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Budget is the next big thing!

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One major event is over now. People have elected a new government having high hopes. The next major event is not the abolition or change of the 19th constitutional amendment. The next big event is the submission of the new government’s first budget. Will it dash the people’s expectations? The writing is on the wall for those who want to read it.

Leaders of the government might be thinking of a big budget deficit. A big budget deficit means a big government. And a big government means lower productivity, lower sellable output, lower capital formation and lower allocation for consumption money to households.

However, I have my doubts as to whether the IMF would support such manoeuvres. For the previous government the IMF insisted to have at least a primary surplus in the government’s budget. Primary surplus means that government revenue must be sufficient to meet its expenditure excluding the payment of interest. For the first time, after many decades, the previous government achieved primary surplus in 2018, but again the target “was missed by a sizable margin in 2019 with a recorded deficit of 0.3 percent of GDP, due to weak revenue performance and expenditure overruns” (IMF staff conclusion, Feb. 7, 2020). The IMF did this observation nearly after two and a half months of Gotabaya’s presidency. Therefore, there is no reason to believe that the IMF would not have insisted on the same condition on this new government. Perhaps, Covid-19 might help to get a temporary excuse. Such excuses would be for the mitigation of economic fallout from COVID-19 but not to run a big government with high budget deficits to finance ambitious projects. This intimates that the government has to slash its ambitious infrastructure projects to be implemented by local expertise and financial resources.

However, if the government wants to have a big budget deficit then it should focus to provide support to enterprising sector enabling entrepreneurs to increase total national proceeds (which is the sum of sales) with profits. For this, the IMF would support as this approach helps recovery of economic fallout, capital formation, take control of current account deficit, and increase the tax revenue eventually. The message from the IMF is clear. In the same report, it observes that, “given risks to debt sustainability and large refinancing needs over the medium term, renewed efforts to advance fiscal consolidation will be essential for macroeconomic stability.”

Fiscal consolidation is a deadly concept for the new government. It seems the government wants to think “out of the box” solution as Nivard Cabraal suggests in recent times. This has already been in government’s official thinking. I quote, “The issuance of an international bond by the government is not anticipated in the near term, thereby rendering the current yields observed in the international bond market irrelevant” (Central Bank of Sri Lanka). Read this again carefully. What is the problem with the current yields in the international bond market? In fact, yield rates are low and positive for the government. But certain governments cannot benefit from low rates if that government’s credit rating is not good. In such an eventuality, the government cannot risk damaging the country’s image trying to access international bond market.

But, as observed by IMF, the government has large refinancing needs in the medium term. It means the government needs money in US dollars. The “out of the box thinking” has kicked in. “The government has taken proactive measures in mobilising funds from multiple sources of market based and official sources of financing to effectively improve the terms and conditions of financing” (CBSL website). Here, what do they mean by “market based … sources?” As far as we know, international bond market is the best “market-based source.” The government has decided not to go for international bond market for whatever reason. Then, does this mean that the government plans to mobilize funds from private financial consortiums? Leave this question open.

CBSL further says “The focus of financing will be to further explore bilateral and multilateral sources to benefit both risk and cost considerations of debt management, and these discussions are well underway. Further, the country is in the process of exploring SWAP facilities with regional central banks, while arrangements are being made for syndicate financing with identified foreign sources.” Borrowing from foreign private sources can break a country than make a country. That was what happened to Greece; in desperation at one point 17 years of future ground-handling income of airports were sold to a foreign consortium. If Sri Lanka issues international bonds, then it limits to 10 per cent of the total bonds and Treasury bills issued separately and borrowing limit also must be approved by the parliament. All these measures are to ensure debt sustainability.

With the Covid-19 pandemic the whole world is in a mess economically. The IMF and other international financial organisations do not have clear policies as to how the crisis should be mitigated. As such, the IMF is going to hold a conference in November 2020 under the theme, “Living in the Extreme: Economics of Pandemics, Climate Change and Tail Risks.” As such, the best source of funds must come from the IMF in times of pandemic getting the US participation in developing such programme invoking its “Exchange Rate Stabilization Act” as many countries use the US dollar as their main reserve currency. This would be a more appropriate “out-of-the box thinking” solution than approaching private foreign funds. In times of difficulty, the government must cling more on to the traditional international financial institutions and donors than newly found friends.

