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The Peril of going to the IMF: Is there an alternative?

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by Chandre Dharmawardana,
chandre.dharma@yahoo.ca.

The forex crisis had forced the government to jettison its initial set of economic managers of the Central bank who looked for home-grown solutions and opposed dealing with the International Monetary Fund (IMF). The President re-instated a set of managers whose ideas were more orthodox and aligned with the neo-liberal bankers of the West. This “about turn” by Gotabaya Rajapaksa fitted perfectly with the views of his successor Mr. Wickremasinghe.

JRJ’s “import and sell” consumer economy

Gavin Karunaratne, a retired civil servant of the 1950-1970s era, has published a new booklet entitled “How the IMF’s structural adjustments destroyed Sri Lanka” (Godage Publishers) where he claims that today’s ills are a direct consequence of JR Jayawardena’s IMF-inspired policies. JRJ converted Sri Lanka’s “produce locally to consume and sell” economy of the Sirimavo era, to a post-1977 “import and sell” consumer economy. In 1975, Lanka’s foreign debt was negligible. According to Karunaratne, “the foreign debt of the country kept mounting throughout the rule of President Jayawardena, …, reaching to special drawing rights (SDR) of six billion by the end of 1994”. Here we may quote Maliyadde (The Island: 23/06/2013) that “at the end of 1976 the foreign debt of Sri Lanka was only $ 75 million, (and that) the external debt liability had increased by more than 500 times in 35 years, with a 2020 foreign debt of around $ 56 billion”. So these claims of Gavin Karunaratne are consistent with mainstream views. Unfortunately, the book has no illustrations, maps or graphs.

Sri Lanka’s Political and Forex crisis

Sri Lanka is facing a flood of economic and political turmoil that began as a minor Cabinet tussle against the then Finance Minister Bail Rajapaksa’s policies and “midnight deals”. However, it coincided with a farmers’ protest, triggered by collapsed agricultural incomes. A knee-jerk 100% ban on agrochemicals, imposed in 2021, by Gotabaya Rajapaksa, was imposed in the name of environmental policies, designed to create a “toxin-free” Sri Lanka, long supported by Champika Ranawaka, Venerable Ratana, advocates of traditional agriculture, and by the Viyath Maga – the “learned” advisory group of President Gotabaya. The JVP (Marxist) leaders, as well as many Western-funded “green” NGOs, welcomed it. Gotabaya boasted of it at the Climate summit and earned kudos from Prince Charles! The hidden reason for the leap into eco-extremism was the lack of foreign exchange even to pay for the import of fertilisers, needed for Tea, Rubber and other export crops, and for the paddy crop that feeds the people. That the investment in agrochemicals paid itself by almost a factor of five in export earnings was ignored by the short-sighted presidential advisors, dazzled by their “green” myths. Sri Lanka had relied on tourism, inward-remittances from expatriate workers, as well as its exports to service its foreign debts, and also to pay for its imports of fuel, food and pharmaceuticals. Of course, the arrival of the Pandemic, and the Ukraine war, created collapse. The government had to declare bankruptcy and look to foreign help, and the IMF.

Responsibility for “economic mismanagement”?

Unlike the economy of a large country, with its own economy, that of Sri Lanka is almost a random function of a multitude of market forces, beyond predictability, even though fully determined by such forces. Such systems are well recognized in modern chaos theory. Meanwhile, one is amazed to hear of a lawsuit seeking action against 39 persons, allegedly responsible for “mismanagement” of the country’s economy! Among the 39 are included Ranil Wickremasinghe, Mahinda Rajapaksa, former Finance Minister Basil Rajapaksa, former Secretary to the President P.B. Jayasundara, former Central Bank Governors Ajith Nivard Cabral and Prof. W.D. Laxman. etc.! Clearly, the petitioners seem to believe that economics is like engineering or medicine where professionals diagnose a problem unequivocally and provide remedies with a high degree of consensus. In such situations, failure to take correct steps would indeed be professional negligence. But this is NOT so for economics.

