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Stop excessive money printing to avert a far worse crisis – SJB
‘The only way prices can be controlled is not by gazette or emergency rule, but via the market itself’
In principle price controls fail, and they create shortages and black markets. The only way prices can be controlled is not by gazette or emergency rule, but via the market itself, says top Samagi Jana Balavegaya spokesman and economist Dr. Harsha de Silva.
Issuing a statement in the wake of the government doing away with price control, Dr. de Silva has said: “To do so, the reason why prices are increasing must be determined. Is it a temporary increase due to a supply shortage, say a drought or flood or is it because aggregate demand has increased due to increased money supply? The answer will depend on what is causing prices to rise.
“In the case of Sri Lanka, the massive expansion of money is the cause for continuous increase in prices or inflation. This is the reason for the rapid depreciation of the currency as well. The only short-term solution to reduce this excessive rate of money growth is to stop excessive money printing. If monetary accommodation is continued inflation could turn into hyperinflation and further depreciation of the currency leading to serious social unrest.
“However, the reality is that much of the population cannot bear the increasing costs. It is not a secret that middle-class families have had to cut down on expenses. The situation among the low-income families is a lot worse. People have had to give up meals. It is the responsibility of the government to ensure people don’t starve due to the total mess up of the economy by the politicized Central Bank that continuously ran its printing press a la modern monetary theory that was bound to fail. It is imperative that an income support mechanism be implemented for the most vulnerable immediately. This can be implemented via the Samurdhi scheme even though it is nowhere near ideal.
“Beyond the short term and in a more stable macroeconomic environment, we need to be more productive. For instance, accurate information on weather, better use of technology, application of right amounts of fertiliser, efficient storage and logistics would help improve the supply of agricultural produce. Similarly, the productivity must increase in manufacturing and services.
“In the meantime, the government must correct market failures by appropriate regulation to foster competition in the market. Take for instance the rice market. While there is more than enough paddy harvested there is a huge shortage of rice. That is because the rice manufacturing market has been captured by a few big millers and competition has been wiped out. The way to correct that market failure is to empower the hundreds of SME rice millers by providing them working capital and get their supply into the market. Instead, the government has now decided to import rice to control the prices. This wrong policy will make the problem worse, from market failure to government failure. When imports are stopped, all the SME millers would be out of business the big players will completely dominate the market.
“The SJB believes in a social market economy where competition will be encouraged with necessary amount of regulation to maintain a stable market. We will ensure that all parties to a transaction, the firm or the investor, the worker or the farmer and the regulator or government would together arrive at sustainable equilibrium so that longer term growth with equity could be maintained. However, given that the economy is in such dire straits, the truth must be told to the public that there is no free lunch and we as a nation will have no option but to work hard to a plan. And that plan will call for significant economic reforms and integrating Sri Lanka with global production networks. The resulting export-led growth, as opposed to the current import-substitution led growth, would significantly elevate living standards of our people while allowing for sufficient funding to provide safety nets for those in need.”
The Frontline Socialist Party (FSP) yesterday demanded an immediate termination of what it called a “secretive and dangerous” defence agreement signed between Sri Lanka and India, during Indian Prime Minister Narendra Modi’s 05 April visit.
Addressing a press conference at the party’s headquarters in Nugegoda, FSP Education Secretary Pubudu Jagoda described the agreement as a “betrayal of the nation” and a “crime against the people,” urging the government to invoke Article 12 of the deal and exit it with the required three months’ notice.
Jagoda said the document, which surfaced on social media after being published by a news portal, appears to be the actual agreement signed between the two countries. “The government has not denied its authenticity. That silence is telling,” he said.
Jagoda added that the agreement bears the signatures of Sri Lanka’s Defence Ministry Secretary Sampath Thuiyakontha and Indian High Commissioner Santosh Jha.
“What’s most troubling,” Jagoda warned, “is that both governments attempted to keep the agreement under wraps. Unlike the 1987 Indo-Lanka Accord, which was made public with all annexures, this agreement was hidden from the people, and even now, we don’t know how many other agreements exist between India and Sri Lanka.”
Jagoda said that a Right to Information request made on 04 April was met with a reply from the President’s Office stating that it had no copies of the agreement—raising serious concerns about transparency, even at the highest level. “One could question whether the President has seen it because his office does not have it,” Jagoda said.
The 12-clause of agreement reportedly covers areas such as exchange and training of military personnel, defence industry collaboration, classified information protection, and military medical services, including battlefield healthcare and telemedicine.
Jagoda said the definition of “classified information” in Clause 7 was alarmingly broad. “It allows India to label virtually anything as secret. Even weapons or military assets transferred under this agreement cannot be revealed—not even after the agreement ends,” he said, citing Clause 7.3.
Clause 10 prohibits either country from taking disputes to international courts or involving third-party mediators. “It’s like asking a rabbit to negotiate with a tiger,” Jagoda quipped, drawing parallels to the complications of the 1987 accord, which eventually saw Indian peacekeeping troops refusing to leave until a change in the Indian government.
Jagoda accused the NPP-led government of hypocrisy, pointing out that the JVP, the main component of the current regime, had vehemently opposed Indo-Lanka Accord in 1987. “Now they’ve gone and signed an even more dangerous deal,” he said.
Citing Clause 12, which allows either party to withdraw with three months’ notice, the FSP called on the government to act immediately to exit the pact. “We urge the people to unite and defeat these underhanded, sovereignty-eroding deals. The FSP stands ready to lead that fight,” Jagoda said.
The police yesterday arrested a group of students, including the Convener of the Inter-University Students’ Federation (IUSF), Madushan Chandradith, during a protest held by the Allied Health Science Graduates’ Union in front of the Health Ministry yesterday.
The police obtained an order from Maligakanda Magistrate’s Court, earlier in the day, to prevent protesters from invading the Colombo Hospital Square and the Health Ministry.
Inspector General of Police T.M.W. Deshabandu Tennakoon is set to face formal questioning on Monday (19 May) over serious allegations of misconduct and abuse of power, parliamentary sources said yesterday.
A special Committee appointed to investigate the claims will commence formal proceedings next week, following several rounds of preliminary discussions held within the parliamentary complex in recent weeks.
The IGP has been officially notified to appear before the Committee and is expected to face the inquiry for the first time at 2:00 PM in Committee Room No. 8.
The Committee, which met again on Thursday (15) to finalise arrangements, is investigating allegations that Tennakoon misused his official powers in a manner deemed severe and improper.
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