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How to put Sri Lanka back to work

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by Jayampathy Molligoda

Basic economic models followed by successive governments:

Since 1978, the successive governments have been following an aggressive open economic policy framework for Sri Lanka and there has been some progress in the much-needed infrastructure development compared to the period governed under a somewhat ‘closed economic system’. Basically, their open economic policy framework is founded on the following two basic economic models (i) ‘neo-classical’, monetarists policy prescription or (ii) ‘Post-Keynesian’ Economic school of thought which builds upon John Maynard Keynes’s argument that effective demand is the key determinant of economic performance.

The difference between these theories is that ‘ economics believe in controlling the supply of money that flows into the economy, while Keynesian economics involves government expenditures. In contrast to the neoclassical (mainstream) approach, Keynes argued that investment is not constrained by the availability of saving, but may be constrained by the availability of credit.

Monetarists believe that government spending causes inflation. The level of the money supply, which they feel has a direct impact on inflation, must be used to control it. In contrast, Keynesian economists believe that a troubled economy continues in a downward spiral unless an intervention drives consumers to buy more goods and services. Governments should balance out the cyclical movement of the economy by spending more in downturns and less in prosperous times (thereby preventing inflation).

One can argue, the open economic policy framework in Sri Lanka has not worked for the benefit of the majority of people although the governments from time to time used to follow either the ‘neo-classical’ principles or Keynesian Economic school of thought. The result is that the overall performance of the economy has been unsatisfactory. The economists are of the view that the economic downturn has been mainly due to serious structural weaknesses in the economy during a long period of time.

Sri Lanka’s relative export performance, especially during the last ten- year period has drastically declined and thus widening the trade deficit around US $ 8- 10 billion per annum. It is clear that the poor export performance relative to increased import bill, together with the external ‘current account’ deficit and large fiscal deficits in the government budgets, popularly known as the ‘twin deficits’, have been identified as the key structural weaknesses that have affected the economy for several decades with continuing adverse trends into the future. The positive feature is the export of goods during the last three years (2021,2022 and 2023) recorded a notable increase and surpassed US $ 13 billion since 2022, however, trade deficit remains a major concern due to the heavy import bill.

The government which came in to power in 2020 was not keen to have an IMF programme as they were of the opinion that such action (i) will definitely contract economic growth, (ii) imposing high taxes and high bank interest rates will reduce business activities, (iii) having a widely fluctuating rupee puts enormous burden on the people with high imported inflation and unbearable cost of living impact and (iv) many other adverse consequences. In short, their view was that people’s purchasing power will be badly affected. From the present socio/economic situation faced by the majority of people, it can be seen that there is some truth of what they had predicted if they had adopted the IMF policy prescription.

Pros and cons of the major policy shift since April 2022:

President GR during the latter part of his tenure was reluctantly compelled to adopt a slightly different economic strategy (i) received a positive response from IMF (in March ’22) to his letter requesting EF (Extended Fund) facility (ii) allowed the rupee to fluctuate, initially a ‘managed float’ mechanism as decided by CB on March 7, 2022 (iii) dissolved the cabinet during the first week of April ‘22 and appointed a new economic team (iv) the Treasury secretary in consultation with the Governor, CB and the new Finance Minister had announced one of the most controversial decisions, i.e. ‘pre emptive’ debt default on April 12, ‘22. Since then, the CB used the term ‘debt standstill’ instead of default (Page 187 of the CB Annual Report-2022)

Upon resignation of President GR in July ’22 then Prime minister RW was elected as President through a ‘parliamentary majority vote’ in accordance with the constitutional provisions for the remaining period of GR’s tenure which ends in October 2024. Since then, the CB Governor and his team have been advising the government on the macro- economic policies, especially the monetary policy area based on IMF programme.

The CBSL has adopted a strategy of curbing inflation as a high priority by increasing the interest rate, imposing high taxation and further tightening monetary policy. President RW and his economic team have been able to manage to stabilize the macro economy to a certain extent thus eliminating the acute shortages in the market place, including petroleum products, gas etc. and also tackled the power cuts imposed by CEB during that time.

