Opinion
New Global Financing Pact Summit in France: Some suggestions
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
Lankan hotels and price discrimination
In planning a long trip to Sri Lanka from the UK, I was disappointed to see different hotel pricing for foreign visitors when compared to local rates. Like many travellers, I prefer to book directly with hotels, rather than international hotel consolidators, as more money goes to local businesses. But the assumption that foreigners should pay more is simply distasteful. As such, I’ve chosen another long-haul destination that does not follow such practices, and hope that Sri Lanka will change its approach to overseas visitors in the near future.
Neil Roskilly Wetherlee UK
Opinion
When will this craziness end?
We are living in ‘Trump times’ characterised by never ending craziness but it is not confined to the USA alone. I will come to our part of the world later. As a large part is due to Trump, perhaps, normalcy may return when he ends his second term on 20th January 2029, at 12.00PM Eastern Standard Time. We cannot be sure of that either because the ‘Great man’ may decide to govern the world for ever, after having purchased Greenland and forcing Canada to be the 51st state of the US!
Trump had an unprecedented opportunity, being only the second to be elected to a non-consecutive second term as the US President, the other being Grover Cleveland at the tail end of the nineteenth century. If only he kept to his campaign promises, his name would have been written in history in golden letters but the complete transformation, following the election, is likely to make his name go down as one of the craziest!
It is a moot point whether even Trump knows what he is going to do that day, when he wakes up, considering the illogicality of some actions, best illustrated by the ad-hoc imposition of tariffs without any discussions or negotiations. The adverse effects of these, to the world economy, is yet to be seen compounded, of course, by the continuing war with Iran. He promised to be a ‘Peace-maker’ but turns out to be a war-monger, like many of his predecessors! His excuse was that he went to war because he was denied the Nobel Peace Prize.
Well, he got the FIFA Peace Prize from FIFA President Gianni Infantino, another shameless leader who is ruining the ‘Beautiful Game’. When a US team member was given the red-card, Trump, who claims to know better than referees, decided it was not so, with a successful appeal to Infantino. During the next World Cup match, Belgium, supercharged with this injustice, thrashed the USA team 4-1.
Even the Semiquincentennial celebration of the US was not about the country but about himself! In fact, a cynic may point out that most of what the US has left behind, over the 250 years, is death and destruction. Paradoxically, whilst fighting a war with Iran to prevent it acquiring nuclear capabilities, the US is the only country to have dropped Atom Bombs, not one but two. Even though Japan was on the verge of admitting defeat, ‘Little Boy’, a uranium-based bomb, was dropped over Hiroshima on 6th August, 1945. Not giving time for Japan even to consider surrender, the second ‘Fat Man’, a plutonium implosion bomb, was dropped over Nagasaki, just three days later. Why did the US drop two A-bombs in rapid succession? It was to test the two different types of bombs they had.
Over the past 250 years, the US has started wars in many countries and, in most instances, lost leaving behind a trail of devastation and destruction. In spite of all that, it is continuing its war with Iran, a war that was started with false intelligence supplied by the war-monger Netanyahu who predicted the instantaneous fall of the Clerical regime in Iran. This war has turned out to be a blessing in disguise for Iran, as it realised the economic value of the Strait of Hormuz. The language Trump uses in reference to Iran is despicable. What sane person, nay a world leader, refers to flattening of a country and erasure of a civilisation?
Back in Sri Lanka, we know that most of our modern-day politicians are also self-serving. They are also very good at amassing wealth, when in power, just like the Trump family had done. However, what is of concern is the rapid decline in the standards of some vital professional classes. Special reference has to be made to the Attorney-General’s Department. Perhaps, the present holder is a decent man but some of his predecessors brought the high position into disrepute.
Dappula Livera allegedly concocted a conspiracy theory about the Easter Sunday terror mastermind as President Gotabaya Rajapaksa denied him an extension in service as the Attorney General. If he has any information about such a conspiracy, it is his bounden duty to come out with facts but has not done so.
A remark recently made by Deputy Solicitor General Dileepa Pieris about gallantry medals awarded to military personnel is said to have caused an affront to the dignity of Air Force officer Shantha Jayathilleke, who has received the highest decoration awarded to a living officer and sought to represent the interests of former Director of State Intelligence Service Maj. Gen. (retd.) Suresh Sallay as permitted by the Penal Code.
When political leaders and professionals holding high office behave in this manner, is there any hope for the nation?
By Dr. Upul Wijayawardhana
Opinion
Prime Minister’s contribution to education reforms
Education has always been one of the strongest foundations of Sri Lanka’s social and economic development. In today’s rapidly changing world, however, education must prepare students not only for examinations but also for life, employment, innovation, and responsible citizenship. Recognising this need, the government of Sri Lanka has introduced a new programme of education reforms. As Prime Minister and Minister of Education, Higher Education and Vocational Education, Dr. Harini Amarasuriya has played a leading role in guiding and promoting these reforms, with the aim of creating a more inclusive, modern, and student-centered education system.
