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The permeance of global debt

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Lanka will subsist on a diet of perpetual debt

by Kumar David

The thesis of this essay, conveyed within my 1,700 word-mandate, is that the world economy has entered a phase of near universal debt. Lanka’s inexorable overload of domestic and foreign debt is part our own making part footnote of the global story. Everywhere, mighty USA and European Union included, the state is mired in debt that will not vanish so long as Finance Capital (FC) rules the world. The surpluses created by economic activity are amassed by a few institutions and individuals. Thomas Piketty drew attention to inequity of wealth and income. The market capitalisation of the world’s largest 2,000 companies is $100 trillion, but the value of all the property (land, houses, other fixed assets) of the poorer 50% of the world’s population is just $10 trillion. The heft of bank balance sheets, private-equity, mutual and hedge funds, pension & social welfare coffers, sovereign wealth funds and holdings of personal wealth, leave one dumb struck by their magnitude. FC rules the world.

Recently, post the 2009 recession, Central Banks including especially the Fed in the US expanded money supply not by billions but by trillions. Governments issued bonds, that is borrowed from FC’s (money-market) gigantic holdings to splurge on fiscal deficits or “sold” Treasury Bonds to Central Banks, which printed money (electronically) to “buy” on never-never terms. Debts to Central Banks will never be repaid, simply rolled over in perpetuity. Central Banks also ‘Quantitative-Eased’ hundreds of billions to banks and private funds to lubricate asset purchases (equities and property) which merely ballooned an asset price bubble and exacerbated wealth inequality. I don’t want to stud this piece with statistics which readers will find easily enough on the Internet and will limit myself to three numbers. The US national (government) debt of $26.5 trillion exceeded US GDP during 2020 and will not decline in the foreseeable future – in Japan it’s 230%. Second, global government debt is $60 trillion but global GDP in nominal (not PPP) terms is $75 trillion. The third point is that the total debt of non-financial corporations, globally, is about 95% of global GDP according to the IMF.

 

A nominal currency (not PPP) comparison

This essay is intended for my non-specialist readers and the data gives a broad idea of magnitudes and distributions. It is not easy to gauge indebtedness of financial institutions as reliable data is hard to come by. And it is meaningless to tot up household debt globally because $1,000 has a different meaning for say the denizens of the USA as against an Indian or an Indonesian. The idea I would like you to take away is not only that States and Corporations are deeply mired in debt, but more important things will get worse not better in the 2020s decade. This is commonplace in countries where productivity is low and which will never export enough to cover imports plus investment for capital projects plus surpluses to accommodate graft for the political classes. But I put basket cases to a side to deal with chronic diseases of the mighty. I cannot within the confines of this essay deal with the US, the EU and China, the big three whose capital shapes the world, and I have to limit this essay mainly to the US

Classical Keynesianism held that when demand and employment were low and economic activity in decline, the state should intervene and prime the pump with monetary and fiscal injections. ‘Monetary’ means to hold interest rates down and lend (print) to would-be investors; fiscal stimulus is big spending by governments to build infrastructure and create employment. Roosevelt’s New Deal helped but it was really WW2 (capitalism loves wars, armaments production and sales) that did the trick. In theory, economic revival should allow the government to recoup its outlay via higher taxes and duties. The “Keynesian multiplier” was said to be greater than one. It worked in the glorious boom from 1945-1970 when capitalism shone and socialist ideas were put away in a dog-box. But Keynes-Thought lost its shine after the oil-shocks of the 1970s and welfare capitalism slumped into Stagflation – economic growth was stuck in the mud; high inflation could not be reduced and high unemployment persisted. The world did not learn a lesson and turn against capitalism. On the contrary, there came neo-liberalism; Regan, Thatcher, Pinochet and JR slashing welfare, smashing trade unions, privatising and swinging political philosophy to the far right. Except Pinochet, mostly within the bounds of democracy unlike ultra-right populism today.

