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Sarath Silva googly gives CBK year less than expected, Helping Hambantota

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Trips to Washington for IMF and World Bank meetings, bargain book sales

We were in the beginning of the year 2005 and the next Presidential election was coming ever closer. CBK had taken Chief Justice Sarath Silva’s advice and had taken oaths as President for the second time soon after the assassination attempt in 2001 in the belief that the balance period of her first term would be added to the tail end of her current tenure. Imagine her consternation when it was held that her second term ended exactly five years after her second oath taking.

It was a double blow in that her faith in Sarath Silva was shattered and her plans to undertake a year of reforms and groom a successor were now stymied. Sarath’s decision was tailor-made for his friend Mahinda Rajapaksa for if CBK had another year she may not have selected him to be the standard bearer of the PA in the forthcoming Presidential election. At this stage with Lakshman Kadirgamar’s demise, the odds on favourite was Anura Bandaranaike. But he was getting deeper into the cups and was not as proactive as his erstwhile protege MR.

The MR camp was busy demoralizing Anura. At the SLFP convention held in Kurunegala there was a well orchestrated hooting when Anura arrived on stage. Day by day pressure was brought on CBK to turn to MR and she was not helped by Anura’s reputation for drinking and indolence. No one knew that he had developed a cancer in his liver which Tissa Vitarana – a superb doctor, told me was caused by excessive drinking. The UNP which worked hand in glove with Mahinda to embarrass CBK now discovered that their favourite SLFPer (MR) whom they had nurtured could become a formidable candidate.

They filed a case through Kabir Hashim challenging Mahinda’s conduct in setting up “Helping Hambantota”, as a fund to collect money for the rehabilitation, presumably, as its name indicates, of Hambantota District. If found guilty he could have been imprisoned for four years as Sarath Silva proclaimed in retirement many years later. The “Helping Hambantota” fund created a dilemma for the Finance Ministry. Only the Treasury is entitled to set up special funds and when I was questioned about it in Parliament I had to frankly admit that “Helping Hambantota” was not properly constituted.

However MR’s Secretary Lalith Weeratunga had managed to get a letter from the Treasury stating that they were aware of this fund which proved to be a sufficient handle to save Mahinda. Kabir Hashim not only lost his case but was reprimanded by the CJ. He narrowly escaped being thrown in jail instead of MR.

Alternate Governor

As a prelude to a budgetary exercise the Ministry of Finance undertakes many discussions about foreign financial contributions which help in formulating our “foreign exchange budget”. All such inflows are depicted in the national budget under the relevant subheads. These discussions are held with both multilateral and bilateral donors. Among multilateral donors we transact business mainly with the IMF, the World Bank group and the ADB. In all these cases the Minister of Finance is an Alternate Governor who attends the annual sessions of these institutions.

The IMF-World Bank meetings are held twice a year as spring and autumn sessions and ADB meetings are held once a year. All these institutions have a practice of having their meetings in Washington and Manila as the case may be. However on every third year meetings are held in a member state. I was the Alternate Governor of these institutions from 2004 to 2015 which adds up to a considerable amount of travelling to all parts of the world. While innumerable ‘pilgrimages’ were made to Washington and Manila during this time, I also travelled to Ankara, Nagoya, Tokyo, Astana, Hyderabad, Singapore, Bali, Shanghai, and Bangkok for these multilateral sessions. Since most Finance Ministers of the world tend to attend these meetings, we also had fruitful meetings with many of them on bilateral issues. It was a good opportunity to review existing projects as well as discuss new requests. Many Ministers were accompanied by heads of their organizations that funded development efforts in the Third World. For instance the heads of the Saudi Fund, Norad, CIDA, UNDP, the Gulf Fund and many others who were funding Sri Lankan projects were present for a review of our joint efforts.

The agenda for IMF meetings was not too complicated. It began with the address of the heads of the IMF and World Bank followed by an overview of the global/regional economy and projections for the future by its Chief Economist. During my time, the post of Chief Economist was held by Raghuram Rajan, the distinguished scholar of Indian origin from the Economics Department of the University of Chicago. He was the first economist to predict the impending economic crisis of the late 20th century beginning with the failing housing market in the US.

He later became the Governor of the Reserve Bank of India at the invitation of Finance Minister Chidambaram. However having fallen out with the Modi government he went back to Chicago. We then had a meeting of the G40 which was a grouping of the developing countries. Here the concerns of the “receivers of aid” were articulated in the presence of the MD of the IMF and the President of the WB. At these meetings I was invariably asked to intervene by our group. Accordingly I characterized our plight as those of “innocent bystanders” whose economies were hit by the financial crisis which enveloped the developed world.

It must be remembered that this was the time when the global financial architecture was shaken to its roots following the American financial debacle. It was aptly described as a system “too big to fail”. The G40 meeting was followed by a luncheon hosted by the Indian Finance Minister for the South Asia group. Our geographical group comprised India, Bangladesh, Nepal, Bhutan and Sri Lanka. In my time our hosts were P. Chidambaram and Pranab Mukherjee who were the relevant Finance Ministers of India.

Afterwards many bilateral meetings were held on the sidelines of the main meetings. We invariably had meetings with India, the Gulf States, US, Japan, China and the Nordic countries where we could discuss progress in the projects underway funded by those countries as well as future funding for projects which had been submitted by the External Resources Division of the Finance Ministry. The grand finale was the plenary session where member states could make their interventions. Usually only eight minutes were allocated for each country.