However, this was achieved at the expense of unbearable burden on households due to high cost of living, job losses and closure of a number of SME businesses, micro enterprises etc. The annual report of the Institute of Policy studies (IPS) – 2022 stated that only remedy on hand was to curb inflation through a forced ‘economic recession’.

The Monetary board of CBSL on March 7, ’22 decided to move away from the fixed exchange rate that prevailed since September 2021, it was announced that they expect an upper limit of Rs.230/-. Nevertheless, from March 8 or 9 onwards, the rupee was allowed to be floated based on market sentiments until May 12, ‘22 and by that time, the exchange rate of Rs.230 has gone up to Rs 377/- per US $. That’s the period, where inflation skyrocketed due to supply side ‘cost push’ imported inflation, more than the ‘demand pull’ inflation. On May 12, CB had to rectify this market behaviour (undue volatility) by shifting its policy to a ‘managed float’ with the introduction of middle rate to facilitate orderly behaviour of the FOREX market.

So far, Sri Lanka has received a total disbursement of two tranches amounting to US$ 670 million out of the US$ 3 billion Extended Fund Facility (EFF) approved by the IMF. The government of the day has been managing the ‘day- today’ inflows/outflows in the ‘forex account’ satisfactorily and, also managed to improve the government revenue collection through higher taxes imposed on the people. The private players who operate businesses especially the exporters and other foreign exchange earners have been able to build up some confidence on the government policy environment and started remitting their ‘forex income’ to the country through established banking systems. The Tourism sector is performing relatively well and ‘forex’ income to the country continues to flow in, thus relieving some burden on the people.

On the negative side, there is an undue delay in the negotiation process of the ‘debt restructuring’ with foreign creditors. (Debt to GDP ratio remains a major concern) Most of the sub sectors of the economy i.e. the so called ‘production economy’ both in the agriculture and manufacturing sub-sectors are not performing well. Although, the government tax revenue has increased significantly, the budget deficit in nominal terms has not made any progress showing reductions.

According to recent surveys conducted by independent research teams, majority of the people – five million households, SMEs, micro enterprises – are really suffering due to high cost of living, higher unemployment rate, further job losses, lack of purchasing power as well as deteriorating health care and educational sectors. The real issue has been that our country’s economic growth has been ‘negative’ during the last five consecutive quarters since 2021.

Solution lies in putting Sri Lanka back to work:

As indicated in my previous published articles, the government must focus on economic (GDP) growth– meaning real economics not financial numbers (transfer payments) etc only. In simple terms, the fundamental solution lies in making one thing to happen;

GDP growth = C+I+ G+ (exports-imports), where, C- consumption and I- investment, G- government spending.

We don’t have to reinvent the wheel. During the great depression period in 1930’s, the US/western economies were able to overcome the crisis successfully by practicing the ‘school of thought’ recommended by John Maynard Keynes, not necessarily based on neo-classical economic principles. Since then, many governments have been adopting the same principles and eminent economists of the calibre Professor Joseph E Stiglitz, winner of Nobel Prize /former Chief Economist of World Bank, Thomas Piketty, French economist who wrote the landmark analysis of Western economic inequality, “Capital in the 21st Century” and others have further developed the Keynesian model.

These economists urge governments to embrace real solutions: investing in education, science, technology and infrastructure, offering more help to the children of the poor, doing more to restore the economy to full employment etc. It is interesting to note that even the IMF, an organisation not taking radical positions, has taken up the position that inequality is associated with instability. (‘Inequality and unsustainable growth; two sides of the same coin?’ – IMF staff discussion note- 2011)

According to Stiglitz, monetary policy instruments for managing the macro economy have proved ineffective. Here are some home truths:

(i) The single most important thing is how to put the country back to work.

(ii) The country should be focussed on job creation. We can’t raise economic growth, create jobs by cutting spending and firing workers. The reason that businesses with access to capital are not investing/hiring people is that there is insufficient demand for their products. Weakening demand in the market place only discourages investment and hiring people.

