Opinion

Is debt necessary evil ?

Published

3 years ago

2022/10/6

A look at global debt statistics would show that almost all countries, irrespective of their economic status, obtain loans. The USA, the second richest country on the basis of PPP index, has a debt burden of more than 100% of their GDP, which is much more than some of the developing countries such as Brunei (1.7%) and Congo (12%). Russia, a developed country, has a debt/GDP ratio of 17% only. How much debt a country could take would of course depend on its ability to pay back. When the interest rate payable on the loans is lower than the growth rate of the national product, it is considered safe to be in debt. The interest/growth ratio in developed countries is maintained around 1, which is said to be safe with no fear of default. Donors too like to deal with countries that adhere to these parameters.

Obviously, poor countries have to take loans to engage in development work. But why would a rich country like the USA take massive loans. The US has debts amounting to 30 trillion which is 110% of its GDP. From year 2000 to 2019, the US debt increased by 69%. Japan and China are among the main lenders to the US, which owes Japan USD 1.2 trillion and China USD 1.1 trillion, and it has borrowed large sums from countries like Taiwan, Brazil, Belgium, etc. The US could settle these debts or take steps to reduce it, but it prefers to have deficit budgets and meet the deficit with loans. It does that because it can afford to, but there are American economists who say the heavy debt burden could cause a crisis.

If that is the case for the USA, obviously poor countries like Sri Lanka cannot afford to run debts in the range of USD 50 Billion. Our export earnings in 2018 amounted to USD 20 billion and imports cost USD 26 billion. The deficit had to be bridged with foreign loans. Even under crisis conditions we are spending more than we earn. In 2021, export earnings were USD 14 billion while imports cost USD 21 billion.

During the last decade or so interest rates for foreign debt was fairly low, and many developing countries made use of the opportunity to borrow heavily. This money, in many instances, was not utilised judiciously but spent on unproductive projects. As a result, those countries owe record amounts of money to foreign investors, governments and other lenders. For instance, Afghanistan, Chad, Bolivia and Zimbabwe owe an astounding USD 2.1 trillion. As many as 154 countries are in economic difficulty due to such short-sighted policies. Sri Lanka also belongs in this group. Tanzania, Lebanon and Belarus are almost bankrupt. Argentina has defaulted to pay its loans for the ninth time. Covid-19 has made matters worse as it has badly affected the dollar earning capacity of these countries. Sri Lanka in trying to solve the problem in 2020 took steps, such as tax cuts, fertilizer import ban etc. that made matters worse.

For the poorest countries (all those eligible for support from the International Development Association or IDA), 2020 debt service is about $36 billion, divided in roughly equal proportions between multilateral, bilateral (mostly non-Paris Club), and commercial creditors. Sri Lanka does not qualify for IDA assistance. There are worse- off countries than Sri Lanka, some consolation!

All developing country regions are potentially seriously affected: Latin America has the highest debt service/exports ratio, Africa has the least diversified export mix, East Asia has the largest absolute amount of debt service. In normal circumstances, these amounts would simply be refinanced in global capital markets or offset by new disbursements from existing lenders. But circumstances are not normal. Credit markets have tightened, and many countries are faced with very large reductions in foreign exchange revenues. In the face of huge global economic uncertainty, it is hard to predict which countries and regions will be most vulnerable. Already, Venezuela, Argentina, and Lebanon have defaulted and face lengthy and damaging legal proceedings with each creditor trying to negotiate individually, resulting in dead-weight losses for everyone until the situation is sorted out.

One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing. It seems clear that this is not just a low-income or Sri Lankan or an African country problem. There are several calls for debt standstills to ease the burden on developing countries. Debt threatens to create a global development emergency, in much the same way as the pandemic is creating a global health emergency. Both could result in social unrest and instability. Something will have to be done by the aid giving countries, but that doesn’t mean the responsibility of developing countries are less. They have to show greater commitment in controlling corruption, waste and in good management and transparency and accountability in all their dealings. Loans should not be wasted on unproductive projects such as Mattala Airport.

All these countries need time to recover. Many developing countries simply will not have the foreign exchange to service their debt this year, notably those who are heavily indebted, are commodity dependent (two-thirds of all developing countries according to UNCTAD), have relied on large tourism earnings, or on remittances. A good example of the value of buying time is the negotiated settlement of debts in Korea in 1997-98. Similarly, Sri Lanka and all the affected countries need time to put their house in order and slowly grind back to recovery.

In the current context, timeliness means that case-by-case solutions may not be feasible. Like COVID-19, there is a need to flatten the curve of debt reschedulings, so that the peak falls within the capacity of the country to handle the crisis. Hence there is a need for the G-20, the IMF/World Bank, the U.N. or others to develop a simple debt freeze framework, that can buy time for these stricken countries. Then the problem in each country could be analyzed and remedial action suitable for each country taken. There could be a UN Security Council Resolution calling for a standstill on payment of debt service and an agreement by all creditors to abide by the UN resolution. Such measures had been taken in the past during global debt crises.