The meeting ended with the formal responses of the heads of the IMF and WB to the concerns raised by delegates and a “family photograph”. I also had short “one to one” meetings with the MD of the IMF and the head of the World Bank. When De Rato the MD of IMF retired I called on him and presented him with a few packages of Ceylon tea and thanked him for his support extended to us particularly during the Tsunami. He remarked ruefully that I was the only representative of the developing countries who came to bid him farewell.

Country meetings

Perhaps the most important of our meetings were the “country meetings” when the senior officials of the IMF and WB reviewed the status of our economy as well as country projects spanning all aspects of the aid programme. I began the meeting with an introduction which reviewed the economy of Sri Lanka since our previous meeting. This was followed by a statement by the Governor of our Central Bank Nivard Cabral or his representative. One of the senior most officials of the IMF – Dr Kato a Japanese national, would then respond and turn over the discussion to the divisional leaders who would take up specific issues in project implementation. For example the Director overlooking education projects would review their activities in Sri Lanka while the Director in charge of budgetary reform would present his divisions analysis of our current budget and their recommendations for the forthcoming one.

It was an interesting high level discussion since we had come to know each other over a period of time and could speak frankly about our concerns. At the end of these discussions I would host the participants for a lunch usually at a top class Chinese restaurant close to the IMF building. Since we had an officer of the Central Bank attached to the IMF in Washington he took care of all these arrangements. He took care to invite a few other senior officials attached to the Maaging Director’s secretariat for that meal.

These and other public relations operations, including arranging a tour of our tourist hotspots when they were on mission in Sri Lanka, helped in smoothing our conversations and we were able to create a sense of goodwill which was very useful when it came to gaining the assent of the governing board which depended heavily on staff recommendations.

IMF ideology

A constant refrain about the IMF is that it follows a neo-liberal economic agenda. Since the West led by the US are the main shareholders of the IMF its Board usually toes a line which is favourable to Western interests. These interests include the regulation of the banking system and careful management of the global currency and exchange system which depended on US money supply and interest rates. Since the US dollar was the reserve currency of the world it held all the cards in the global financial game.

Part of our discussions were with the US Secretary to the Treasury and the Chairman of the Federal Reserve. When I first participated in IMF meetings the head of the Fed was Alan Greenspan [1987-2006] the legendary economist who dominated US economic policy for decades. He was followed by Ben Bernanke and Janet Yellen. They all participated in IMF meetings and Yellen in particular had special meetings with Finance Ministers to warn them of the possible consequences for their economies due to changes in the monetary policies of the US. For instance when the US raises interest rates money invested in developing countries tend to flow back to the US. When the US Fed reduces its interest rates there is a reverse flow to the poorer economies which offer higher rates.

Discussion with IMF officials in Colombo

When it comes to developing countries facing economic crises the IMF helps “by offering loans, technical assistance and surveillance of economic policies”. Loans are conditional on the following of a mutually agreed recovery programme for which funds are released in tranches after staff reviews which are endorsed by the Governing Board of the IMF. Sri Lanka has had 16 such programmes but none of them have been completed because the Sri Lankan side has aborted them mid stream due to political considerations.

In countries which go to varying types of polls almost every year, leaders find it difficult to accept the bitter economic recommendations of the IMF and the Central Bank. This is particularly true of Rajapaksa regimes because an electoral loss meant that “their occupation is gone” to use Shakespearean language. Subsidies however deleterious to growth is sacrosanct in this country and governments of the day prefer to pass on the hard decisions to future generations even if it means the breaking of its understandings with the IMF.

However there are some critics who challenge the model of growth adopted by the IMF. ‘Ihey find an alternative in closed economies where consumption is curtailed through a regime of restrictions and production is more for a domestic market. The economic models of such closed economies (also called “fortress economies”) have failed in the last 50 years and with the fall of the Communist blocs and the new trade policies of China, such an alternative is now hardly credible as a viable economic solution. Russia, China and Vietnam are keen members of the IMF and they jealously guard their interests in a globalized economy.

Donor meetings

In 1978 Ronnie de Mel established the practice of holding an annual meeting with our donor community as a prelude to preparing the budget. Since the new administration under JRJ was popular with western countries there was no dearth of supporters from among non-Communist countries. This was best seen in the foreign financing of the giant Mahaweli scheme. A large amount of money was provided as grants while many of the loans were given on concessionary terms.

The funding of this “Jumbo”project – both bilateral and multilateral – was so extensive that it is unlikely that such funding would be repeated in the future. Germany, Canada, Sweden and the UK financed the building of dams in Randenigala, Rantembe, Kotmale and Victoria. Japan which wanted to join the bandwagon but could not be accommodated under Mahaweli, opted to donate a whole new TV system and a 1001 bed hospital in Jayawardenepura as outright grants. When Scandinavian countries and Canada drew up “short lists”of developing countries earmarked for foreign funding Sri Lanka ranked among the top three.

Donor meetings were held because it was difficult to manage foreign funding on a one to one basis. It was more feasible to bring our donors together with the External Resources Division of the Treasury for a three-day long meeting when project performance could be reviewed and new funds pledged for the coming year and sometimes even beyond on a three year cycle. The World Bank agreed to host such a meeting and its European office in Paris was selected as the venue.

Thus from 1978 Treasury officials and the Minister of Finance wended their way to Paris for this much anticipated donor conference. Pledges were wrapped up and the meeting concluded with a grand dinner at the Ritz hosted by Ronnie in which all heads of relevant financial institutions participated. This model was so successful that the World Bank prescribed such meetings for many countries which were on the “beggars list” for extensive foreign support. This procedure worked well under the JR regime but was reduced to a shambles by Premadasa who preferred private foreign investment particularly for his garment manufacturing enterprises.