(iii) The advantage of having underinvestment in the public and private sector for so long (nearly 10 years) is that we have many high return opportunities. Use this opportunity with low ‘long term’ bank interest rates to focus high return, labour intensive- investments in infrastructure, education, health care, technology etc.

(iv) Increased output can generate higher tax revenue to the treasury to pay low interest on the debt. Higher income to people means higher tax revenue to treasury without unnecessarily increasing the VAT rate to 18% and other tax rates.

(v) Government can change the design of the tax system and expenditure pattern. Increasing taxes at the top five percent and lowering taxes at the middle class. This will lead to more consumption spending, which is not happening now- in other words create demand in the market place.

(vi) Review Indirect taxes: Direct taxes ratio. The revenue from Indirect taxes such as VAT compared to Direct taxes (income taxes) is disproportionately very high, thus creating inequality in the society and negating the cardinal principle of progressive tax system.

(vii) Sri Lanka’s debt burden will reduce and economic growth increases, meaning debt to GDP ratio will improve.

It is simply a matter of politics:

Presidential elections are due to be held in early October ’24 and it appears that the two main opposition parties tend to gain popularity among the people, who are eligible to vote, especially the NPP and SJB. The present government and the two main opposition parties are in possession of somewhat comprehensive policy packages. However, whether they could offer a viable economic model at the elections as against the two economic models practiced by successive governments is yet to be seen. My own view is the success depends on how to put Sri Lanka back to work.


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Relief without recovery

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A US airstrike on an Iranian oil storage facility

The escalating conflict in the Middle East is of such magnitude, with loss of life, destruction of cities, and global energy shortages, that it is diverting attention worldwide and in Sri Lanka, from other serious problems. Barely four months ago Sri Lanka experienced a cyclone of epic proportions that caused torrential rains, accompanied by floods and landslides. The immediate displacement exceeded one million people, though the number of deaths was about 640, with around 200 others reported missing. The visual images of entire towns and villages being inundated, with some swept away by floodwaters, evoked an overwhelming humanitarian response from the general population.

When the crisis of displacement was at its height there was a concerted public response. People set up emergency kitchens and volunteer clean up teams fanned out to make flooded homes inhabitable again. Religious institutions, civil society organisations and local communities worked together to assist the displaced. For a brief period the country witnessed a powerful demonstration of social solidarity. The scale of the devastation prompted the government to offer generous aid packages. These included assistance for the rebuilding of damaged houses, support for building new houses, grants for clean up operations and rent payments to displaced families. Welfare centres were also set up for those unable to find temporary housing.

The government also appointed a Presidential Task Force to lead post-cyclone rebuilding efforts. The mandate of the Task Force is to coordinate post-disaster response mechanisms, streamline institutional efforts and ensure the effective implementation of rebuilding programmes in the aftermath of the cyclone. The body comprises a high-level team, led by the Prime Minister, and including cabinet ministers, deputy ministers, provincial-level officials, senior public servants, representing key state institutions, and civil society representatives. It was envisaged that the Task Force would function as the central coordinating authority, working with government agencies and other stakeholders to accelerate recovery initiatives and restore essential services in affected regions.

Demotivated Service

However, four months later a visit to one of the worst of the cyclone affected areas to meet with affected families from five villages revealed that they remained stranded and in a state of limbo. Most of these people had suffered terribly from the cyclone. Some had lost their homes. A few had lost family members. Many had been informed that the land on which they lived had become unsafe and that they would need to relocate. Most of them had received the promised money for clean up and some had received rent payments for two months. However, little had happened beyond this. The longer term process of rebuilding houses, securing land and restoring livelihoods has barely begun. As a result, families who had already endured the trauma of disaster, now face prolonged uncertainty about their future. It seems that once again the promises made by the political leadership has not reached the ground.

A government officer explained that the public service was highly demotivated. According to him, many officials felt that they had too much work piled upon them with too little resources to do much about it. They also believed that they were underpaid for the work they were expected to carry out. In fact, there had even been a call by public officials specially assigned to cyclone relief work to go on strike due to complaints about their conditions of work. This government official appreciated the government leadership’s commitment to non corruption. But he noted the irony that this had also contributed to a demotivation of the public service. This was on the unjustifiable basis that approving and implementing projects more quickly requires an incentive system.