The gurus of neo-liberalism like Heinrich Hayek, Robert Barro and Robert Lucas, theorised that the Keynesian-multiplier was less than one. Barro father of the now discredited ‘rational expectations theory’ said that if the state spent more, people will realise that higher taxes were on the way and would spend less, erasing the hoped for increase in demand. Nothing of the sort is happening today; reality has stood ‘rational expectations’ on its head. The US housing market is rising because of low interest rates (interest rates are negative in Japan). Consumer spending remains undamped without engendering inflation because the US consumer is tapping into a global, mainly Asian, dirt cheap by US prices, one-billion worker labour-market churning out goodies for pampered North American and European consumers. Inflation in the Eurozone is negative; Japan is in perpetual deflation. Fifteen dollars per hour! An Asian or south of the US-border worker will be lucky to take home $15 (LKR 2800) a day. What Barro and his ilk failed to take into account was much-integrated global goods, services and labour markets. US inflation stays stubbornly low because producers for the US market de facto pay minimal wages to their producers (workers). In any case governments and Central Banks can’t stimulate the economy in perpetuity, you can’t defy gravity forever.

Demand is slack in advanced countries because the one percent rich can only splurge that much on consumer goods and prefer to invest in assets, and secondly production companies are risk-averse in the face of Asian competition hence domestic investment in manufacturing remains weak. The pre-COVID picture was bleak since state revenue was slack in the rich world due to slow growth, and it was falling in the US thanks to Trump’s tax handouts to the rich. Post-COVID expenditure has risen even further due to large expenses on medical and subsistence grants and unemployment payments. Hence pressure for trillion-dollar stimulus packages. The end point is that substantial fiscal deficits have become a permanent feature. In the US for example the fiscal deficit for 2020 and 2021 taken together will be three to five trillion dollars. There is no way out except to borrow-print-hold interest rates low or negative, and live with debt for eternity. Eurozone stimulus will be hundreds of billions per years for many more years. This nexus of extra-loose monetary policy and unescapable fiscal deficit blurs the divide between monetary and fiscal policy; they merge. Government borrowing without constraint has got a new name, Modern Monetary Theory (MMT). Adherents of MMT dismiss concerns that excess borrowing will induce inflation or will bring countries to the brink of an abyss. They have no fear that if interest rates go up governments will have to default or that the financial system will die in convulsions.

I need to repeat the thesis that underpins my essay before moving on: The world economy has entered a period of universal debt – government, corporate and household. I now need to say a few words about high-finance in China; I am avoiding the term finance-capital (FC) when dealing with China because how financial interactions will unfold in the context of a state-led economy cannot be foreseen yet.

High-finance is moving into China on a not insignificant scale. I am on tenuous ground, but I make a ball-park guess that about 10% of global high-finance is networked with China – add 5% to 10% if Hong Kong is included. True, New York, London, Tokyo and Frankfurt dominate bank, investment-fund and equity-market capital. High-finance however is on the move; asset managers (BlackRock and Vanguard), giant investment banks (JP Morgan Chase) and others are setting up shop in China (HSBC is already there), and Ant Group’s Hong Kong stock market launch later this year will be the largest ever IPO, eclipsing Saudi oil giant Aramco’s recent listing. Let us imagine that global high-finance has a quarter of its roots in the PRC by 2030. Remember that China took over as manufacturing workshop of the world in 20 years from 1980 to 2000; finance is a great deal more fluid than industry.

High-finance will be affected if the reach of China’s financial sector becomes even half as big as its global manufacturing. Some of the influences that will underpin change in the decade of the 2020s are easy to discern. The stranglehold of the US dollar as world reserve currency and mechanism of payment will need to be broken. Within five years an alternative global payments system and a currency based on two or three of the following, gold, yuan, yen, Euro and US$, will need to be initiated. (The US is the only country that can run eternal deficits, print mountains of money and export its economic problems because the world remains hungry for dollars till the value of the dollar declines). Second, the world needs other payments mechanism to overcome the US stranglehold known as sanctions – Cuba, Iran, Hong Kong, China, Venezuela, Turkey and Russia are among affected countries. Third, Belt & Road expenditure will be facilitated by an alternative global currency and banking and payments mechanisms.