Discussion with IMF officials in Colombo

It must be stated here that this strategy did not entail obtaining a range of loans which would come home to roost later. Funding was provided by private investors. Premadasa’s favourite official in the Treasury – the super efficient Civil Servant Paskaralingam and his handpicked Treasury officials managed to steer the foreign exchange budget to success as well as start many urban infrastructure projects which began to alter the Colombo skyline. But the raging war – LTTE in the North and East and the JVP in the South – put paid to Premadasa’s dream of making Sri Lanka economically resurgent like Singapore, South Korea and Germany – countries that he admired. He was no great fan, unlike JRJ, of the USA and UK.

When CBK took over the reins in 1994 she had to confront an ongoing northern war. Premadasa had by then physically eliminated the JVP and its top leadership. All CBK’s efforts to quickly solve the “national question” became a tragic failure which blighted her regime. It particularly affected her management of the economy which declined over time to zero growth. As Minister of Finance I managed to reverse this trend and achieve a five percent plus growth and a significant increase in per capita income.

Her presence at the Paris donor meetings enabled western countries and Japan to complain to her about the escalating war in the North and East. To add to the countries security concerns several senior ministers Kadirgamar, CV Goonaratne and Jeyaraj Fernandopulle were assassinated and she herself had a narrow shave – all highlighting the stresses in a war torn country which were noted by the donors. Her strategy of taking her deputies GL Peiris and SB Dissanayake to Paris backfired in that they were exposed to the details of our economic debacle and the persisting concerns of western donors.

As SB told the media later he and GL realized at these meetings that CBK could not meet the challenge of managing the economy and therefore decided to cross over to Ranil and the UNP. To add to the misery the Tsunami of 2004 derailed all her plans and called for a concerted effort to put our foreign funding on a sounder footing.

We in the Finance Ministry decided to take the bold step of holding the Development Forum in Kandy. Earlier an attempt was made by Japan to host the Forum in Tokyo. It was decided then to move the venue from Paris to Tokyo largely due to the initiative of Japan’s roving ambassador Akashi who was well known for formulating his “Akashi Doctrine”. According to this policy Japan pledged substantial funds for development if the countries’ domestic conflicts were ended. It had been tested and tried successfully in Cambodia. This approach had been welcomed by Ranil’s regime.

But the LTTE had pulled out at the last minute and the Tokyo meeting had to be canceled. Our decision to shift to Kandy was welcomed by the donor community. We invited Bill Clinton for this meeting and he responded positively by sending a recorded message through his “alter ego” Erskine Bowles, the son of Chester Bowles – the former US ambassador to India, who attended on his behalf. The Deputy Managing Director of the IMF Praful Patel and deputy MD of the ADB Li Jin (who later headed the China backed Asian Infrastructure Development Bank) also attended together with senior officials of the World Bank.

The Ceylon Observer newspaper reported “More than 150 representatives from over 50 countries and international donor agencies will participate at this meeting. According to sources, the Government aims to cut down the budget deficit for 2005 with the assistance from donor countries and agencies. Sri Lanka maintains a 5.6 percent economic growth rate even in the midst of its largest ever disaster”.

After the ensuing discussions in which attention was drawn to the need to increase funding for Tsunami relief and strengthening the peace process, more specifically P-TOMS (Post-Tsunami Opertionl Mnsgement Structure), the international community pledged three billion US dollars for reconciliation and reconstruction activity in Sri Lanka. The holding of the development Forum in Sri Lanka was welcomed by the donors and it was continued the next year in Galle. However with the change of management a few years later it was abandoned by MR and successive administrations. Those Finance Ministers preferred to have bilateral discussions by themselves with donors and their contractors which led to many accusations of corruption which became more strident by the day. Instead of donor meetings emphasis was placed by MR and Basil Rajapaksa on “unsolicited proposals”.

Sunday off

Sunday in Washington was a free day which we used to visit the bookshops in Washington and go to the theatre. There was a bargain bookshop near Dupont Circle close to our hotel which was patronized by our delegation. It had many rare books donated to it by publishers since the sales collection went to charities. It was manned by students from top universities who were only too happy to engage in discussions about new books. Another memorable event was the closing down sale of the famous Borders bookshop since the company had gone bankrupt.

All books in the shop were sold at one dollar apiece. Borders bookshops in downtown Washington and Georgetown were stormed by “egg heads” who bought up not only books at a dollar each but even the shelves and safes which were on offer in the fire sale. I also visited my Peradeniya friend and colleague Professor HL Seneviratne and his family in Charlottesville, Virginia. Once I visited Stanley Tambiah my old teacher at Peradeniya. He had retired from teaching at Harvard and was installed in an old folks home by his ungrateful family. That was my last encounter with our much loved teacher from the fifties since Tambiah died a few months later.

The practice then was to attach a senior Central Bank officer to the IMF for a two year stint. It began with AS Jayawardene who later became Governor of our Central Bank. He was followed by Karunaratne, Jayatissa, Herath, Nandalal Weerasinghe, Dheerasinghe and Ranasinghe (the last three of whom we referred to as the “The three Sinhas”- lions). They all entertained us to dinner in their homes in Maryland. There were a large number of IMF and World Bank professionals who lived close to each other in the district.

It was no surprise therefore to learn that the Democratic Senator representing Maryland was Christopher Van Hollen Jr., the son of Chris Van Hollen, a long serving US Ambassador in Colombo who was a good friend of mine. Senator Van Hollen had his early schooling in Colombo. He was a Sri Lanka supporter who was always available for meetings with us. I was happy to present a book edited by his father to mark the historic relations between Sri Lanka and the USA to mark the bicentennial.