The litigants should heed Bernard Shaw’s comment that “ten economists seeking an exit from the same crisis will point in twelve different directions”! The litigant academics should revisit Friedrich von Hayek’s Nobel Prize address about the questionability of economic “knowledge”? Agricultural science is much closer to being a science capable of predicting the harvests to be expected, and so, shouldn’t the litigants take the architects of the toxin-free programme to court more meaningfully?

The assumption that major economic doctrines are independent of political ideology is clearly false. Even the attitude to foreign debt, and how it is discussed are coloured by political ideology. Western media claim that Sri Lanka has been caught in a “Chinese debt trap”. In reality, the percentage shares of the debt are: international capital-market borrowing 47%, Asian Development Bank 13%, China 10%, Japan 10%, World Bank 9%, India 2%, and others 9%. A significant share of the debt was created by orthodox economists during the “Yahapalanaya” era of the Sirisena-Wickremasinghe government.

Gavin Karunaratne, in his book, discusses how the JRJ government dismantled local industries and allowed the “private sector,” or the foreign investor, to do whatever they pleased. He notes that the inflow and outflow of Forex is not known to the government as private banks have wide liberties in managing their Forex, while the Central Bank mainly controlled domestic funds and domestic money supply.

The way out of the impasse

Given the present Forex crisis, the government cannot even run its day to day affairs, without a loan. Karunaratne gives us a brief account of the negative effects of JRJ’s free-market policies on a fledgling developing economy of a very small country. He does not tell us how to obtain the immediately needed Forex, or what to do with the accumulated debt. His long-range solution is largely to return to the model of local production that was laboriously built up under the Sirimavo government. Even if that were the right model, unlike in 1970, the country currently has no Forex to move forwards.

However, Karunaratne and many others, including the spokespersons of the “Aragalaya” (Agitation and Protest) groups rarely indicate the next set of steps. It is amusing to read some writers hark back to how the Kerensky government was replaced by the Bolsheviks, although the dynamics of each such black-swan event is utterly different from each other and those of yore. The only common factor is that all such “political revolutions” lead to arson, anarchy, and gory gulags.

The nature of globalization and the consequent incapacity of small nations to guide their economic destines make a strong case for demanding a general monetary amnesty – a debt cancellation programme – that should be launched in the wake of the Ukrainian war that toppled the precarious balance. The war is a massive money earner for the arm- manufacturing nations (https://www.youtube.com/watch?v=26O-2SVcrw0).

Furthermore, we can extrapolate from the 1970s model that Karunartne seems to strongly support. A small country like Sri Lanka CANNOT plan its economy unless and until it achieves some sovereignty over its supply of food and fuel. Energy is the life blood of modern societies. I have in my past writings (The Island 6th May 2019, and The Island, 27-June-2022) contended that Sri Lanka can use its biodiversity and its agrarian cultural framework rather than traditional industrialization to achieve self-sufficiency in food, and energy within a few planting seasons. Lanka had achieved self-sufficiency in food already, prior to its misadventure with “Toxin-Free” pseudo-science. As for energy, virtual self-sufficiency in petroleum and diesel substitutes can be achieved by exploiting its vegetable oils, as well as dendro (wood) energy. Exploiting solar energy has to wait for enough Forex savings to purchase solar panels. They should be installed on floats deployed to cut evaporation of water from reservoirs, and thereby increase hydropower outputs by 30-40% even without solar panels.

So, although Karunaratne has not touched on several issues and stuck to bashing the IMF, it is a rapid read and a spring board for further thought.



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Opinion

Prisoners are human beings

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In developed countries such as US, prisons are normally built, far away from City Areas because of the risk of prison breaking as happened recently in Negombo. For an example, just imagine what would be the fate of people around Colombo, if an attempt to break the jail in Welikada become a success. Therefore, it is necessary to introduce strategies to discipline our prisoners to behave as humans rather than simply displaying above message to the people living outside of the prison, as happened in Sri Lanka. To materialised above idea. it is necessary discipline prisoners mentally before they are released. As a Buddhist country we could develop our own model based on Buddhist Stanza such as Wanaropa Sutta to mentally discipline the prisoners. According to that Stanza, people would naturally get self-disciplined themselves while growing trees

The World Health Organization (WHO) reports, that the food not only affects physical and mental health, but is also key to successful rehabilitation and resettlement after release of prisoners. Recognizing this, many organisations and correctional facilities are striving to create a stronger and more sustainable food system among prison populations, which totaled more than 10.35 million globally in 2016, according to the World Prison Brief.

