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New Global Financing Pact Summit in France: Some suggestions

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President Ranil Wickremesinghe will be among more than one hundred heads of state to attend the above conference in Paris from 22 to 23 June. Ad hoc debt restructuring of Sri Lanka and Ecuador’s debt buy-back would be discussed as recent examples of multilateral efforts to ensure the debt sustainability in developing countries. Since Sri Lanka is not out of the woods yet, it would be best to present some of the weaknesses we have in our ad hoc solutions designed with the support or insistence of the IMF for our debt crisis.

Why do I say the IMF support programme is ad hoc? I am not submitting a conclusion; instead my effort is to bring the views of eminent economists and accounting professionals into this discussion. According to the programme approved by IMF in March this year, Sri Lanka’s gross external financing needs for the year 2023 will amount to USD million – 6,636 (negative 6,636 (page 46 of IMF Country Report No. 23/116 of March 2023). Whatever the case, this amount needs to be financed to prevent an economic crisis. So, the source of financing will be from three major items namely, (1) borrowing, (2) other net capital inflows and (3) change in reserve assets. Under this programme the government is to borrow USD 2,120 mainly from multilateral and bilateral lenders except 11 million dollars. Then, net capital inflow will be USD 2,110 million, both will amount to USD 4,230 million. Therefore, the shortfall is USD 2,406 million (6,636 – 4,230). However, with the proposed “change in reserve assets amounting to USD -2,533 million (negative 2,533) new external financing gap is USD 4,939 million. This financing gap will be financed as follows; (1) IMF USD 663 million, (2) IFI budget support USD 900 million and (3) debt relief USD 3,376 million.  All these three items amount to USD 4,939 million, the exact amount equal to the external financing gap.

However, let us consider the change in reserve assets. The amount is negative 2,533 million dollars, but on monetary authorities’ accounts this is positive, which means the amount is available to be used in case of extreme necessity but usually not expended under a very strict policy framework. Now, assume that we reduce the change in reserve assets by one billion dollars. In that case, we can reduce the amount of debt relief by one billion or we can reduce the government borrowing by one billion. If debt relief can be reduced by another one billion dollars that will make it easier for the debt restructuring negotiations. Otherwise, if there is a change in reserve assets by one billion dollars, the government borrowing can be reduced by one billion dollars and that will set the borrowing target easily. This kind of arrangement is more feasible if multilateral agencies provide a standby credit line which will never be used under a strong policy framework but will increase the foreign exchange reserve position by one billion in our case.

Even though the change in reserve assets in 2023 is estimated to be negative 2,533 million dollars in estimating gross external financing needs, in regard to the year 2024 the same is estimated to be negative 1,697 million dollars; it again rises to negative 2,392 in 2025. Supposing that everything is decided by market forces or by demand and supply including rate of exchange, according to the ideology of IMF, I strongly feel that those estimates are much more arbitrary than scientific. This means that it questions the economic wisdom in designing a strong policy framework for developing countries by existing multilateral financial institutions including IMF.

Additionally, recent macroeconomic theory reveals that when the demand and supply equilibrium is met, it always happens so by creating a component of debt that can never be paid back, and as such debt should keep on accumulating creating unsustainable debt bubbles under the current Fractional Reserve banking system, which is the current practice of almost all countries. The said debt occurs in three main debt regimes, namely in public debt or household debt or non-financial corporate debt or in all three which is defined recently as “Total Core Debt” by Bank of International Settlement. Perhaps, this theory might explain the severe debt crises faced by developed nations. The same will occur in developing countries too, if they show continuing dismal low economic growth patterns similar to mature developed economies.

Perhaps, these are some of the points Sri Lanka can take up at the Paris conference as one of the main goals of the conference is to evolve the existing multilateral development banks and to get increased participation with more contributions from countries which have more foreign exchange surpluses. If successful, the shift in vision suggested by the conference to articulate the protection of climate and biodiversity along with the United Nations Sustainable Development Goals can be remodeled with a new shift in scale of financing and through novel methods.

If the Paris summit is keen to evolve multilateral financial agencies including IMF, ultimately the scale and method of financing as cited in the example will have to be remodelled to ensure debt sustainability and the ideas behind policy framework upheld by those agencies evolved in view of the new findings of macroeconomic theories.