Our Ambassadors in Washington also assisted us. They participated in our IMF-WB meetings and arranged receptions so that we could meet IMF-WB staffers socially and also meet important US politicians and officials. As they say, Washington “inside the beltway” is the happy hunting grounds of politicians and bureaucrats. I particularly remember an Ambassador joining me for a memorable concert by Ravi Shankar and his daughter Anoushka held at the Kennedy Centre. Though our work in Washington was arduous and we had to burn midnight oil, we also had a lot of fun during our visits to the US capitol.

(Excerpted from vol. 3 of the Sarath Amunugama autobiography) ✍️



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Features

Social justice in suspense: Sri Lanka’s welfare legacy in an era of austerity

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by Prof. M.W. Amarasiri de Silva

The evolution of Sri Lanka’s social policy framework represents one of the most compelling, paradoxical, and debated case studies in the global political economy of development. Often celebrated as an exceptional model among developing nations, Sri Lanka achieved human development indicators, such as high adult literacy, elevated life expectancy, and low infant mortality, that rivaled those of industrialised Western societies, despite maintaining a low-to-middle per capita income. This distinct trajectory was fundamentally sculpted by the establishment of an extensive welfare state, characterised by universal healthcare, free education, and pervasive food subsidies.

However, the long-term impact of this historical welfarism on present-day Sri Lanka presents a complex matrix of social triumph, economic vulnerability, and systemic crisis. To fully comprehend how the historical welfare state has shaped contemporary Sri Lanka, one must trace the institutional genesis of these policies through the critical frameworks provided by eminent social theorists, notably Ralph Peiris in his analysis of Asian development styles and Laksiri Jayasuriya in his landmark work on Sri Lanka’s experience of social development directed toward equity and justice.

Foundation of welfare state

The structural foundation of Sri Lanka’s welfare state was not a post-colonial luxury, but rather a late-colonial construct deeply interwoven with the dynamics of democratization and constitutional reform. As Laksiri Jayasuriya meticulously argues in his historical and theoretical explorations of Sri Lankan social policy, the trajectory of the country’s social development was rooted in the state-building exercises of the late British colonial era. The introduction of universal adult suffrage under the Donoughmore Constitution of 1931 served as a pivotal catalyst. By enfranchising the local population decades before formal independence in 1948, the colonial state altered the political elite’s incentives.

Politicians were suddenly forced to seek electoral legitimacy from a vast, rural, and economically disadvantaged populace. This constitutional shift institutionalised what Jayasuriya terms a culture of ‘welfare politics,’ where competitive electoral democracy became intrinsically linked to the provision of social goods.

During the period spanning from the 1930s to the 1950s, the state laid down the three pillars of its social safety net: free state-provided healthcare, free universal education from primary to university levels (championed by C.W.W. Kannangara), and a heavily subsidised food rationing scheme, most notably the rice ‘polu’ (haal polla) system. In the popular Sri Lankan vernacular and historical memory, these restrictive barriers and checkpoints became closely associated with the rationing culture surrounding the rice distribution and cooperatives where state-allocated rice rations were obtained via coupon books.

Jayasuriya highlights that these measures were conceived not merely as safety nets for the destitute, but as fundamental rights of social citizenship modeled partly on the egalitarian principles of the British post-war welfare state yet adapted to a post-colonial environment seeking equity and social justice. This social democratic commitment was maintained across alternating political regimes, creating a broad cross-party consensus that state-funded welfare was an untouchable social contract between the state and its citizens.

Policy trajectory in perspective

To place this unique policy trajectory in a broader comparative perspective, Ralph Peiris’s conceptualisation of ‘Asian Development Styles’ offers a critical lens. Peiris examined how different Asian nations navigated the tensions between Western models of modernisation, economic growth, and indigenous social structures. Many East Asian economies—such as South Korea, Taiwan, and Singapore—adopted a development style centered on ‘growth-first’ imperatives, state-directed capitalism, and the deferral of widespread social expenditure until after rapid industrialisation was achieved. In contrast, Sri Lanka pioneered a distinct ‘social-led’ development style within South Asia. Peiris observed that Sri Lanka’s development style prioritized human capability, social redistribution, and basic needs over raw capital accumulation. This style reflected a socio-cultural ethos that viewed social harmony, equity, and state paternalism as integral to governance, resisting the purely utilitarian or market-driven metrics of economic progress.

The immediate consequences of Sri Lanka’s socio-centric development style were undeniably positive in terms of human wellbeing. By the late 20th century, Sri Lanka had achieved a physical quality of life index that far surpassed its South Asian neighbors. Maternal and infant mortality rates dropped precipitously due to widespread access to free public health facilities and midwife networks. Universal education fostered a highly literate electorate, dramatically closed the gender gap in basic and secondary education, and enabled significant upward social mobility for marginalized caste and rural communities. Jayasuriya emphasizes that this commitment to equity and justice transformed the social fabric, democratising access to public life and cultivating a politically conscious citizenry that viewed education and healthcare as non-negotiable entitlements.

However, the enduring legacy of this historical welfare state is dual-edged, carrying deep-seated economic contradictions that directly contributed to present-day Sri Lanka’s socio-economic landscape. The central paradox of the Sri Lankan welfare state lay in the disconnect between social expansion and economic productivity. While the state committed huge fractions of its national budget to social consumption, it failed to build a resilient, diversified industrial export base capable of generating the revenue necessary to sustain these expenditures over generations. The primary revenue source funding the early welfare state was the taxation of the colonial-era plantation export economy—primarily tea, rubber, and coconut. As global commodity prices fluctuated and deteriorating terms of trade eroded plantation revenues in the post-independence decades, the state faced severe fiscal deficits.