One of the Prime Minister’s most significant contributions has been providing a clear vision for transforming the education system. Rather than focusing only on examination results, the reforms seek to develop students’ creativity, critical thinking, communication skills, problem-solving abilities, and emotional well-being. This approach recognizes that success in the twenty-first century requires a broad range of skills that go beyond memorisation.
A major feature of the reforms is the introduction of a new curriculum. The Prime Minister has emphasised that revised syllabuses will be introduced in stages, beginning with Grades 1 and 6, before expanding to other grades over the following years. The updated curriculum is designed to make learning more engaging, practical, and relevant to modern society. It encourages inquiry-based learning, teamwork, creativity, and the application of knowledge to real-life situations rather than relying solely on textbook learning.
Teacher development has also been identified as a key priority. The Prime Minister has repeatedly stressed that meaningful reforms cannot succeed without well-trained and motivated teachers. As a result, the government has planned professional development programmes to help teachers understand the new curriculum, adopt modern teaching methods, and integrate digital technology into classroom instruction. Strengthening teachers’ skills ensures that students receive a higher quality education and are better prepared for future challenges.
Improving school infrastructure is another important contribution under the Prime Minister’s leadership. Many schools across Sri Lanka continue to face shortages of classrooms, laboratories, libraries, and digital learning facilities. The reform programme aims to reduce these disparities by giving priority to improving physical infrastructure, upgrading learning environments, and ensuring that children from rural and urban areas have more equal educational opportunities. These investments are expected to create safer, more effective, and more inclusive learning spaces for all students.
The reforms also place strong emphasis on digital education. As technology continues to shape every aspect of modern life, students need digital literacy to succeed in higher education and future careers. The Prime Minister has supported initiatives to expand the use of digital tools in teaching and learning while encouraging schools to make greater use of educational technology. By promoting digital learning, the reforms seek to narrow the technological gap between schools and prepare students for a knowledge-based economy.
Another noteworthy contribution is the promotion of vocational and skills-based education. Traditional education has often placed greater emphasis on academic achievement, while practical skills received less attention. The new reforms aim to change this balance by introducing vocational subjects within the school system and creating clearer pathways for students who wish to pursue technical and vocational careers. This approach helps students develop employable skills while supporting the country’s economic growth and workforce needs.
The Prime Minister has also encouraged a more balanced approach to student assessment. Instead of measuring success only through final examinations, the reforms seek to include continuous assessment, classroom activities, projects, and practical learning experiences. Such an approach recognises different learning styles and provides students with more opportunities to demonstrate their abilities. It also reduces excessive pressure associated with high-stakes examinations and supports the overall development of children.
Inclusivity is another important aspect of the Prime Minister’s contribution. The reform process has involved experts, educators, and advisory committees representing diverse communities. The government has emphasised that curriculum development should reflect fairness, inclusiveness, and respect for Sri Lanka’s multicultural society. By involving different stakeholders in the planning process, the reforms aim to build a national education system that serves all children equally.
Despite these promising initiatives, implementing large-scale education reforms is not without challenges. Teacher training, infrastructure development, adequate funding, and effective monitoring are essential for the long-term success of the programme. Public awareness and cooperation among parents, teachers, school administrators, and policymakers will also play a vital role in ensuring that the reforms achieve their intended outcomes. Sustained commitment from the government and continuous evaluation will be necessary to address emerging issues and improve implementation over time.
The Prime Minister of Sri Lanka has made a significant contribution to the country’s new education reforms by promoting a modern, inclusive, and future-oriented vision for education. Through curriculum modernization, teacher development, improved infrastructure, digital learning, vocational education, and better assessment methods, the reforms seek to prepare students not only for examinations but also for lifelong learning and responsible citizenship. If implemented successfully, these reforms have the potential to strengthen Sri Lanka’s education system, reduce inequalities, and equip future generations with the knowledge, skills, and values needed to contribute positively to national development in an increasingly competitive global environment.
Saumya Aloysius
saumyaaloysius@gmail.com
-
News6 days agoHerath warns prospective migrant workers not to get fleeced by racketeers
-
Features4 days agoPrison riots and politics: NPP’s biggest challenge and Sri Lanka’s biggest opportunity
-
Editorial5 days agoWhat’s the world coming to?
-
Foreign News6 days agoTensions erupt in Indian state after 11-year-old raped and murdered
-
Features6 days agoDevanesan Annan – in Memoriam
-
News7 days agoNegombo Prison riot: Ensuring protection of prisoners fundamental responsibility of the state – UN
-
Editorial6 days agoPunishment in hellholes
-
News6 days agoRepresentatives of the Organization of Professional Associations (OPA) of Sri Lanka meet the Prime Minister