A few words about Lanka before I sign off. The merging of monetary and fiscal policy is already advanced. Prof Lakshman’s task is to stay on the phone borrowing from whoever will lend and burning the midnight oil ensuring that the printing presses keep rolling. We are familiar with Lanka’s Central Bank borrowing billions again and again from China, India, the IMF or money-markets to repay China, India, the IMF or money-markets, again and again! Debt keeps growing as interest compounds while capital indebtedness persists. The balance of payments will remain in the red if not forever, for the foreseeable future. I don’t know it can be reversed both because governments need to survive politically and there is no big-enough feasible economic strategy. I am certain China, India, Japan and the US will not let us sink on the balance of payments issue since none of them wants a chaotic and anarchic country in this geographic location. For this reason I do not see sudden collapse but slow irreversible decline.

This essay has turned into heavy reading; I feel sorry for myself. No one pays attention to well researched stuff that is not simple to skim and digest. Anything on the Sinhala-Tamil brawl or derogatory of persons, regimes or regime-opponents draws stampeding crowds. Oh well, what to do!



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From the missing to the missing truth and beyond

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A file photo of Foreign Minister Vijitha Heath addressing the UNHRC.

by Jehan Perera

The government is preparing to meet the challenge of the UN Human Rights Council next month. A Sri Lankan delegation led by Foreign Minister Vijitha Herath is expected to attend the 63rd session of the UNHRC in Geneva, where the UN High Commissioner for Human Rights will present a written update on Sri Lanka. The government has already submitted its response to the advance version of the report prepared by the Office of the High Commissioner for Human Rights. The Foreign Minister, accompanied by officials from Colombo and Sri Lanka’s Permanent Mission in Geneva, is expected to explain the progress made on reconciliation, accountability and human rights. This is therefore an important moment for the government. It is an opportunity not merely to defend its record but to make new commitments.

The government has been criticised, as were its predecessors, for the manner in which it has dealt with past human rights violations, especially those connected with the thirty year war. The vexed issue of thousands of missing persons remains at the centre of this criticism. The government has sought to strengthen the Office on Missing Persons by providing it with additional staff and resources. It has also given support to the excavations at the Chemmani mass grave. Justice and National Integration Minister Harshana Nanayakkara has told Parliament that the government has allocated Rs. 57 million for the excavations and related legal work, though that figure has not been set against the cost of comparable forensic operations elsewhere.

The government also took the significant step of holding a national event in Jaffna to mark the International Day of the Victims of Enforced Disappearances. Minister Harshana Nanayakkara attended the event together with the Chairman of the Office on Missing Persons (OMP), Mahesh Katulanda, and other senior officials and political representatives. Their presence was meant to demonstrate the government’s commitment to addressing the issue. But on the victims’ side there is continuing dissatisfaction. The commemoration in Jaffna was met by a protest outside the District Secretariat, organised by families of the disappeared, who demanded to know what happened to relatives who, according to their accounts, surrendered to or were taken away by the military and were never heard from again.

Jaffna Protests

The protests in Jaffna are a reminder of the gap that remains between what the government is trying to do and what the victims expect. For these families, compensation and death certificates are not substitutes for knowing what actually happened to those they lost. The protests, and the police action taken against some of those who demonstrated, were reported by the international and Tamil media and by international human rights organisations, and overshadowed much of what the government had hoped to showcase at the Jaffna event. The OMP’s mandate is to establish the fate and whereabouts of missing persons, clarify the circumstances in which they went missing, and provide redress and assistance to their families. Accordingly, it has sought to verify complaints, remove duplicate entries, encourage people who have not yet made complaints to come forward, and facilitate compensation and other forms of assistance. The families of victims expect the OMP to do more to clarify the circumstances in which their loved ones went missing. An example would be the disappearance of 158 displaced Tamil persons from the Eastern University campus in Vantharumoolai, Batticaloa District, who were rounded up and forcibly removed in front of thousands of other similarly displaced persons, including the officer in charge Prof T Jayasingam.

The government has also increased the support available to families of the missing, and says it is accelerating the OMP’s investigations. But the scale of what remains undone is stark. There are around 11,000 complaints remaining to be investigated, according to the Justice Minister, while the OMP has reported that final information has been established in only 31 cases, communicated privately to the families concerned. On the government’s own figures, that puts the clearance rate for establishing fate and whereabouts at well under one percent of the outstanding caseload. There is a limit to what the OMP can do even with more resources and time. Its mandate is primarily to establish the fate and whereabouts of individual missing persons. It was not intended to produce the comprehensive, public account of the past that victims and the country as a whole require.