Hema Senanayake

 

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Opinion

Cattle slaughter ban and common sense

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By Rohana R. Wasala

It was reported in the media (September 8, 2020) that Prime Minister Mahinda Rajapaksa’s proposal for a ban on cattle slaughter received cabinet approval, as well as the approval of the government parliamentary group. Some Buddhist monks, and allied groups who have long been agitating for such legislation to be enacted, raised euphoric cries and invoked blessings on the Prime Minister and the President. I don’t know how the two privately reacted to the acclamation they received on the basis of a controversial measure, tentatively proposed, but not finally agreed upon: Did they accept the still unearned accolades with a feeling of exultant self-vindication or with a sense of gnawing doubt that the whole thing might misfire? They are more likely to experience the latter state of mind, because this ban cannot be imposed without harmful repercussions, given the unalterable ground realities that must be recognized and accommodated before enacting and implementing the proposed ban. This is so particularly in relation to the prevailing economic and political crises in today’s globalized world, of which Sri Lanka is a small member, hardly noticed, except for her strategic location and her beleaguered state due to the same circumstance, trapped between three superpowers – two global and one regional. The domestic fallout could be even more critical. This is the worst imaginable time for such a radical measure to be implemented, however popular it could be among a section of the people.

But let’s not be too alarmed. Media Minister and Cabinet spokesman Keheliya Rambukwella (a good choice for the latter job, in my view) managed to assuage the fears of sceptics, like me, who are not convinced about the actual benefits, but are really concerned about the possible unsavoury economic, socio-cultural, and political consequences, of a ban being imposed on cattle slaughter, when Rambukwelle told the local media that Prime Minister Rajapaksa ‘hopes to ban cattle slaughter’ and that ‘he  would decide when to submit the proposal to the government’. The government announced that a final decision will be delayed by a month (as reported in the online Istanbul/Turkey based TRT News Magazine). Rajapaksa’s cautious non-commitment hints at the possibility of  a reassessment of the pros and cons of the move and points towards the likelihood of sanity finally prevailing. But this will need a lot of reverse convincing to do among the convinced (I mean, among those who are for the ban).

From my point of view (for what it is worth), it is vitally important to be mindful of how the ban would be viewed abroad, as well as among domestic non-Buddhist religious minorities, though it might go down well with a majority of Buddhists and Hindus. There is no question about trying to assert our rights as an independent sovereign nation and to pursue political and economic policies that we believe serve the best interest of our people. However, divisive party politics of the recent years have landed Sri Lanka in such a vulnerable situation, globally, that any government  that even occasionally dares to defy undue superpower pressures in order to accommodate the legitimate demands of its own people, gets labelled as undemocratic, autocratic, oppressive, and therefore ripe for replacement. For a Sri Lankan government to be on its best behaviour is no guarantor of its survival in a context where India, China, and America are each looking after their own national interest in a competitive relationship with one another at the expense of Sri Lanka’s very survival. But what can we do about it?  I think that the present government, under the joint leadership of the President and the Prime Minister, is doing what it can in these internationally beleaguered  and internally treacherous times. Insisting on passing potentially divisive legislation is no way to help them. 

Today, with Gotabaya Rajapaksa as President, we have the first executive head of government since independence who has found a way to consult with the Maha Sangha as a monolithic entity through non-political, non-sectarian interaction. He appointed a board of monks called the Bauddha Upadeshaka Sabhawa (the Buddhist Advisory Council) to advise him, and had its first meeting on April 24, 2020. It consists of the Mahanayake Theras of the Three Nikayas and a group of prominent scholar monks, who are specialists in various fields, connected with the Buddha Sasana, in which they have time-honoured claims and commitments. The monks meet with the President on the third Friday of every month. In their last meeting, on September 18, they commended the President for taking steps, in accordance with their proposals, for, among other things, the protection of historical sites of archaeological importance, development of Pirivena education, designing of a national educational policy, control of the drug menace, etc. But, as far as the Derana TV news coverage was concerned, there was no mention of the cow slaughter ban proposal. Can’t this be an indication that it is not being perceived as such a pressing issue? 

There is no gainsaying the fact that Buddhist monks worked tirelessly for the victory of the nationalist camp, and they did not do so for any personal benefit. There are a number of activist monk groups each articulating different issues of broad national interest such as environment protection in addition to the central issue of the threat to the Buddha Sasana, the predominantly Buddhist nation (the people) and the unitary state that comes from the handful of foreign-sponsored separatist racists and religious extremists among the peaceful mainstream Tamil and Muslim minorities, respectively. These traitorous elements dominated the previous regime. The President appointed the Buddhist Advisory Council, partly in recognition of the service they did in helping to save the country from misgovernance, but primarily in fulfilment of the constitutional requirement of giving foremost place to Buddhism. We can expect nothing but good from this interaction between the prominent Nayake and scholarly monks and the President. Is it likely that they will  fail to understand the problematic nature of the proposed ban on cattle slaughter?  

