level.

This is a dangerous move, as the root cause of the present economic ills has been the Government’s excessive use of borrowings from the CBSL to fill up the huge shortfall in its revenue caused by politically-motivated tax cuts enacted immediately after the Presidential election in November 2019. 

Such bank borrowings led to an increase in the money supply by 18% during the last 12 months and escalate the annual inflation to over 30% by now. 

Continuing to accommodate the fiscal deficits by the CBSL through new currency issues as per PM’s announcement will deepen the present economic crisis.

Managed floating unlikely to arrest rupee depreciation

Meanwhile, the CBSL reintroduced managed exchange rate floating with effect from 13 May 2022, after a lapse of two decades. A managed exchange rate float, also known as ‘dirty float’, is an intermediate regime in which the exchange rate is neither entirely fixed nor free-floating. Instead, the value of the local currency is kept within a band against a foreign currency (or a basket of currencies) by central bank intervention. 

As I discussed in a recent FT column, as long as the official exchange rate band is kept below the market-clearing level in the backdrop of near-zero foreign reserves, the black market foreign exchange transactions will continue to thrive despite CBSL’s stern warnings (https://www.ft.lk/columns/Managed-exchange-rate-floating-unlikely-to-rescue-the-falling-rupee/4-734939).

Balancing accountability and CB independence critical

At present, the CBSL seems to operate on a hand-to-mouth basis rather than formulating monetary policy based on a sound macroeconomic framework geared to tackle the current economic crisis. It depends heavily on obsolete direct controls such as foreign exchange restrictions, mandatory export proceeds conversion, banning informal remittance channels, policing forex dealers, and monitoring forex flows. While such controls may help to ease the balance of payments crisis during these difficult times, their adverse effects on the economic recovery process in the medium-term cannot be underestimated. 

For example, the recent suspension of open account transactions for imports by the CBSL is likely to magnify enormous hardships already experienced by consumers and entrepreneurs due to further import shortages. Open account transactions are generally used between an exporter and an importer with a trustworthy trade relationship built over many years, where the exporter allows the importer to make the payment for the imports whenever the importer has money, without stipulating a particular time limit. Thus, banning open accounts further restricts imports. 

The Monetary Board’s strength in reacting to the Prime Minister’s recent demand for increased money printing through exorbitant Treasury bill issues is yet to be tested. 

Meanwhile, in a special televised address, the PM announced last Sunday several proposals to strengthen Parliament which include the setting up of a larger number of new committees as well as an all-party National Council. Thus, political agendas seem to be given priority once again sweeping the urgently-needed economic recovery strategies under the carpet. 

In fulfilling the CBSL’s core objective of maintaining price and economic stability, it is the utmost responsibility of the Monetary Board to keep the right balance between accountability and central bank independence, instead of blindly bending to political masters. 

(The writer, Emeritus Professor of Economics at the Open University of Sri Lanka and a former Central Banker, can be reached at sscol@ou.ac.lk.)

 

Unpopular opinion: Gota pushed the failing economy down the precipice Perhaps someone had to break it to fix it

Some Parliamentarians are calling for the appointment of a commission of inquiry to hold those responsible for the current economic crisis. The worst-ever economic crisis since independence has already created cascading effects of looming hunger, shortage of lifesaving medicine and crippling public service. Look no further: The primary culprit is none other than President Gotabaya Rajapaksa himself. That would mean that the search for accountability under the current circumstances is elusive. Yet the hard but stubborn fact is that Gotabaya with a series of misguided and ego fuelled decisions turned an otherwise manageable crisis into a national calamity, impoverishing millions of Sri Lankan families and bringing the country’s economy to its breaking point. 

31 May 2022

However, as much as he is the protagonist in the current bout, the genesis of the economic crisis is not his creation.

Sri Lanka throughout its independent history has spent more than it could afford. That practice began soon after the British left the country’s shores. The independent leaders had a knack for short term fixes to postpone serious economic reforms, which anyway have been politically unpalatable.

The much-hyped Sino-Ceylon Rubber-Rice Pact is one of the earliest examples. Faced with declining commodity prices at the end of the Korean War, the then government of Prime Minister Dudley Senanayake was cash strapped to provide two measures of free rice to people, which was a wartime measure that the British introduced.  But the native leaders, driven by electoral considerations continued with the rice subsidy, despite it being a wasteful doll out. So much so, that the government asked for a US$ 50 million loan from the US to finance the rice subsidy. When that request was rejected, the government turned to Communist China which had then been shunned by the US and the West, and inked the trade pact to barter Sri Lankan rubber for the Chinese rice. If anything, that was an early blow for the country’s industrialization as the government shipped raw rubber to feed the population that had been procreating at a rate of modern day Niger. 