Macroeconomic imbalances

The fiscal strain of maintaining universal subsidies led to severe macroeconomic imbalances by the 1970s. The state attempted to manage these pressures through import-substitution policies, strict price controls, and state monopolies, culminating in the closed economy of 1970–1977. While this period sought to preserve the egalitarian principles articulated in Jayasuriya’s analysis of social justice, it resulted in severe shortages of essential goods, economic stagnation, and rising unemployment among the newly educated youth. The inability of the economy to absorb the expanding class of literate, ambitious young citizens created a structural mismatch between educational output and employment opportunities.

This socio-economic disjunction erupted into violent political crises. The educated yet economically disenfranchised rural youth became the primary base for insurgencies, such as the Janatha Vimukthi Peramuna (JVP) uprisings in 1971 and 1987–1989. Concurrently, the failure to extend equitable socio-economic and political opportunities to the Tamil minority—compounded by language policies that prioritized the Sinhala majority in public sector employment—fueled ethnic marginalization, eventually escalating into a devastating nearly three-decade-long civil war. Thus, as both Jayasuriya and Peiris observe in their respective analyses, while the welfare state was designed to promote social cohesion and equity, its economic unviability and politicization contributed to social frustration and structural conflicts when the economy failed to fulfill the aspirations created by universal social programs.

Janasaviya, Samurdhi and Aswesuma

A profound structural turning point occurred in 1977, when Sri Lanka became the first country in South Asia to abandon import-substitution and embrace neoliberal market-oriented economic reforms. The advent of the ‘Open Economy’ signaled a major shift in the state’s social policy regime. As Jayasuriya notes in his critique of the post-1977 retreat from the welfare state, universal welfare policies were systematically dismantled or reconfigured into targeted, means-tested poverty alleviation programs. The universal food subsidy was replaced by food stamp programs and later by targeted cash transfer schemes such as Janasaviya and Samurdhi, and eventually Aswesuma.

This transition from universal social citizenship to targeted safety nets marked a fundamental redefinition of the social contract. While the 1977 open market policies stimulated economic growth, foreign investment, and infrastructure development, they also led to rising income inequality, regional disparities, and the commercialization of public goods. The state’s fiscal commitment to public education and health gradually eroded as a percentage of GDP, leading to a dual-track system.

Underfunded state healthcare and education systems remained free but suffered from resource constraints, overcrowding, and quality decline, while a burgeoning private sector in health and tuition-based education emerged to cater to the affluent. Jayasuriya argues that this marketization of social services undermined the egalitarian ideals of social justice that had historically anchored the nation’s social policy.

The contemporary manifestation of this historical trajectory became starkly apparent during the unprecedented economic crisis that engulfed Sri Lanka in 2022 and its continuing aftermath. The crisis—characterized by sovereign debt default, hyperinflation, severe foreign exchange shortages, and acute shortages of fuel, medicines, and food—exposed the fragile structural foundations of the country’s political economy. The roots of this crisis are inextricably linked to the unresolved tension between public expectations built by historical welfarism and modern neoliberal fiscal mismanagement.

Welfare and populism

Over recent decades, successive governments continued to rely on populism to secure electoral victory, promising subsidies, tax cuts, and public sector employment without building a sustainable tax base or correcting structural economic deficits. When the state faced catastrophic revenue declines following ill-advised tax cuts in 2019, combined with the shock of the COVID-19 pandemic and debt-driven infrastructure spending, the fiscal apparatus collapsed. The resulting austerity measures, mandated under International Monetary Fund (IMF) stabilization programs, forced sharp reductions in energy subsidies, increased indirect taxation, and deep spending cuts that severely hit vulnerable populations.

In present-day Sri Lanka, the legacy of the welfare state manifests as both a vital buffer and a site of intense political contestation. On one hand, the historical infrastructure of universal health and basic education has prevented an even more catastrophic loss of human life during the peak of the recent economic collapse. The enduring social capital, public health institutions, and high literacy rates provided a baseline of societal resilience that assisted communities in coping with immense economic shock. The persistent popular memory of social entitlement has also fueled widespread civic mobilization, as demonstrated by the Aragalaya mass protest movement in 2022, which demanded accountability, social justice, and an end to political corruption—echoing the deeply ingrained political culture of democratic accountability that Jayasuriya identified as a byproduct of early welfarism.

Challenge of restructuring social policy

Contemporary Sri Lanka faces the immense challenge of restructuring its social policy framework in an era of stringent fiscal constraint. The rollback of state subsidies and the rising cost of living have pushed millions of citizens below the poverty line, threatening to reverse decades of hard-won human development gains. Malnutrition rates among children have spiked, access to essential imported life-saving medicines has been compromised, and the real value of state pensions and social assistance has been severely eroded by inflation. The targeted social safety nets, such as the Aswesuma welfare scheme introduced to replace Samurdhi, have faced significant administrative challenges, exclusion errors, and public resistance, reflecting the ongoing difficulty of transitioning from universal rights-based social protection to targeted relief mechanisms in a deeply distressed economy.

Furthermore, the contemporary economic crisis has intensified a major ‘brain drain,’ as highly educated medical professionals, engineers, university lecturers, and skilled workers migrate abroad in large numbers. This mass emigration directly exposes the present-day crisis of Sri Lanka’s historical social model: the state continues to invest significant public resources into providing free secondary and tertiary education, but the domestic economy fails to offer economic stability and professional opportunities to retain this human capital. Consequently, the social returns on the state’s educational investment are increasingly captured by developed nations, leaving domestic public institutions further depleted.