Whether or not this explanation fully captures the situation, it points to an issue that the government needs to address. Disaster recovery requires a proactive public administration. Officials need to reach out to affected communities, provide clear information and help them navigate the complex procedures required to access assistance. At the consultation with cyclone victims this was precisely the concern that people raised. They said that government officers were not proactive in reaching out to them. Many felt they had little engagement with the state and that the government officers did not come to them. This suggests that the government system at the community level could be supported by non-governmental organisations that have the capacity and experience of working with communities at the grassroots.

In situations such as this the government needs to think about ways of motivating public officials to do more rather than less. It needs to identify legitimate incentives that reward initiative and performance. These could include special allowances for those working in disaster affected areas, recognition and promotion for officers who successfully complete relief and reconstruction work, and the provision of additional staff and logistical support so that the workload is manageable. Clear targets and deadlines, with support from the non-governmental sector, can also encourage officials to act more proactively. When government officers feel supported and recognised for the extra effort required, they are more likely to engage actively with affected communities and ensure that assistance reaches those who need it most.

Political Solutions

Under the prevailing circumstances, however, the cyclone victims do not know what to do. The government needs to act on this without further delay. Government policy states that families can receive financial assistance of up to Rs 5 million to build new houses if they have identified the land on which they wish to build. But there is little freehold land available in many of the affected areas. As a result, people cannot show government officials the land they plan to buy and, therefore, cannot access the government’s promised funds. The government needs to address this issue by providing a list of available places for resettlement, both within and outside the area they live in. However, another finding at the meeting was that many cyclone victims whose lands have been declared unsafe do not wish to leave them. Even those who have been told that their land is unstable feel more comfortable remaining where they have lived for many years. Relocating to an unfamiliar area is not an easy decision.

Another problem the victims face is the difficulty of obtaining the documents necessary to receive compensation. Families with missing members cannot prove that their loved ones are no longer alive. Without official confirmation they cannot access property rights or benefits that would normally pass to surviving family members. These are problems that Sri Lanka has faced before in the context of the three decade long internal war. It has set up new legal mechanisms such as the provision of certificates of absence validated by the Office on Missing Persons (OMP) in place of death certificates when individuals remain missing for long periods. The government also needs to be sensitive to the fact that people who are farmers cannot be settled anywhere. Farming is not possible in every location. Access to suitable land and water is essential if farmers are to rebuild their livelihoods. Relocation programmes that fail to take these realities into account risk creating new psychological and economic hardships.

The message from the consultation with cyclone victims is that the government needs to talk more and engage more directly with affected communities. At the same time the political leadership at the highest levels need to resolve the problems that government officers on the ground cannot solve. Issues relating to land availability, legal documentation and livelihood restoration require policy decisions at higher levels. The challenge to the government to address these issues in the context of the Iran war and possible global catastrophe will require a special commitment. Demonstrating that Sri Lanka is a society that considers the wellbeing of all its citizens to be a priority will require not only financial assistance but also a motivated public service and proactive political leadership that reaches out to those still waiting to rebuild their lives.

 

by Jehan Perera

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Supporting Victims: The missing link in combating ragging

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A recent panel discussion at the University of Peradeniya examined the implications of the Supreme Court’s judgement on ragging, in which the Court recognised that preventing ragging requires not only criminal penalties imposed after an incident occurs but also systems and processes within universities that enable victims to speak up and receive support. Bringing together perspectives from law, university administration, psychology and students, the discussion sought to understand why ragging continues to persist in Sri Lankan universities despite the existence of legal prohibitions. While the discussion covered legal and institutional dimensions, one theme emerged clearly: addressing ragging requires more than laws and disciplinary rules. It requires institutions that are capable of supporting victims.