In 2015, the government headed by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe committed itself to establishing such a commission as part of a comprehensive approach to dealing with Sri Lanka’s past. Human Rights Council Resolution 30/1, which the government co-sponsored, specifically welcomed the proposed establishment of a “commission for truth, justice, reconciliation and non-recurrence”, together with an Office on Missing Persons and an Office for Reparations. However, the commitment to a truth-seeking mechanism was never fulfilled. The government should consider setting one up now. There is a growing feeling among Tamil people in the North and East that the government is failing to deliver on promises that are important to them. On issues important to them, they feel this is once again a Sinhala-dominated government like all the ones that came before.

Establish Truth

For the past two years the government has been concentrating on problems that it deems are important to the country as a whole such as the economy, development, poverty alleviation and corruption and criminality. However, the government needs to demonstrate that national unity means addressing the concerns of all communities, including those whose wounds from the war remain unhealed. Some of its own institutions have begun to act on this. The Office for National Unity and Reconciliation recently staged a drama entitled From Yakaweva to Nandikadal, depicting relationships between people that transcend the destruction caused by war. The drama portrayed the sufferings as well as the prejudices on both sides of the divide, from the Kebithigollewa bus bombing to the final days of the war around the Nandikadal lagoon. Its central message is that without forgiveness there cannot be reconciliation.

Particularly moving was the fact that the actors themselves came from families touched by the violence on both sides. The son of an LTTE Black Tiger leader and the daughter of an Army officer were among those who performed, alongside others who had experienced and survived some of the sites of carnage. The fact that a state institution is taking this message of reconciliation forward is itself a testament to the government’s openness to dealing with the past. A government institution can reach a population far larger than any civil society campaign could reach on its own, simply because the machinery of the state is so much more extensive. It is in this context that the government needs to give serious thought to setting up a Truth and Reconciliation Commission as the next step in the truth-seeking process. Special care will need to be taken to ensure that those who are appointed are not only politically non-partisan, but are acceptable to all the communities.

A Truth and Reconciliation Commission cannot by itself resolve all the wounds of the past. Nor can it replace criminal investigations or judicial proceedings where these are necessary. But it can provide something that existing institutions cannot provide on their own. This would be a comprehensive national process through which victims can be heard and the truth can be established. The general population needs to understand what happened, so that the country can begin to acknowledge its past without passing it on indefinitely to future generations. The government has already taken several steps. It is supporting the search for the truth at Chemmani. It has begun reaching out to families of the disappeared. Its own institutions are producing messages of reconciliation. But these are still not delivering the results that the victims and their families want. The next step should be to bring these efforts together to begin the journey from the missing to the missing truth, and from there to comprehensive justice.

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The long road to educating Sri Lanka’s Bhikkhunis

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Bhikkunis: Image courtesy Buddhist Society of South Asia

A robe without recognition:

 

by Anushka Kahandagamage

Education is the right of every child. Yet somewhere between childhood and the robe, that right becomes precarious for many Buddhist women in Sri Lanka, threatening not only their social standing, but their fundamental access to learning and the institutional discrimination they face. This piece is not about Buddhist disciplinary rules, which discriminates women, rather about how the state’s refusal to fully recognise bhikkhunis as bhikkhunis quietly determines what they are, and are not, permitted to learn.

Unlike dasasil mathas, who occupy a distinct and unofficial category within Buddhist renunciation, bhikkhunis belong to a formally ordained order recognised within Buddhist monastic tradition itself. Dasa sil mata means ‘ten-precept mother.’ They are women who observe the ten precepts (rather than the fuller Vinaya) and live a renunciant, celibate life, often in robes, but formal ordination has not translated into formal recognition by the state. Even after a Supreme Court ruling affirmed their right to be identified as bhikkhunis on their National Identity Cards, many still do not hold one. This stems from the hesitation of the male-dominated Buddhist hierarchy to recognise these women as part of the Theravada tradition, specifically refusing to validate their higher ordination. The identity card lists her title as Dasa Sil Mata. The ruling exists on paper, but they are still waiting for their identity cards. This is not a small bureaucratic oversight. It is the first link in a longer chain, one that reaches, eventually, into the classroom.