Hema Senanayake

hemasenanayake@yahoo.com



Opinion

Sovereignty without Governance is a hollow shield

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Globalisation exposes weakness and failed governance; and invites intervention – A message to all inept governments everywhere

The government of Burkina Faso has shattered the illusion of party politics, dissolving every political party in the nation. Its justification is blunt: parties divide the people, fracture sovereignty, and allow corrupt elites to hijack the sacred powers that belong to the citizenry.

This is not an aberration. It is the recurring disease of fragile states. Haiti, Somalia, Sudan, Venezuela, Sri Lanka—their governments collapse under the weight of incompetence, leaving their people abandoned and their sovereignty hollow. These failed states do not merely fail themselves; they burden the world. Their chaos spills across borders, draining the strength of nations that still stand.

Globalisation does not forgive weakness. It exposes it. And as global opinion hardens, a new world order is taking shape—one that no longer tolerates decay. The moment of rupture came when US President Donald Trump seized Nicolás Maduro from his Venezuelan hideout and dragged him to face justice in America.

Predictably, the chorus of populists cried “oil!” They shouted about imperialism while ignoring the rot of Maduro’s failed government and his collapse in legitimacy. But the truth is unavoidable: if Venezuela had been competently governed, Trump would never have had the opening to topple its leadership. Weakness invited conquest. Failure opened the door.

Singapore offers the perfect counterexample. It is perhaps the best-governed nation on earth, and for that reason it is untouchable. Strong governance is the only true shield of sovereignty. Without it, sovereignty is a brittle shell, a flag waving over ruins.

Trump’s precedent will echo across continents. China, Russia, India—regional powers are watching, calculating, preparing. The message is unmistakable: Sovereignty is conditional. It is not guaranteed by history or by law. It is guaranteed only by strength, by competence, by the will to govern effectively.

This is the revolutionary truth: nations that fail to govern themselves will be governed by others. The age of excuses is over. The age of accountability has begun. Weak governments will fall. Strong governments will endure. And the people, sovereign and indivisible, will demand leaders who can protect their destiny—or see them replaced by those who can.

By Brigadier (Rtd) Ranjan de Silva
rpcdesilva@gmail.com

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CORRECTION

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In the article, “Let My Country Awake…” published yesterday, it was erroneously said that Sri Lanka was celebrating 77 years of Independence. It should be corrected as 78 years of Independence. The error is regretted.

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“Let My Country Awake …”

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Where the mind is without fear, and the head is held high;

Where knowledge is free;

Where the world has not been broken up into fragments by narrow domestic walls;

Where words come out from the depth of truth;

Where tireless striving stretches its arms towards perfection;

Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit;

Where the mind is led forward by thee into ever-widening thought and action

Into that heaven of freedom, my Father, let my country awake.

– Rabindranath Tagore, Gitanjali, 35

As Sri Lanka marks seventy-seven years of independence, this moment demands more than flags, ceremonies, or familiar slogans. It demands memory, honesty, and moral courage. Once spoken of with affection and hope as Mother Lanka, the nation today increasingly resembles a wounded child—carried again and again across fragile hanging bridges, suspended between survival and collapse. This image is not new to our cultural consciousness. Long before today’s crises, Sri Lankans encountered it through literature and radio, most memorably in Henry Jayasena’s Hunuwataye Kathawa (1967), the Sinhala radio drama adaptation of Bertolt Brecht’s The Caucasian Chalk Circle, written during World War II (WWII), broadcast by Radio Ceylon and later staged across the island. Heard in village homes and city neighborhoods, the story quietly shaped a moral imagination we now seem to have forgotten.

In Hunuwataye Kathawa, a child is placed at the center of a chalk circle, claimed by two women. One is Natella, the biological mother who abandons the child during a moment of danger and later returns—not out of love, but driven by entitlement, inheritance, and power. The other is Grusha, a poor servant who risks everything to protect the child, feeding her, carrying her across perilous terrain, and choosing care over comfort. When ordered by the judge to pull the child out of the circle, Grusha refuses. She would rather let go than injure the child. Justice, the story teaches, belongs not to those who claim ownership most loudly, but to those who practice responsibility and restraint. For generations of Sri Lankans, this lesson entered the heart not through policy or economics, but through art.