Sri Lanka enacted the Prohibition of Ragging and Other Forms of Violence in Educational Institutions Act No. 20 of 1998 following several tragic incidents in universities, during the 1990s. Among the most widely remembered is the death of engineering student S. Varapragash at the University of Peradeniya in 1997. Incidents such as this shocked the country and revealed the consequences of allowing violent forms of student hierarchy to persist. The 1998 Act marked an important legal intervention by recognising ragging as a criminal offence. The law introduced severe penalties for individuals found guilty of engaging in ragging or other forms of violence in educational institutions, including fines and imprisonment.

Despite the existence of this law for nearly three decades, prosecutions under the Act have been extremely rare. Incidents continue to surface across universities although most are not reported. The incidents that do reach university administrations are dealt with internally through disciplinary procedures rather than through the criminal justice system. This suggests that the problem does not lie solely in the absence of legal provisions but also in the ability of victims to come forward and pursue complaints.

The tragic reminders; the cases of Varapragash and Pasindu Hirushan

Varapragash, a first-year engineering student at the University of Peradeniya, was forced by senior students to perform extreme physical exercises as part of ragging, resulting in severe internal injuries and acute renal failure that ultimately led to his death. In 2022, the courts upheld the conviction of one of the perpetrators for abduction and murder. The case illustrates not only the brutality of ragging but also how long and difficult the path to justice can be for victims and their families. Even when victims speak about their experiences, they may not always disclose the full extent of what they have endured. In the case of Varapragash, the judgement records that the victim told his father that he was asked to do dips and sit-ups. Varapragash’s father had testified that it appeared his son was not revealing the exact details of what he had to endure due to shame.

More than two decades after the death of Varapragash, the tragedy of ragging continues. The 2025 Supreme Court judgement arose from the case of Pasindu Hirushan, a 21-year-old student of the University of Sri Jayewardenepura, who sustained devastating head injuries at a fresher’s party, in March 2020, after a tyre sent down the stairs by senior students struck him. He became immobile, was placed on life support, and returned home only months later. If the Varapragash case exposed the deadly consequences of ragging in the 1990s, the Pasindu Hirushan case demonstrates that universities are still failing to prevent serious violence, decades after the enactment of the 1998 Act. It was against this background of continuing institutional failure that the Supreme Court issued its Orders of Court in 2025. Among the key mechanisms emphasised by the judgement is the establishment of Victim Support Committees within universities.

Why do victims need support?

Ragging in universities can take many forms, including verbal humiliation, physical abuse, emotional intimidation and, in some instances, sexual harassment. While all forms of ragging can have serious consequences, incidents involving sexual harassment often present additional barriers for victims who wish to come forward. Victims may hesitate to complain due to weak institutional mechanisms, fear of retaliation, or uncertainty about whether their experiences will be taken seriously. In many cases, those who speak out are confronted with questions that shift attention away from the alleged misconduct and onto their own behaviour: why did s/he continue the conversation?; why did s/he not simply disengage, if the harassment occurred as claimed?; why did s/he remain in the environment?; or did his/her actions somehow encourage the accused’s behaviour? Such responses illustrate how easily victims can be subjected to a second layer of scrutiny when they attempt to report incidents. When individuals anticipate disbelief, minimisation or blame, silence may appear safer than disclosure. In such circumstances, the presence of a trusted institutional body, capable of providing guidance, protection and support, become critically important, highlighting the need for effective Victim Support Committees within universities.

What Victim Support Committees must do

As expected by the Supreme Court, an effective Victim Support Committee should function as a trusted institutional mechanism that places the safety and dignity of victims at the centre of its work. The committee must provide a safe and confidential point of contact through which victims can report incidents of ragging without fear of intimidation or retaliation. It should assist victims in understanding and pursuing available complaint procedures, while also ensuring their immediate protection where there is a risk of continued harassment. Recognising the psychological harm ragging may cause, the committee should facilitate access to counselling and emotional support services. At a practical level, it should also help victims document incidents, record statements, and preserve evidence that may be necessary for disciplinary or legal proceedings. The committee must coordinate with university authorities to ensure that complaints are addressed promptly and responsibly, while maintaining strict confidentiality to protect the identity and well-being of those who come forward. Beyond responding to individual cases, Victim Support Committees should also contribute to broader awareness and prevention efforts, within universities, helping to create an environment where ragging is actively discouraged and students feel safe to report incidents. Without such support, the process of pursuing justice can become overwhelming for individuals who are already dealing with the emotional impact of abuse.