A Name Withheld

In Sri Lanka, there are 827 pirivenas, traditional monastic colleges that have, for centuries, served as the primary institutions of Buddhist education. Of these, only 12 are dedicated to female renunciants at all, and of those 12, just five serve fully ordained nuns specifically. The imbalance is stark on its face: 827 institutions for monks, five for fully ordained nuns. But the discrimination here is not only a matter of numbers, but it is also written into the very language used to name these institutions. Monks’ schools are called pirivena, a term carrying centuries of institutional weight, historical continuity, and state recognition under Sri Lanka’s education laws. Bhikkhunis’ schools, by contrast, are not called pirivenas at all. They are designated Buddha Sravika Meheni Adhyapana Ayathanaya (Institute for the Education of Buddha’s Female Disciples), a separate, parallel term that, however similar in function, withholds from bhikkhuni institutions the same legal and institutional status that the word ‘pirivena’ confers. Since there are ten-precept mothers, the institutes have not given the same name as the pirivena and lack the official as well as social recognition they deserve.

A Pattern a Century in the Making

Following the decline of the Buddhist nun (bhikkhuni) order after the Polonnaruwa period, the first woman to be robed again was ordained in 1905 as a dasasil matha. Although dasasil mathas have long served important religious and societal roles, they have historically lacked access to formal education. Unfortunately, today also, this pattern continuous to exist. Education, in this context, is never just about literacy or dhamma study. It is the currency of religious authority. A bhikkhuni denied equivalent education or educated in an institution the state refuses to name a pirivena, is denied that religious authority. She may know the Tipitaka as well as any monk yet will lack the institutional stamp that would make a lay community trust her reading of it. It was not indifference from the public; it was the accumulated effect of a system that has spent centuries teaching devotees, implicitly, that a woman’s robe does not carry the same weight as a man.

The female renunciants, both dasasil mathas and bhikkunis, although they wear robes, have not been regarded as individuals capable of comprehending or preaching dhamma, simply because they are women. This is most visible in education, the pirivena system, developed historically to train bhikkhus, offered dasasil mathas and bhikkunis no equivalent institutional pathway, no comparable curriculum, certification, or state recognition. This exclusion is notable because it runs counter to Sri Lanka’s broader educational trends, where women have historically outnumbered men in general university enrolment, the gap here is specific to monastic/religious education rather than a reflection of wider societal restrictions on women’s schooling. The country’s National Education Commission Policy has a section on Pirivena education. However, it does not address the education of Buddhist nuns, nor does it mention nuns within the policy. I recently learned that the policy was being reviewed, with a committee appointed by the Ministry of Education, scheduled to begin the review on the 1st of September. This presents an important opportunity to raise the issue of nuns’ education and advocate for its inclusion in the revised policy.

The monks and nuns’ education institutes are funded by the government, which allocates only 5,000–6,000 LKR per student for the entire year. This sum is grossly inadequate to cover even basic institutional needs, accommodation, food, learning materials, and the maintenance of the physical premises, let alone to support any meaningful expansion of the curriculum. With this level of funding, these education institutes are struggling to sustain themselves, and many are forced to rely almost entirely on external support simply to remain operational. This is where the disparity becomes most visible. As female renunciants have historically not been taken seriously, regarded neither as authoritative teachers of dhamma nor as figures worthy of the same reverence extended to their male counterparts, their education centres receive far fewer lay offerings than those for male renunciants. The result is a widening resource gap that mirrors and reinforces the very discrimination that caused it. Underfunded institutions produce fewer well-trained female scholars, which in turn reinforces the perception that female renunciants are less capable, a perception that then justifies continued underinvestment. Without deliberate intervention, either through equitable government allocation or targeted lay support, this cycle is likely to persist rather than resolve on its own.