Based on above observations, we could creatively plan to relocate our prisons outside cities. For an example, already ecologically damaged area adjacent to Wilpattu Sanctuary could be used to build an ecofriendly prison. It should be designed with qualified Landscape Architects specialized in designing ecofriendly prisons as adapted in other countries. Those projects should be a joint effort with prisoners because the prisoners themselves should also become the partners of the project while rejuvenating original forest cover after project completion. While creating the forest cover, in the case of Wipattu, we could also use our traditional Chena Cultivation approaches which are now treated in developed countries as most sustainable land use method, to produce healthy foods without damaging eco systems.

By that approach, we could also transform whole prison premises to Organic Food Production Farm, managed by the prisoners themselves. This is very common in developed countries. In my view, the prisoners serving long term jails are ideal for this effort. After their release, they would definitely duplicate their experience in their residence areas rather than repeating crimes as happening now days. They also could be entitled for any profits generated from the project which takes about 5 years for completion. Income generating from farms could be deposited into the bank accounts of prisoners in order to use it after their release.

Another potential area for this intervention is Kandakadu Prison, which was an Agriculture Farm before it was transformed to a rehabilitation camp. Being located adjacent to an area with elephant population and the Beach in Batticaloa, eco-tourism hotel might be the best option for this area. Income generation from tourism is the return on investment which could be used to duplicate same concept to similar locations. Another potential area is the Right Bank area of Maduru Oya located near an Army Camp. Animal Husbandry is ideal for this area. Another potential area is Manthieu island, Batticoloa.

Capital required to invest for this type intervention could be generated by selling the urban areas currently allocated to prisons. Sri Lanka Army could be the ideal implementation agency mainly because of possible reluctances of Prison Officers to work in remote areas such as Wilpattu.

Mahinda Panapitiya

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Resplendent isle in transit: The misery of getting from A to B

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Train service in Sri Lanka

For centuries, many travellers have waxed eloquent about Sri Lanka, the “Resplendent Isle.” They spoke of lush tea estates, golden shores, and a spirit of much-admired spontaneous hospitality that defined our Pearl of the Indian Ocean. But today, the residents of this isle know a different reality; one not of postcards, but of grease, grit, and the grinding misery of a transport system, virtually in terminal collapse. To move from Point A to Point B in modern Sri Lanka is no longer a simple errand; it is a “Herculean effort” of survival against a backdrop of state incompetence, private-sector thuggery, total disregard for human decency and a government that seems to have outsourced its conscience to the highest bidder.

For the millions who call this thrice-blessed island home, the daily reality of navigating it by any form of transport has become a “major catastrophe” of Dickensian proportions. To move from Point A to Point B in 2026 is no longer a simple logistical task; it is a distasteful test of human endurance, a drain on the spirit, and a gamble with one’s own safety. The current transport status of Sri Lanka is not merely “poor”, a terminology that defies even proper definition. It is a monumental systemic failure, a toxic cocktail of state negligence, private-sector extortion, and a total collapse of regulatory oversight.

The Iron Horse in Decay: A Rail Service in Tatters

At the heart of our transit woes is the state-run surface rail service. As the only transport entity exclusively handled by the government, the railways should be the backbone of our economy. Instead, they have become a testament to nonchalant and omnipresent bureaucratic apathy. The carriages, many of which look as though they have not seen a lick of paint or a structural repair since the mid-20th century, are in a state of advanced decay.