In evaluating the contemporary impact of Sri Lanka’s social policy through the theoretical insights of Ralph Peiris and Laksiri Jayasuriya, it becomes evident that Sri Lanka’s history is neither a pure success story nor an absolute policy failure. Ralph Peiris’s emphasis on Asian development styles reminds us that development cannot be reduced merely to economic output metrics; the deliberate choice to prioritize human capabilities and social equity established an enduring standard for human welfare in the global South. However, as Jayasuriya’s critical analysis reveals, a welfare state cannot exist in an economic vacuum. The failure to integrate social policy with a productive, sustainable, and equitable economic strategy created structural vulnerabilities that ultimately undermined the very social justice the state sought to achieve.

Socio-economic contradiction

This socio-economic contradiction has entered a critical new phase under the administration of President Anura Kumara Dissanayake and the National People’s Power (NPP) government, which assumed office with an explicit mandate focused on systemic corruption reform and equitable development. Facing the stringent structural constraints of post-default economic management, the administration has adopted a pragmatic, hybrid economic framework designed to reconcile Sri Lanka’s historic social protection legacy with strict international fiscal discipline. Rather than abandoning structural reforms, the government maintains continuity with the Extended Fund Facility agreement managed alongside the International Monetary Fund (IMF), adhering to primary budget surplus targets and progressive revenue-mobilisation goals. However, it attempts to reorient macroeconomic priorities away from elite-driven financialization toward a state-regulated, productive market economy centered on public sector transparency, digitalization, anti-corruption legislation, and the revitalisation of local agriculture and manufacturing.

Policy of rebalancing

This policy rebalancing directly reflects the enduring relevance of Peiris’s ‘Asian development style’ framework, as the state seeks to build export competitiveness while retaining public oversight of basic social safeguards. Yet, as Jayasuriya cautioned in his critiques of targeted safety nets, managing fiscal austerity within a political culture historically accustomed to universal state entitlement poses severe domestic challenges. High living costs, continuous pressure on public sector wages, structural poverty, and the persistent outflow of skilled human capital leave narrow margins for error. Contemporary Sri Lanka’s economic policy thus represents an ongoing attempt to construct a viable, modern economic model—one that generates sustained productivity and debt sustainability while preserving the foundational democratic imperative of equity and social justice that has defined the nation’s post-colonial identity.

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Cholesterol lowering statins: Scope for use widens

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by Dr Upul Wijayawardhana

In my medical practice of just under 57 years, divided almost equally between Sri Lanka and the UK, I have been fortunate enough to meet some remarkable patients who demonstrated indomitable fortitude. Not that there were no nasties, but, fortunately, they were extremely rare. Now well into my retirement, I can still vividly remember some remarkable cases as if they happened yesterday. One of them well illustrates what happens when prescription warnings are ignored; that can result in drug interactions producing nasty, sometimes lethal, side effects.

A man in his sixties was admitted under my care to Grantham Hospital with progressively increasing muscle pain and weakness, being almost bedbound by the time of admission. It was pretty obvious that there was extensive damage to muscles which was confirmed by huge elevation of markers of muscle damage. A careful history, one of the vital steps needed for diagnosis, revealed that he was on long-term statin therapy following a heart attack and his GP has recently prescribed an antifungal agent for an infection in the groin. This was before the computerised prescription era and is not likely to have happened now, as a red-alert would be displayed as antifungals are known to produce severe interactions with statins. Both drugs were stopped, and with supportive therapy, he recovered fast and walked out of the ward two weeks later. He was started on a different statin later with no problems.

Would this experience make me join the vast numbers of YouTubers who are harping on the dangers of statins? Definitely not. I say so because the benefits of statins far outweigh the rare side-effects. All drugs have side effects and, in some trials, placebos producing more side effects than the active drug itself! Drugs need to be prescribed by those with education and experience whilst prescribers need to be updated regularly. Statins, perhaps, are the most widely used class of drugs and the scope for use is widening with the reporting of new clinical trials, two significant trials being presented at the European Society of Cardiology Congress held last month in Munich.

It was known for a long time that elevated levels of cholesterol in blood leads to damage of arterial walls (atherosclerosis) which manifests as cardiovascular disease including heart attacks, cerebrovascular disease including strokes and peripheral vascular disease. Various attempts at lowering cholesterol effectively by diets, drugs and surgery were largely unsuccessful till statins were discovered and it was soon realised that cholesterol synthesis by the body is more important than ingestion of cholesterol rich foods and saturated fats. Statins inhibit cholesterol synthesis in the body and the first statin released for therapeutic use was Lovastatin in 1987, but wide use of statins started only after the release of results of the landmark 4S trial in 1994.

The Scandinavian Simvastatin Survival Study (4S) was a multicentre, randomised, double blind, placebo controlled clinical trial which used Simvastatin, the second statin released for use a year later in 1988. 4444 patients, who previously had a heart attack or were having angina with moderately elevated levels of cholesterol, in spite of rigorous dieting, were recruited from 94 centres in Scandinavia. After follow-up of 5.4 years, compared to the placebo group, it was shown that the group treated with Simvastatin showed lowering of LDL cholesterol (Bad Cholesterol whereas HDL cholesterol is protective) by 35% and, more importantly, lowering of death rate by 30%. A follow-up study of 10 years showed continuing benefits. More trials and more statins followed.