Sri Lanka is somewhat better off than most of these badly affected countries. It is a fertile country with a good base for agricultural development. Its literacy rate is high and has an educated workforce. Its garment and tourism industries are fairly well-developed, and the potential for development of industries like electronics, IT and communication is fairly good. The geographical situation of Sri Lanka in the Indian Ocean is most favourable for the development of a trade and shipping hub. If our leaders stop doing foolish things, listen to genuine scientists and economists and focus on supplying the agriculturists, planters, fishers and industrialists their requirements to develop their sectors, the country has a good chance of recovery. Our economists, managers, CEOs and entrepreneurs are second to none in the world. If there is no political interference they have the knowledge and ability to deliver.

In the energy sector, the mafia that controls it must be got rid of, and solar energy must receive highest priority. More than half of our foreign exchange earnings go for import of fuel. The sun is the only source of energy the world has, the problem is we have not tapped its resources fully. Sri Lanka must seriously go into the business of researching and manufacturing solar power capturing equipment. These things could and should have been done with the big loans that the country took in the past.

In future, loans must be kept below 50% of the GDP and the ratio between interest rate payable on loans and GDP growth rate should be maintained at one or less. The present debt burden of USD 50 B should gradually be reduced to about 10 B. Loans should never be taken for consumption or unsustainable projects that do not benefit the people. No room should be left for corruption. Therefore, corrupt politicians would not like to adopt these policies. First we must elect incorruptible politicians.

N.A.de S. AMARATUNGA

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Opinion

Missing 52%: Why Women are absent from Pettah’s business landscape

Published

13 hours ago

2026/02/23

Thilina Walpola

Pettah

Walking through Pettah market in Colombo, I have noticed something both obvious and troubling. Shop after shop sells bags, shoes, electronics, even sarees, and yet all shops are owned and run by men. Even businesses catering exclusively to women, like jewelry stores and bridal boutiques, have men behind the counter. This is not just my observation but it’s a reality where most Sri Lankans have observed as normal. What makes this observation more important is when we examine the demographics where women population constitute approximately 52% of Sri Lanka’s population, but their representation as business owners remains significantly low. According to the Global Entrepreneurship Monitor 2023 report, Sri Lanka’s Total Early Stage Entrepreneurial Activity rate for women is just 8.2%, compared to 14.7% for men.

Despite of being the majority, women are clearly underrepresented in the entrepreneurial aspect. This mismatch between population size and economic participation create a question that why aren’t more women starting ventures? The answer is not about capability or intelligence. Rather, it’s deeply in social and cultural barriers that have been shaping women’s mindsets for generations. From childhood, many Sri Lankan girls are raised to believe that their primary role is as homemakers.

In families, schools, and even universities, the message has been same or slightly different, woman’s success is measured by how well she manages a household, not by her ability to generate income or lead a business. Financial independence is rarely taught as essential for women the way it has been for men. Over time, this messaging gets internalised. Many women grew up without ever being encouraged to think seriously about ownership, leadership, or earning their own money. These cultural influences eventually manifest as psychological barriers as well.

Years of conditioning have led many skilled women to develop what researchers call “imposter syndrome”, a persistent fear of failure and feel that they don’t deserve success kind of feeling. Even when they have the right skills and resources, self-doubt holds them back. They question whether they can run a business independently or not. Whether they will be taken seriously, whether they are making the right choice. This does not mean that women should leave their families or reject traditional roles. But lack of thinking in a confident way and make bold decisions has real consequences. Many talented women either never start a business or limit themselves to small, informal ventures that barely survive. This is not about men versus women. It’s about the economic cost of underutilising 52% of the population. If our country is genuinely serious about sustainable growth. we must build an inclusive entrepreneurial ecosystem through confidence building programs, better finance access to women, and a long term societal mindset shift. Until a young girl walking through Pettah can see herself as a future shop owner rather than just a customer, we will continue to waste our country’s greatest untapped resource.

Harinivasini Hariharasarma
Department of Entrepreneurship
University of Sri Jayewardenepura

Opinion

Molten Salt Reactors

Published

13 hours ago

2026/02/23

Thilina Walpola

Some essential points made to indicate its future in Power Generation

The hard facts are that:

1) Coal supplies cannot last for more than 70- 100 years more at most, with the price rising as demand exceeds supply.

2) Reactor grade Uranium is in short supply, also with the price rising. The cost is comparable to burning platinum as a fuel.

3) 440 standard Uranium reactors around the world are 25-30 years old – coming to the end of their working life and need to be replaced.