Sitting Alone at the Bo Tree

I was at Jaya Sri Maha Bodhi in Anuradhapura, where a few monks sat preaching in the shade of the Bo Tree, each surrounded by small clusters of lay devotees. Nearby, I noticed a few female Buddhist renunciants, though I could not immediately tell whether they were bhikkhunîs or dasasil mathas, since visually, in their robes and demeanour, they appeared indistinguishable to an outside observer. Most of them sat alone, without the small crowds of devotees gathered around the monks nearby. This, too, is not incidental. Because women cannot enter the sâsana through the same pathway to ordination, available to men, many Buddhist female renunciants remain dasasil mathas, a status that carries the appearance of monastic life without its legitamised spiritual standing. They observe the 10 precepts, wear robes, and live in renunciation, yet occupy a lower, unofficial rung in the religious hierarchy, one that grants them neither the ordination lineage nor the institutional recognition given to monks. However, in June last year, the Supreme Court of Sri Lanka delivered a landmark majority ruling in SC/FR/218/2013, affirming that fully ordained Buddhist nuns have the fundamental right to use the title ‘Bhikkhuni’ on their National Identity Cards, legally recognising the de facto existence of the Bhikkhuni Sanga.

A Closed Loop

Social discrimination and educational discrimination feed each other in a closed loop. Because bhikkhunis have fewer, less recognised institutions, fewer are formally trained to a standard the public recognises. Because fewer are recognised as authoritative teachers, fewer devotees seek them out or support them. Because they attract fewer devotees, the education institutions of female renunciants remain under-resourced and easy to overlook in state budgets and in popular imagination alike. A dasasil matha or bhikkhuni without an active following also lacks the economic support that following brings, since in Sri Lanka’s monastic economy, devotees are patrons as much as students. The precarity is not only spiritual or bureaucratic; it is material, and it compounds across a lifetime spent in robes.

Until bhikkhunis’ education is named, funded, and recognised on the same terms as that of bhikkhus, this will remain a story not only about missing ID cards or under-resourced schools, but about an education system that continues to decide, quietly and continuously, which students are worth investing in. Education was supposed to be the one place where the women can speak for themselves, instead, for these women, it has become just another place where women have to ask permission to be heard.

(Anushka is a Sociologist who is working on contemporary Buddhist movements. She was formerly attached to the University of Colombo)

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

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‘Memories of Milton – Live in Concert’ to enchant Dubai

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Seven Notes: Doing it in Dubai

Sri Lankan music knows no borders. Wherever our people go, our melodies follow — and our musicians make sure of it.

From Qatar’s Exit, to Melbourne’s EBONY, to Toronto’s Ceymphony, and Dubai’s Seven Notes, Sri Lankan bands abroad continue to keep the community connected to home, through song.

In July, Rajiv Sebastian set the Dubai stage alight with the band Seven Notes, creating an unforgettable night for Sri Lankans in the UAE. And the live-wire behind that magic? Niluk Uswaththa of Seven Notes.

Well, Niluk says he isn’t stopping there.

Now, Dubai is preparing for something truly special — ‘Memories of Milton – Live in Concert’, a grand musical tribute to one of Sri Lanka’s most beloved voices: Milton Mallawarachchi.

For more than a decade, Milton Mallawarachchi was a trending force in Sri Lankan music. With nearly 850 songs and over 35 albums to his name, he gave us melodies that became the soundtrack to our lives — songs of love, longing, and life itself.

On Saturday, 26th September 2026, from 8:00 PM to 3:00 AM, the Mercure Hotel, Al Barsha Heights, Dubai, will transform into a space of nostalgia.

Ranil Mallawarachchi; Carrying forward his father’s legacy / Yenuli Neriah

With the spotlight on Ranil Mallawarachchi — Milton’s eldest son, carrying forward his father’s legacy — along with Yenuli Neriah and Tharaka, the evening will certainly bring Milton’s timeless classics back to life … on one stage.

Seven Notes will do the needful, providing the live music that made Dubai dance before.

According to Niluk, this isn’t just a concert.

“It’s designed as a nostalgic musical journey — to bring cherished memories and beloved songs back to life,” he says.

And he promises: 26th September will be a night to remember.

In fact, Niluk Uswaththa has become a driving force for Sri Lankan entertainment in Dubai.

Through Seven Notes, he ensures the community always has something special to look forward to — especially when it comes to music that feels like home.

The success of these overseas shows naturally raises one big question back in Sri Lanka.

Yes, music lovers, in Sri Lanka, are keen to know whether the Seven Notes band will pop up in Colombo, sometime soon, for a live performance?

Music lovers, island-wide, will be watching … and waiting!

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