Making Victim Support Committees work

According to the Orders of Court, these committees should include representatives from the academic and non-academic staff, a qualified counsellor and/or clinical psychologist, an independent person, from outside the institution, with experience in law enforcement, health, or social services, and not more than three final-year students, with unblemished academic and disciplinary records, appointed for fixed terms. Further, universities must ensure that committees consist of individuals who possess both expertise and genuine commitment in areas such as student welfare, psychology, gender studies, human rights and law enforcement, in line with the spirit of the Supreme Court’s directions, rather than consisting largely of ex officio positions. If treated as routine administrative positions, rather than responsibilities requiring specialised knowledge, sensitivity and empathy, these committees risk becoming symbolic rather than functional.

Greater transparency in the appointment process could strengthen the credibility of these committees. Universities could invite expressions of interest from individuals with relevant expertise and demonstrated commitment to supporting victims. Such an approach would help ensure that the committees benefit from the knowledge and dedication of those best equipped to fulfil this role.

The Supreme Court judgement also introduces an important safeguard by giving the University Grants Commission (UGC) the authority to appoint members to university-level Victim Support Committees. If exercised with integrity, this provision could help ensure that these committees operate with greater independence. It may also help address a challenge that sometimes arises within institutions, where individuals, with relevant expertise, or strong commitment to addressing issues, such as violence, harassment or student welfare, may not always be included in institutional mechanisms due to internal administrative preferences. External oversight by the UGC could, therefore, create opportunities for such individuals to contribute meaningfully to Victim Support Committees and strengthen their effectiveness.

Ultimately, the success of the recent judgement will depend not only on the directives it issued, the number of committees universities establish, or the number of meetings they convene, or other box-checking exercises, but on how sincerely those directives are implemented and the trust these committees inspire among students and staff. Laws can prohibit ragging, but they cannot by themselves create environments in which victims feel safe to speak. That responsibility lies with institutions. When universities create systems that listen to victims, support them and treat their experiences with seriousness, universities will become places where dignity and learning can coexist.

(Udari Abeyasinghe is attached to the Department of Oral Pathology at the University of Peradeniya)

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.

by Udari Abeyasinghe

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Big scene … in the Seychelles

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Mirage: Off to the Seychelles for fifth time

Several of our artistes do venture out on foreign assignments but, I’m told, most of their performances are mainly for the Sri Lankans based abroad.

However, the group Mirage is doing it differently and they are now in great demand in the Seychelles.

Guests patronising the Lo Brizan pub/restaurant, Niva Labriz Resort, in the Seychelles, is made up of a wide variety of nationalities, including Russians, Chinese, French and Germans, and they all enjoy the music dished out by Mirage, and that is precisely why they are off to the Seychelles … for the fifth time!

The band is scheduled to leave this month and will be back after three weeks, but their journey to the Seychelles will continue, with two more assignments lined up for 2026.

In August it’s a four-week contract, and in December another four-week contract that will take in the festive celebrations … Christmas and the New Year.

Donald’s birthday
celebrations

According to reports coming my way, it is a happening scene at the Lo Brizan pub/restaurant, Niva Labriz Resort, whenever Mirage is featured, and the band has even adjusted its repertoire to include local and African songs.

They work three hours per day and six days per week at the Lo Brizan pub/restaurant.

Donald Pieries:
Leader, vocalist,
drummer

Led by vocalist and drummer Donald Pieries, many say it is his

musical talents and leadership that have contributed to the band’s success.

Donald, who celebrated his birthday on 07 March, at the Irish Pub, has been with the group through various lineup changes and is known for his strong vocals.

He leads a very talented and versatile line up, with Sudham (bass/vocals), Gayan (lead guitar/vocals), Danu (female vocalist) and Toosha (keyboards/vocals).

Mirage performs regularly at venues like the Irish Pub in Colombo and also at Food Harbour, Port City.

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