The statistics tell a grim story. Derailments have become so frequent that they are no longer headline news but a daily footnote in the lives of commuters. These “accidents” are rarely the acts of God; they are the inevitable results of poor maintenance of tracks and rolling stock. Unacceptable delays are now the standard operating procedure. A journey that should take an hour often stretches into three, leaving students, office workers, and labourers stranded on sweltering platforms while the authorities offer nothing but silence or hollow excuses. While other nations race toward high-speed travel connectivity, our “Queen of Jaffna” and “Udarata Menike” crawl through a landscape of systemic neglect.

The symptoms are visible to any commuter: rusted carriages with leaking roofs, seat upholstery that has not seen a deep clean since the 1970s, and an electrical system prone to sparks and darkness. But the issues run deeper than aesthetics. We are witnessing a terrifying frequency of derailments, often blamed on “technical faults” that are actually the predictable results of poor track maintenance and a lack of spare parts. Accidents at unprotected crossings continue to claim lives, while “unacceptable delays” have become the only predictable feature of the timetable. For the office worker in Colombo Fort or the student in Peradeniya, the train is no longer a vessel of progress; it is a gamble with time and safety.

The Bus “Mafia” and the Ransom of the Commuter

If the rail service is a ghost of a bygone era, the fee-levying bus service is a modern-day war zone. The landscape is split between the state-run Sri Lanka Transport Board (SLTB), burdened by a very poorly maintained fleet of ageing buses and a massive and aggressive fleet of private buses, which outmatch and outperform the state-run flotilla, not by efficiency but by sheer intimidation. It is absolutely crucial to note that neither serves the public. The SLTB really operates a skeletal, poorly maintained fleet that barely scratches the surface of demand. The private buses are a law unto themselves.

At the heart of the private transport sector lies an association that critics have aptly dubbed a “Mafia.” Headed by the influential figure colloquially known as “Bus G”, this association holds the entire nation’s commuters to ransom. At the drop of a hat, they can paralyse the country with “trade union action” that are little more than unsophisticated blackmail. In a telling ransom note, whenever a policy change or a fuel hike threatens their bottom line, the buses disappear from the roads. The result? Thousands of citizens are stranded in the blistering heat, watching their productivity and dignity evaporate while the “association” negotiates with a government that appears to be absolutely terrified of their political muscle.

There is a dark irony in the politics of it all. The kingpins of this “bus mafia” openly boast that they were instrumental in bringing the current political powers into office. Consequently, the government appears not just toothless, but complicit. While the public suffers, the state turns a blind eye to overcrowding, reckless driving, and the use of nasty, addictive drugs by the staff, which turns our highways into graveyards. The powers-that-be do not have the gumption to call a spade, just that, a spade, and rein in the miscreants, using the finest employment of the laws that govern this country.

The Law of the Tuk-Tuk: A Free-for-All on Three Wheels

Descending further into the chaos, we find the omnipresent three-wheeler and taxi services. Once a convenient alternative, the “Tuk-Tuk” has become a law unto itself. In a country where the cost of living is already spiralling, these unscrupulous operators have created a “free-for-all” fare system. There is no central control over rates; instead, passengers are forced to haggle or succumb to whatever arbitrary figure the driver decides upon. For those who can afford to bypass the buses, the totally inconsiderate charges of three-wheelers and private taxis offer no sanctuary. What was once a convenient last-mile solution has devolved into a predatory racket. The tuk-tuk services have become stallions of self-importance, operating without any meaningful oversight of rates or conduct.

Commuters are met with the nonchalant refusal of short-distance hires. Drivers, seeking to “make a fast buck,” prioritise long-distance hauls where they can extort exorbitant, unmetered fares. In the absence of a standardised digital fare system enforced by the state, the passenger is always the loser. The arrogance is palpable, and respect for fellow humans has been thrown out the window. These operators behave as if they own the asphalt, often claiming that their collective vote base was the kingmaker for the current political establishment. This perceived “immunity” has bred a culture of impunity where the commuter is treated as a nuisance rather than a customer.

For the elderly trying to reach a hospital or a worker trying to get home during a rainstorm, the “refusal” has become a standard, insulting rejection. The fee-levying taxi services, though slightly more professional in appearance, operate with a similar mercenary mindset, exploiting the desperation of a public that has no other choice.