Beneath Sri Lanka’s recurring failures lies a deeper wound: collective forgetfulness. It is indeed incredible how a nation colonised by foreign powers for over four centuries, battered by people’s insurrections and national struggles ever since, divided by a 30-year-long ethnic war, shaken by a Tsunami, inflamed by Easter Bombings 2019, hit by Covid-19 shutdown, and bankrupt by economic crisis, just to mention a few before the devastating Cyclone Ditwah that rocked the entire nation not many weeks ago, could be so forgetful of its tragedies. This insight was articulated with striking clarity by Dr. Arvind Subramanian, the former Chief Economic Advisor to the Government of India, speaking at an event organised by The Examiner in Colombo on Jan 21, 2026. Subramanian observed the nation’s troubling tendency to forget its own history—its tragedies, hard-earned lessons, and warnings—and to embrace uncritically whatever is new in a pattern-line manner. This historical amnesia traps Sri Lanka in vicious cycles of debt, dependency, and unscientific thinking. When memory fails, every crisis feels unprecedented; when learning fails, every mistake is repeated.

Consequently, after seventy-eight years of independence from the last colonial rule, Sri Lanka still stands inside that chalk circle. Mother Lanka, once admired for free education, public health, and social mobility, has over the decades been reduced to a wounded child carried across unstable political, economic, and environmental bridges. Different governments, armed with different ideologies and promises, have taken turns holding her. Some carried her carefully; others dropped her midway; still others claimed her loudly while burdening her with unsustainable debt, weakened institutions, superstitious demeanors, and short-term fixes that mortgaged the future. This mother-made-child nation was perpetually oscillating between collapse and recovery. Yet instead of healing her wounds, with every passing Independence Day, we repeatedly celebrated and argued over who owned her.

This long post-independence journey reveals two recurring patterns. There have been many Natella-like approaches—entitlement without responsibility, nationalism without sacrifice, populism without prudence. These abandon the child in moments of crisis, only to return when power, contracts, or prestige are at stake. Alongside them, however, there have also been Grusha-like moments—imperfect, painful, often unpopular, yet rooted in reform, discipline, and care. These moments prioritise institutions over personalities, education over spectacle, sustainability over extraction, science over superstitions, and responsibility over applause. They are the moments that keep the child alive. The thorough cleaning that the whole nation recently experienced with Cyclone Ditwah also reminds us, among many other lessons, about the power and the need of these Grusha-like moments. It reminds us that the real celebration of freedom requires not slogans but breaking free from Natella-like approaches and, after the immersion that she just experienced, that it is only possible in and through at least three kinds of voluntary and ongoing immersions (3P Immersions)—disciplines that reshape not only policy but also personal and national character—Immersion of Poverty, Immersion of Plurality, and Immersion of Prudence.

The immersion of poverty, both spiritual and material, is deeply rooted in Buddhist teaching of tanhaā and āśā—the restless craving for more than one truly needs or can sustain. It is that which enables us to be constantly mindful of ourselves, not only who we really were, who we actually are, and what we continue to become, but also what we are really in need of. Nationally speaking, it involves acknowledging the country’s geopolitical placement, the strengths of its proud history and civilisation, and the limitations of its repeated struggles and political dismay. While material realism, when faced honestly, disciplines excess and teaches gratitude for what we already have, the immersion in poverty should remind us about how greed can lead to corruption and about the illusion that fulfillment lies in accumulation. A nation that does not discern its desires with its own resources and real capacity—human, historical, cultural, and environmental—will always mortgage its future to satisfy temporary cravings. We must ask ourselves honestly: how different are we today from the colonial era, when our decisions were shaped by external powers, if we remain bound by foreign debts, external models, and a forgetting of our own identity?

The immersion of plurality should not be understood as a slogan, but as a lived ethic. Sri Lanka’s diversity of language, religion, culture, geography, and memory is not the problem; it is the unfinished promise. Sinhala and Tamil, Muslim and Burgher, Buddhist, Hindu, Christian, and Muslim, village and city, coast and hill—all belong to the child in the chalk circle. While Natella-like politics weaponise difference and division, pulling the child apart to claim possession, Grusha-like care holds plurality together, recognising that it is the unity in diversity that sustains, protects, and frees the child, carrying it safely home. Freedom figures like Siddi Lebbe, Veera Puran Appu, Sir Ponnambalam Ramanathan, Sir Ponnambalam Arunachalam, C. W. W. Kannangara, T. B. Jayah, Anagarika Dharmapala, and D. S. Senanayake emerged from different faiths, languages, and regions, yet shared a common ethic: the country mattered more than self, party, or community. They were not perfect, but they were Grusha-like—unwilling to pull the child apart to prove ownership, willing instead to carry her patiently across danger.