The Sri Lankan economy had been rotting for decades. The first three decades since independence, which some Sri Lankans consider good times, were, in fact, the lost decades. Good times ended when Sri Lanka run out of economic fortune that the departed British left behind, and squandered relative advantage vis a vis other countries it enjoyed at the independence.

Mahinda Rajapaksa is blamed for spending Chinese loans on vestige projects, some of which are indeed wasteful investments. But, MR is also the first leader in the independent Sri Lanka, who made a decisive effort to address a long-held infrastructure backlog.  It would have been better if his administration was less corrupt and more transparent. But again, from Suharto to South East Asia’s development dictatorships, the governments that leapfrog their economies were equally corrupt and lacking in transparency. That was however in a different era. MR is also blamed for the declining share of industrial output or exports as a percentage of the GDP. But, again, Sri Lanka’s export basket had been stagnating since 1994, long before he became the president. The current economic crisis is the extreme manifestation of collective follies and indifference by a succession of political leaderships.  Sri Lankan economy had been failing, and underperforming, even though it clocked 6-7% growth in the first half of the last decade. 

It could have gone on that way for some more time, had it not been for the economic shock of Covid, and Gotabaya’s serial follies. With his idiosyncratic ban on chemical fertilizer and emptying the foreign reserves to pay off the sovereign debt and defend the Rupee, Gotabaya pushed the already failing Sri Lankan economy down the precipice. (Rani Jayamaha, a former member of the monetary board says the government spent US$ 5.5 billion of foreign reserves to maintain the Rupee at 200-203 to US$). In a political system where accountability of the holders of political office matters, he would have been held accountable for the destruction he unleashed on the country.

However, there is another point. Unbeknownst to him, probably he might have brought the Sri Lankans to the realization that without economic (and political) reforms, they would perish,
That itself is a rare achievement. No leader had managed to do that, perhaps except for Sirimavo Bandaranaike. Without her disastrous Statist economic experiment in 1970-77, her successor JR Jayawardene would not have been able to introduce the first ever serious economic reforms in Sri Lankan history, leading to a free market economy, without facing any real opposition.

 

Sri Lanka throughout its independent history has spent more than it could afford. That practice began soon after the British left the country’s shores. The independent leaders had a knack for short term fixes to postpone serious economic reforms, which anyway have been politically unpalatable

 Sri Lanka is a difficult country for economic reforms. Sri Lankans have repeatedly protested against their interests. Each free trade agreement and many development projects have been abandoned to appease the protesters. Private-Public Partnerships are considered as selling out of the nation’s wealth and strategic nerve centres. Serious donor-funded projects are labelled as foreign conspiracies. Free trade agreements are condemned as unpatriotic. In the meanwhile, two to three hundred thousand Sri Lankans are leaving the country to eke a living abroad, often doing gruelling menial jobs as the local economy is stagnated by too much protectionism.
Countries rarely change their course on their own. When they do so, they do because of exogenous shocks, which are generally a combination of unexpected outcomes, like Covid and accumulated rot of their previous mismanagement of the economy. India’s economic reforms in 1991, after the country ran through all its foreign reserves and was forced to ship its gold to London to secure a loan is one such instance. Survival of the economy and the state itself compelled the Indian lawmakers to dismantle licence Raj and adopt liberal economic reforms which turbocharged the Indian economy for the next three decades. Until then, teeming masses of Indians lived hand to mouth, while their bureaucrats mouthed the superiority of central planning over Capitalism.
You see a gradual change in Sri Lankan mass opinion as well along these lines. The usual culprits who oppose anything associated with economic reforms are qualifying their stance. IMF has suddenly become the patron saint. Politicians are openly advocating for the restructuring of loss-making SOEs. An IMF deal or any substantial assistance from foreign countries would come with conditions for serious economic reforms. No one wants to pump money into a bottomless pit. 

Sri Lankans perhaps for the first time in history are not asking for free goodies or subsidised fuel. But an end to queues. The public is much less enamoured with the usual naysayers who oppose every attempt at economic reforms. The gruelling hardships of the economic crisis have also dawned on them with a degree of economic realism.

Nonetheless, economic reforms that are needed to place the country on a sound footing for future economic take off would be painful. But Sri Lankans had already been through a good part of the crisis. If it gets worse, it is less due to the reforms, but due to the lack of it.

Alberto Fujimori, the right-leaning former president of Peru described a series of economic reforms under his presidency, taken suddenly and at tremendous social displacement as economic shock therapy. As much as it caused immediate pain, the economy of Peru leapfrogged thanks to pro-market reforms, becoming one of the economic success stories in South America.