The RMV Mess, the Registration Trap and the Police Ambush

For those who have attempted to escape the public transport nightmare by purchasing their own vehicles, a different kind of trap awaits. The government has allowed the mass import of private vehicles, including two-wheelers, but the Registrar of Motor Vehicles (RMV) has become a black hole of inefficiency. Delays in vehicle registration now run into several months. Despite a surge in private vehicle imports, the bureaucracy has ground to a resounding halt. Vehicle owners face “blatant delays” in registration that extend for several months, leaving them in a bureaucratic and legal limbo.

The situation is worsened by the government’s decision to halt the private-sector issuance of number plates, centralising it into a system that is currently a “total mess.” Tens of thousands of vehicles are forced to ply the roads displaying only engine and chassis numbers, a temporary measure born of necessity. Yet for all that, and totally against even a minuscule iota of any consideration, the Police Department seems to have missed the memo and become a set of hungry predators. Officers wait in ambush, charging these owners with hefty fines for being on the road without official number plates; plates that the state itself has failed to provide. It is an avaricious cycle, where the state fails to register your car or motorcycle, and then the state’s law enforcement arm punishes you for that very failure. Rather than focusing on the blatantly reckless bus drivers or the lawless Tuk-Tuks, Police Officers wait in ensnarement to pounce on these “unregistered” vehicles. Even when owners produce documents proving the delay lies entirely with the RMV, they are charged and fined. The message is clear: the citizen must pay for the government’s failure.

The Prohibitive Cost of Mobility

Overseeing all of this is the crushing weight of fuel prices. The government continues to raise the cost of petrol and diesel with scant regard for the downstream consequences. These so-called “cost-reflective” adjustments may look good on a balance sheet in Washington or at the International Monetary Fund, but on the ground in Colombo and Kandy, they are prohibitive. Every hike in fuel prices triggers a “ripple effect” that raises the price of bread, vegetables, and, of course, the very transport that people use to get to work to pay for those goods.

Finally, a Nation at a Standstill

The transport crisis is not just a logistical problem; it is a moral one of utter social degradation. It reflects on a government that has abandoned its primary duty: to provide the infrastructure for a functioning society. We are living on a “glorious isle” where the beauty of the landscape is now obscured by the soot of a broken bus and the stress of an uncertain commute. Going from Point A to Point B has become a major travail of unbelievable misery.

Overseeing this chaos is a government that views the fuel pump as an Automated Teller Machine (ATM). The cost of all fuel types, from petrol to the diesel that powers the nation’s mobility has reached “absolutely prohibitive” levels. With scant regard for the domino effect on the cost of living, the authorities and the powers-that-be continue to raise prices, fuelling a major catastrophe of economic inflation.

For the average Sri Lankan, the “travail of unbelievable misery” is now constant. We are a nation on the move, but we are moving towards a cliff from which we are likely to fall into an abyss of no return. Until the transport sector is stripped of its political “protectors” and returned to the service of the people, this “Resplendent Isle” will remain a beautiful prison for those trying to get from Point A to Point B.

If the current administration continues to protect the infamous “mafias”, ignore the decay of the rails, and profit from the administrative chaos of the RMV, and totally fail to get their act together, they are not failing just the transport sector; they are in fact failing the very heart of the nation for sure. Our Motherland, Sri Lanka, deserves a whole lot better than a state of an ever-present and unending transit catastrophe. All the rhetoric about a rich country and a beautiful life that was promulgated in the not-too-distant past remains only as unbelievable wishful thinking.

By an Aficionado

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Opinion

Why do many Sri Lankan students become school dropouts?

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Education is widely recognised as the foundation of a country’s development. In Sri Lanka, free education has provided generations of children with the opportunity to attend school regardless of their economic background. Despite these advantages, many students still leave school before completing their education. School dropout is a significant social issue because it affects not only the lives of young people but also the country’s economic and social progress. Understanding the reasons behind school dropout is essential for finding effective solutions.