Grusha-like care, therefore, holds plurality together, recognizing that no single group can carry the country alone. Rather, it is plurality which is the ground of freedom from coercion, selective justice, and hostage-taking—whether by professions, ideologies, or institutions that prioritize self-interest over the common good. It also demands freedom from resistance to positive change, especially when that resistance is motivated by private gain rather than the common welfare. A plural society asks: Does this serve the nation, or merely my group, my party, my advantage?

The immersion in prudence is perhaps the rarest and most neglected virtue. Prudence calls us to move from myth to science, from avidyā to vidyā, from superstition to evidence. Recent floods and landslides were not merely natural disasters; they were moral warnings. Thy painfully revealed what happens when desire overrides restraint, when planning ignores science, when land is abused, when short-term gain overrides long-term responsibility, and when development forgets sustainability. Freedom from disaster is inseparable from freedom from ignorance. Prudence teaches us to listen actively, speak intentionally, plan with evidence, build with environmental awareness, and govern with foresight. Prudence is not only about grand reforms; it is also very much about our everyday civic behaviour, such as how we treat Mother Earth and shared spaces.

For example, freedom from spitting on the ground, freedom from littering public places, and freedom from leaving behind what we refuse to clean or return. These are not small matters; they are indicators of whether people see the nation as a common home or as a place to be used and discarded. These are only a handful of many instances where we need to hear what JFK (John F. Kennedy) asked the Americans in 1961: “Ask not what your country can do for you – ask what you can do for your country”. The WWII-devastated Japan’s development is not built merely on technology, but on discipline, as systems like 5S cultivate order, responsibility, and respect for shared space. Clean Sri Lanka and the proposed Education Reforms 2026 can become transformative moments—but only if truth replaces pretense, cooperation replaces cynicism, and ownership replaces vengeful rhetoric. Prudence allows a nation to appreciate its ownness—its history, institutions, cultural resources, and the agendas for the common good—without rejecting learning from the world. Without prudence, novelty becomes addiction, and reform becomes fashion.

Before the history repeats itself for another 77 years, either as a series of tragedy or comedy, it is important, therefore, to recognise that freedom from debt, disaster, and dependency (national or personal) is impossible without all three types of immersions working together—poverty of desire, plurality of belonging, and prudence of action. Initiatives such as education reform and Clean Sri Lanka offer genuine opportunities, but only if we cooperate, think long-term, and resist turning reform into another slogan. This raises an uncomfortable question: Do we truly want to be free? Or are we content to remain in the same rut, so long as ignorance is preserved, education is left unreformed, and distractions are supplied by a handful of greedy politicians—their vengeful rhetoric, their allies, lopsided media, and mushrooming content creators—while the powerful continue to benefit from it all? Freedom is demanding. It asks for memory, restraint, cooperation, and courage. Dependency, by contrast, is easy.

Therefore, the question before us is not who shouts the loudest, who claims patriotism most aggressively, or who promises instant miracles. It is who remembers, who renounces, who embraces plurality, and who acts with prudence as her stewards and not owners. When are we going to immerse ourselves in these three immersions and be free? After Rabindranath Tagore’s poem, W. D. Amaradeva once sang, “Patu adahasnam paurinen lokaya kabaliwalata nobedi, jnanaya iwahal we… Ehew nidahase swarga rajyataṭ, mage dæśaya avadi karanu mena, Piyanani…“— Where knowledge keeps the world from being divided by the walls of narrow thoughts… Into that heaven of freedom, Father, let my country awake. How many poems, how many Amaradevas, how many freedom speeches, how many religious sermons, how many inundations, and how many struggles must come and go before we awaken to that truth and let Mother Lanka be out of that vicious pattern or circle of collapse and recovery—whole, healed, and free?

By Dr. Rashmi M. Fernando, S.J.
Loyola Marymount University, Los Angeles, CA, USA
Rashmi.Fernando@lmu.edu | https://orcid.org/0009-0006-3310-721X

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