Though Simvastatin had widespread use initially, the more powerful Atorvastatin, launched in 1997, overtook producing more dramatic results in subsequent clinical trials. Till the introduction of monoclonal antibodies (mAbs), laboratory produced proteins that mimic the immune system and capable of targeting antigens in cells or pathogens (which can be identified as the drug names end with ‘mab’) Atorvastatin was the highest grossing drug of all time, in spite of prices dropping sharply. There had been a proliferation on mAbs as many are used in a number of cancers and auto-immune diseases, earning more money as they continue to be expensive.

I remember a meeting I attended, just after the results of the 4S trial was released, where fears were expressed whether the NHS would go bankrupt if all eligible patients were prescribed Simvastatin. Widespread use has brough prices tumbling down, a tablet of Atorvastatin now costing in UK only 3p!

Though the initial trials were for secondary prevention, reduce recurrence after the disease has manifested, subsequent trial were aimed at primary prevention, preventing or delaying disease occurrence in those with high risk factors. These too showed significant benefits and the scope for use of statins continue to expand. Two significant trials were presented at the ESC congress.

The first was the STAREE study, which enrolled 5000 persons, over the age of 70 in Australia, with no history of cardiovascular disease, diabetes or dementia and half got Atorvastatin 40mg daily, the other half getting a placebo. Results showed a significant 30% reduction of a composite end point of death from cardiovascular causes, nonfatal myocardial infarction, stroke or coronary revascularization. Interestingly, incidence of serious adverse effects was similar in both groups being 2.6%. There was no significant reduction of death rate by itself. Perhaps, this is explained by most deaths being due to non-cardiac causes in this age group.

The second was a Danish observational study, where researchers assessed whether early initiation of statins after the diagnosis of type 2 diabetes was associated with a lower risk of dementia. Over 10 years, early statin initiation was associated with a 15% lower relative risk of dementia than no statin treatment, while late initiation was associated with a 10% lower risk. Though they studied the records of 132,585 patients, as this is an observational study, not a double blinded clinical trial, results are not as convincing and may have to be reaffirmed by further studies.

How will the results of these two trials affect clinical practice?

To act on the results of these trials is not difficult in the UK. Those over 80 years are already offered a statin and it would not be difficult for GPs to extend use to those over 70. Most diabetics, unless relatively young, are likely to be on a statin already, as they are categorised as high risk. There are no cost implications to patients as diabetics and those over 65 years get all their drugs free from NHS.

Unfortunately, things are likely to be very different in Sri Lanka. Diabetes is rampant and dementia is on the rise. As life expectancy is increasing and those over 70 being an ever-increasing group. Diabetics may be able to get a statin from government hospitals. However, there is no provision for free supply of statins for over 70 group, as this is for primary prevention. With exponentially increasing cost of living, retirees may find it difficult to afford a statin.

Ideally, Atorvastatin 40mg daily, the dose used in the trials, should be taken though one can argue that other statins may be effective as benefits are likely to be a group effect. As many trials used the 40mg dose, Pfizer decided to price 10mg, 20mg and 40mg Atorvastatin tablets the same, but this is unlikely in Sri Lanka, what is available being generics; Atorvastatin went out of patent protection in 2011. If 40mg tablets are significantly more expensive, perhaps, a lower dose could be considered as the average body size of Sri Lankans is smaller than that of Australians.

It can be argued that even a small dose is better than taking no statin at all. Maybe there is a good opportunity for our scientists, perhaps together with their Indian counterparts to do clinical trials to establish appropriate doses of statins and other drugs, rather than follow Western guidelines. Until then, it may be sensible to give anyone over 70 years an affordable dose, with some patient education on adverse effects could be minimized.

Statins are a valuable tool for the prevention of vascular disease. They not only reduce deaths but also improve quality of life by preventing debilitating illnesses. Like any drug they too have adverse effects and should be used under proper medical supervision. Worst thing to do is to listen to fear-mongers!

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‘Mortal Causes’ Tales of Mystery and Suspense 20

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Tales of Mystery and Suspense 20

by Prof. Rajiva Wijesinha

After the elegance of Agatha Christie and Hercule Poirot, I revert to one of the least elegant detectives I have looked at. The first John Rebus novel by Ian Rankin I discussed here was Set in Darkness, though I think I failed to mention the title. That does not really matter for Rankin’s titles seem a bit interchangeable. Certainly, the title of the book I will explore today, Mortal Causes, could apply to most Rebus adventures.

But this too was a gripping tale, and also dealt with what used to be a disturbing social issue in the last quarter of the last century, namely violent clashes between Catholics and Protestants, which had their roots in the age-old question of Northern Ireland and its place in the United Kingdom. The root problem there was the influx, when Ireland was comprehensively taken over by the English, of Protestants from Scotland, who were so entrenched in the north of Ireland, the area known as Ulster, that they stopped Britain from granting independence to the whole of Ireland.

Ulster remained a part of the United Kingdom, but over the years the Catholics there, supported by the Irish Republican Army, the IRA, agitated for union with the Republic of Ireland. This was bitterly resented by the Protestants, and emotions ran high, as I found when I tried to bring together Catholic and Protestant friends when I was at Oxford.

Ian Rankin

The sixties saw the overthrow of three Prime Ministers of Northern Ireland, each succeeding one being more committed to the Protestants than his predecessor, for there was a preponderance of Protestant constituencies. But the Catholic numbers were proportionately increasing, and the IRA of course got support from the Irish Republic, with the border being porous and impossible to patrol. This led to vicious reprisals by British troops, and it was their failure to address excesses over the years that made clear their infinite hypocrisy in criticizing Sri Lanka for excesses during the civil war, demanding inquiries while signally failing to address the massacres of Catholics in Northern Ireland.