One of the main reasons students leave school is financial hardship. Although education in Sri Lanka is free, families still have to spend money on uniforms, stationery, transportation, private tuition, and other school-related expenses. For low-income families, these costs can be difficult to manage. Some students are forced to work to support their families instead of continuing their education. In rural areas especially, children may help with farming, fishing, or family businesses, reducing the time and motivation they have for school.

Another important factor is academic pressure. Sri Lanka’s education system is highly competitive, especially because of major examinations such as the Grade Five Scholarship Examination, the G.C.E. Ordinary Level, and the G.C.E. Advanced Level. Many students feel stressed by the heavy workload and the pressure to achieve high marks. Those who struggle academically may lose confidence and believe they have little chance of success. As a result, some choose to leave school rather than continue facing disappointment and failure.

Family problems also contribute significantly to school dropout rates. Children who experience divorce, domestic violence, alcoholism, or the loss of a parent often face emotional and financial difficulties. Some students become responsible for caring for younger siblings or elderly family members. Without proper support, balancing family responsibilities with education becomes extremely challenging. In such situations, education may become a lower priority.

Another reason is the lack of interest in traditional classroom learning. Every student has different talents and learning styles. However, the education system often focuses mainly on academic achievement rather than practical or vocational skills. Students who are gifted in sports, arts, technology, or technical work may not feel motivated in a classroom that emphasises examinations and textbook learning. Without opportunities to develop their unique abilities, some students become bored and eventually stop attending school.

Bullying and mental health issues are also important causes of school dropout. Some students experience bullying because of their appearance, disability, ethnicity, language, or family background. Others suffer from anxiety, depression, or low self-esteem but do not receive the counseling they need. When students feel unsafe or unwelcome at school, they may begin missing classes and eventually leave school altogether. Schools that lack proper counseling services may struggle to identify and support these vulnerable students.

In some parts of Sri Lanka, long travel distances and transportation difficulties discourage students from attending school regularly. Rural students often travel several kilometers every day, sometimes on foot or using unreliable public transport. During the rainy season, flooded roads and poor infrastructure make travel even more difficult. Frequent absenteeism caused by transportation challenges may eventually lead students to drop out.

For some girls, early marriage and teenage pregnancy become barriers to continuing education. Although these cases are less common than in some other countries, they still affect certain communities. Young mothers often find it difficult to balance childcare with school responsibilities. Social stigma and limited support can further reduce their chances of returning to education.

The COVID-19 pandemic also increased the number of students at risk of dropping out. During school closures, many families lacked internet access, smartphones, computers, or stable electricity for online learning. Students from disadvantaged backgrounds fell behind in their studies, and some never returned to school after classes resumed. The pandemic highlighted inequalities in access to education across the country.

The consequences of school dropout are serious. Students who leave school early often have fewer employment opportunities and may earn lower incomes throughout their lives. They are more likely to experience poverty, unemployment, and social exclusion. School dropout can also contribute to higher crime rates, child labor, and poor health outcomes. For the country, losing educated young people means a less skilled workforce and slower national development.

Several solutions can help reduce school dropout rates in Sri Lanka. The government can strengthen financial assistance for low-income families through scholarships, school meal programmes, and transportation support. Schools should provide counseling services to address mental health concerns and prevent bullying. Teachers can receive training to identify students who are at risk of dropping out and provide timely support. Expanding vocational education and technical training would also give students more opportunities to pursue careers that match their interests and abilities. Finally, parents, schools, communities, and government agencies should work together to encourage regular school attendance and create a supportive learning environment.

In conclusion, school dropout is a complex issue caused by economic difficulties, academic pressure, family problems, mental health challenges, transportation issues, and limited educational opportunities. Although Sri Lanka has made remarkable progress in providing free education, ensuring that every child completes their schooling requires continued effort from all sectors of society. By addressing the root causes of school dropout and supporting vulnerable students, Sri Lanka can build a more educated, skilled, and prosperous future for the next generation.

Saumya Aloysius

saumyaaloysius@gmail.com

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