Gotabaya Rajapaksa already had unleashed his ‘shock therapy for no reason. However, it could be the opening for meaningful structural reforms, which are long overdue. You can blame Gota for the current economic pain. But, if Sri Lanka misses this opportunity to reform, Sri Lankans can only blame themselves.

Follow @RangaJayasuriya 
on Twitter 

 

Mutual Assistance for Joint development

China and Sri Lanka are good neighbors helping each other, good friends treating each other with respect and trust, and good partners in mutually beneficial cooperation.

by  Qi Zhenhong-MAY 30, 2022

Since the beginning of the year, despite the multiple challenges brought by the grave and complex situation internationally and the frequent outbreaks of the COVID-19 at home, the Chinese economy has withstood pressure and got off to a stable start. The gross domestic product (GDP) in the first quarter reached CNY 27,017.8 billion (USD 4.25 trillion), registering a year-on-year growth of 4.8%, ranking among the top worldwide. China continues to be the major stabilizer and growth engine of the global economy, which was highlighted by:

First,   consumer   price experienced   mild    growth. The consumer price index (CPI) grew by 1.1% year on year, lower than the expected target of 3% and significantly below that of the world’s major economies.

Second, employment was stable in general. The newly increased employed people in urban areas numbered 2.85 million and the urban surveyed unemployment rate averaged 5.5%.

Third, industrial structure was further adjusted and optimized.    The    value    added    of    high-tech manufacturing and equipment       manufacturing       increased by 14.2% and 8.1% respectively. The information service industry has developed rapidly and investment in high-tech industries grew fast.

Fourth, efforts to revitalize industrial development worked well. Growth of industrial production picked up. The value added of industrial enterprises above the designated size grew by 6.5% year on year, 2.6% higher than the previous quarter.

Fifth, investment growth rebounded significantly. The total planned investment of newly started projects increased by 54.9% over the same period of last year. Investment in fixed assets grew by 9.3%. Specifically, private investment, investment in manufacturing and infrastructure went up by 8.4%, 15.6% and 8.5% respectively.

Sixth, foreign trade and foreign investment remained stable. The value of merchandise exports reached USD 803.2 billion, up by 16% year on year; that of merchandise imports was USD 658.2 billion, up by 15%. Foreign investment in actual use was USD 59.09 billion, up by 31.7%.

Seventh, people’s livelihood was strongly and effectively safeguarded. The real growth rate of nationwide per capita disposable income of residents, after   deducting   price factors, was 5.1%, basically in line with economic growth. Market supply of grain, meat, eggs, etc. was sufficient and prices were stable with some declines. Investment to improve people’s livelihood has continued to increase and capacity to serve the public was improving steadily.

Eighth, financing cost for enterprises further decreased. By the end of March, the balance of broad money supply and the stock of social financing rose by 9.7% and 10.6% respectively. In the first quarter, corporate loan interest rate was 4.39%, down by 0.22% over the same period of last year.

Globally, the COVID-19 is still spreading and geopolitical conflicts are intensifying; the industrial and supply chains have been disrupted; contradiction between the supply and demand of bulk commodities is prominent; the International Monetary Fund (IMF) recently lowered its forecast for world economic growth in 2022 to 3.6%. The Chinese economy is also faced with some difficulties, but its fundamentals, that will sustain stable and long-term growth and are characterized by strong resilience, enormous potential and broad space, remain unchanged. The Chinese government has stepped up the implementation of macro policies and strengthened cross- and counter-cyclical adjustments; actively implemented measures to stabilize employment, protect people’s livelihood, expand consumption, and promote investment; deepened reform and expanded opening up, providing a solid guarantee for the sustainable and healthy development of the domestic economy and a strong support for world economic recovery.

China and Sri Lanka are good neighbors helping each other, good friends treating each other with respect and trust, and good partners in mutually beneficial cooperation. Sri Lanka is confronted with an economic crisis, bringing inconvenience to people’s daily life and sometimes social instability. We feel the same as our Sri Lankan friends during this trying time. To help Sri Lanka overcome the current difficulties, the Chinese government has decided to provide RMB 500 million (approximately USD 76 million) of emergency humanitarian assistance. The International Department of the Central Committee of the Communist Party of China, the Yunnan Province and other local governments, China Foundation for Poverty Alleviation, the Red Cross Society of China and even pupils from the Caihe No.3 Primary School in Hangzhou also lend a hand. Sri Lanka has a long history of civilization and its people are of great wisdom. We sincerely hope that Sri Lanka could maintain unity and stability and will continue to offer support within our capabilities. We believe that Sri Lanka will definitely be able to get out of the immediate predicament and achieve economic and social stability and development at an early date.

(The writer, Chinese Ambassador to Sri Lanka )