Mortal Causes

deals with the repercussions of this rivalry in Scotland, where the latent animosity between Catholics and Protestants was exacerbated by events in Ulster. Obviously Scottish groups were keen to help their fellow religionists, and the book is based on how money was collected and guns smuggled in to Ulster. But typically, Rankin also looks at how the proliferation of guns led to the strengthening of gangs, who engaged in extortion, with on occasion Catholic and Protestant guns maintaining a truce so that they could each exploit their own catchment areas.

A microcosm of what went on was seen in a youth club in a seedy housing estate in Edinburgh, to which a Catholic priest Rebus was friendly with sent a youngster who was supposed to bring the communities together. Though this resulted in a truce, it was in essence an arrangement that allowed both Catholics and Protestants to deal in intimidation of their different communities in the area. And the club was dominated by the protestants, led by a youth called David Soutar, who is endemically violent, and takes against Rebus on his very first visit, after he had promised Father Leary to look into the situation.

The youth club turned out of course to be connected with the murder that set off the investigation, though this only became clear because of Rebus’ painstaking investigation of that crime. It was a brutal killing, in an underground section of the city, usually only to be seen by arrangement with the city council. The bodies were discovered by some youngsters, one of whom had purloined a key from his great uncle who was one of the custodians, who provides important information in the course of the investigation to make up for that lapse.

Before that Rebus had realized something bigger was behind the gruesome murder, for while part of the team at his own station he was asked by a Chief Inspector with the Scottish Crime Squad, Kilpatrick, to work also with his team. He had come to the site of the crime with an Inspector from London, Abernethy, who went back almost immediately to London. And though Abernethy mentioned the possibility of the killing being because of drugs, Rebus stuck to his view that it was terrorism related.

The body was soon enough identified, that of a youngster who lived with a couple called Murdock and Millie, and had Protestant insignia on his walls. And painstakingly Rebus established connections with diehard Protestants, one of whom, called Bothwell now which was his parental name, had edited a magazine while stationed in the Orkneys but now ran a dance club in Edinburgh. And he also deduced that SaS tattooed on the arm of the dead body stood for Sword and Shield, an extreme Protestant organization to which it transpired that David Soutar also belonged.

Alarmingly, it turned out that the dead Billy was the illegitimate son of Rebus’ old antagonist Ger Cafferty, who was now serving time in prison. But when he hears that his son had been murdered, he escapes, and makes it clear, through several contacts with Rebus, that he expects the killers to be found, and that he will take revenge on them.

Rebus and Inspector Smylie from the Crime Squad have to fly to Ulster to collect information which the police there refuse to transmit, and find nothing special though they confirm the existence of an extreme group called Sword and Shield, and that it has branches in America. And it seems that one of its leaders in Ulster has just gone to Scotland, while the Americans confirm that another leader will be flying to England and then to Edinburgh. Rebus asked Kilbride to tail the latter, and he says he will set two of his officers, who have no affection for Rebus, on to him.

When Rebus and Smylie get back from Ulster, Rebus is taken aside by one of these officers who says that Smylie’s brother Calumn, who was also part of the Crime Squad, and had been working undercover on arms shipments, has been murdered. This makes it clear that the arms smuggling is the key to the deaths, and also that there has been a leak from the Crime Squad.

And then Millie, who had taken a disk which Billie had hidden in his wall and fled, is also found killed. She had sought shelter with a friend who worked at Bothwell’s club, and the friend had told Bothwell about this, which was doubtless why she had been killed.

When the American organizer of Sword and Shield comes to Edinburgh Rebus manoeuvers a meeting with him, though not without rousing his suspicions. But the reports he receives from Kilpatrick of the surveillance say that he has just been doing touristy things.

The book is set during the Edinburgh Festival, and the police have been getting several calls to say a bomb will go off at its height. And Rebus now realized that this is precisely what Soutar is planning to do, having creamed off some of the weaponry, including explosives, that he had been collecting for transmission to Ulster.

These were stored in a facility provided for him by a friend whose father ran the group, but knew nothing about what Soutar was planning. The son, terrified by what he had been involved in and what the police knew, took Rebus to the warehouse which was where, DNA tests of the floor revealed, Calumn had been killed. And when Rebus and Abernethy, whom he had called up from London, confront Bothwell, it seems he too did not know of Soutar’s little sideshow, though it was also clear that he had known of Millie’s death, as well as Billy’s.

Her murderers had got the compact disk but her flatmate, though he had destroyed the backup, had looked at it before and that was how Rebus found out about the warehouse that Soutar had used. But then he goes with Abernethy to the warehouse in which the Crime Office had kept the weapons they had found, and they both confront Kilbride there and tell him that they know he too had been a member of SaS – the granduncle having shared his research with Rebus – and had passed on parts of what was confiscated to Soutar, since he was in a position to change the invoices.

But he too evidently did not know what Soutar was planning, and when Rebus goes to the youth club it is to find that Soutar had nearly killed him, and had then set off for the festival. There is great drama then as Rebus tries to stop him setting off whatever bomb he has and, though he is nearly killed, as happens in so many Rankin books at the end, Abernethy shoots Soutar dead.

Then however, when Rebus goes to the dance club for what he thinks of as final business, he finds it on fire. Bothwell has been killed. But he finds the American inside and pulls him out. When he goes further and finds the man from Ulster in a chair, tied up so he would burn, he tries to free him and then is again nearly killed, though this time he is rescued by Cafferty – who tells him it was not to save him that he had come in but to make sure he did not save the other man, the American having slunk away after Rebus had taken him outside the burning building.

The American is apprehended when he was trying to leave the country. But Kilbride is smothered in his hospital bed when he was recovering, so Cafferty’s vengeance for his son was almost complete.

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