4) Climate Change is increasingly making itself felt and forecasts can only be for continuing deterioration due to existing levels of CO2 being continuously added to the atmosphere. It is important to mention the more serious problems associated with the release of methane gases – a more harmful gas than CO2 – arising from several sources.

5) Air pollution (ash, chemicals, etc.) of the atmosphere by coal-fired plants is highly dangerous for human health and should be eliminated for very good health reasons. Pollution created by India travels to Sri Lankans by the NE monsoon causing widespread lung irritations and Chinese pollution travels all around the world and affects everybody.

6) Many (thousands) of new sources of electric power generation need to be built to meet increasing demand. But the waste Plutonium 239 (the Satan Stuff) material has also to be moved around each country by lorry with police escort at each stage, as it is recovered, stored, processed and formed into blocks for long term storage. The problem of security of transport for Plutonium at each stage to prevent theft becomes an impossible nightmare.

The positive strengths to Thorium Power generation are:

1) Thorium is quite abundant on the planet – 100 times more than Uranium 238, therefore supplies will last thousands of years.

2) Cleaning or refining the Thorium is not a difficult process.

3) It is not highly radioactive having a very slow rate of isotope decay. There is little danger from radiation poisoning. It can be safely stored in the open, unaffected by rain. It is not harmful when ingested.

4) The processes involved with power generation are quite different and are a lot less complex.

5) Power units can be quite small, the size of a modern detached house. One of these can be located close to each town, thus eliminating high voltage cross-country transmission lines with their huge power losses (up to 20%).

6) Thorium is ‘fertile’ not fissile: therefore, the energy cycle has to be kick-started by a source of Neutrons, e.g., fissile material, to get it started. It is definitely not as dangerous as Uranium.

7) It is “Fail – Safe”. It has walk-away safety. If the reactor overheats, cooled drain plugs unfreeze and the liquid drains away to storage tanks below. There can be no “Chernobyl/ Fukoshima” type disasters.

8) It is not a pressurized system; it works at atmospheric pressure.

9) As long as reactor temperatures are kept around 600 oC there are little effects of corrosion in the Hastalloy metal tanks, vessels and pipe work. China, it appears, has overcome the corrosion problem at high temperatures.

10) At no stage in the whole chain of operations is there an opportunity for material to be stolen and converted and used as a weapon. The waste products have a half- life of 300 years, not the millions of years for Plutonium.

11) Production of MEDICAL ISOTOPE Bismuth 213 is available to be isolated and used to fight cancer. The nastiest cancers canbe cured with this Bismuth 213 as Targetted Alpha therapy.

12) A hydrogen generation unit can be added.

This information obtained from following YouTube film clips:

1) The Liquid Fluoride Thorium Reactor – what Fusion wanted to be…

2) An unbiased look at Molten Salt Reactors

3) LFTR Chemical Processing by Kirk Sorensen

Thorium! The Way Ahead!

Priyantha Hettige

Opinion

Foreign degrees and UGC

Published

13 hours ago

2026/02/23

Thilina Walpola

There are three key issues regarding foreign degrees:

Recognition: Is the awarding university recognized by our UGC?

Authenticity: Is the degree genuine or bogus?

Quality: Is it a standard, credible qualification?

1. The Recognition Issue (UGC Role)

The UGC addresses the first issue. If a foreign university is listed in the Commonwealth Universities Yearbook or the International Handbook of Universities, the UGC issues a letter confirming that the university is recognized. However, it is crucial to understand that a recognized university does not automatically imply that every degree it issues is recognized.

2. The Authenticity Issue (Employer Role)

The second issue rests with the employer. It is the employer’s responsibility to send a copy of the foreign degree to the issuing university to get it authenticated. This is a straightforward verification process.

3. The Quality Assurance Gap

The third issue

—the standard and quality of the degree—has become a matter for no one. The UGC only certifies whether a foreign university is recognized; they do not assess the quality of the degree itself.

This creates a serious loophole. For example:

Does a one-year “top-up” degree meet standard criteria?

Is a degree obtained completely online considered equivalent?

Should we recognize institutions with weak invigilation, allowing students to cheat?

What about curricula that are heavy on “notional hours” but light on functional, practical knowledge?

What if the medium of instruction is English, but the graduates have no functional English proficiency?

Members of the UGC need to seriously rethink this approach. A rubber-stamp certification of a foreign university is insufficient. The current system ignores the need for strict quality assurance. When looking at the origins of some of these foreign institutions (Campuchia, Cambodia, Costa Rica, Sudan..) the intentions behind these “academic” offerings become very clear. Quality assurance is urgently needed. Foreign universities offering substandard degrees can be delisted.

M. A. Kaleel Mohammed
757@gmail.com
( Retired President of a National College of Education)