Be that as it may, we can’t overlook the fact that some well known leading activists, heads of some animal rights and public health maintenance-related organizations, welcomed the proposal with great enthusiasm, despite the principal proponent’s non-committal stance. These included such prominent personalities as the Justice for Animals and Nature Organization Chairman  Ven. Dr Omalpe Sobhita Thera, founder of Sarvodaya Dr A.T. Ariyaratne, and GMOA head, medical specialist Dr Anuruddha Padeniya. They  published a public announcement-cum-invitation to ‘all professional and civil organizations’ asking them to attend a meeting  at the ‘Sangha Headquarters,’ on Alvitigala Mawatha, on September 20. They are urging the enforcement of the ban proposal. An announcement-cum-invitation was issued on September 17, the day that marked the 156th birth anniversary of Anagarika Dharmapala, who had pioneered the agitation for putting an end to cattle slaughter. In his time, probably, it was more meaningful and less controversial to do so than today. This announcement appeared in the online Lankaweb Forum page the same day, where I read it. It must have been published elsewhere, too. The author and principal signatory to the document, Ven. Sobhita, wrote (in translation): ‘It need hardly be stressed that the principled, determined and fearless enactment of the praiseworthy decision taken by the government MPs, headed by the Prime Minister, requires the approval and support of the general public. We believe that we are going to get your fullest cooperation in this regard. We intend to call a meeting of delegates from such organizations and take decisions in connection with organizing the relevant future activities to achieve this aim.’

Personally, I have the highest respect for these three eminent persons (who have already done much commendable service to Mother Lanka in their different capacities), and the others mentioned in the document, and also empathize fully with their commitment to the cause they believe in,  but I do not share their conviction about the feasibility, the functionality, or the actual benefits, of the proposition that they are wholeheartedly supporting. I would support a movement with the same devotion to stop animal slaughter in general, not just cattle slaughter, if there was such a movement, but I know that it is an unlikely initiative, an impossibility even. I don’t see any rationality in such a project. The kind of free rational thinking that the Buddha advised the young Kalamas to adopt without blindly following him – the way to Enlightenment, budh,rational intelligence, that Narendra Modi identified some months ago, invoking the common intellectual heritage of India which we, too, share through Buddhism,  as opposed to yudh, war/conflict, as the best way to resolve problems – seems to be at a premium, i.e., there is paradoxically little available of it – in the sacred Treasury of Theravada Buddhism that Sri Lanka is often claimed to be. Occasional submergence of practical rational thinking as in this case – our rational faculty sometimes becomes manifest in its humblest form of common sense – could prove costly in more than one sense for the whole country.

Rational minds can conceive of alternative ways of dealing with a problem, when sometimes the most direct solution is likely to create worse problems than the original problem itself like the cattle slaughter ban, if implemented, will certainly do. It is not likely to contribute towards enhancing intercommunal goodwill as already implied above. Many Muslims are employed in the meat industry, and there are secondary industries, like tanning (making leather out of animal hides), shoe making, and the manufacture of leather products, such handbags, waist belts, saddles, some percussion instruments, etc. Import of beef from abroad will lead to increase in prices, in addition to the loss of jobs, and the drain on scarce foreign exchange that it will entail. We may easily imagine the problematic implications for the important dairy milk industry, the development of which is essential for stopping the import of toxic milk powder. 

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Opinion

Youth battle against drugs needed

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Twenty-one-year-old student Panusaya Sithijirawattanakul read a 10-point manifesto aimed at reform of Thailand’s politically powerful monarchy

If our university students are daring enough to challenge the government for their rights for a clear-cut education policy, that no government could change, according to their whims and fancies or for the benefit of corrupt ministers, and state officials, then our university students’ unions could also challenge the government, regarding the drug mafia.

They should follow the 21-year-old. Thailand girl, from Thammasat University, who stood up against Royalty and called for a monarchy change, saying all humans have red blood and called for various reforms, as she fearlessly delivered the manifesto, including the call to change the constitution and education. This speech could have sent her to jail for 15 years, but she stood her ground.

Our university students, for the sake of our young generation, and those to be born, could challenge the government to take genuine action, as promised at the recent election, against all those who are involved in the drug mafia, be they ministers, officials or relatives. It is a well known fact that such an amount of drugs, etc., cannot be imported without the help of VVIPs.

Only the challenging from the young generation of all fields could induce positive action to expose the culprits. Mr. President, you asked the people to give you the strength to fight all corruption. You got it, but the people are worried about the outcome. Was it an ‘election gundu’? Do it, though you may not get the goodwill of corrupt ministers and officials, but the people, the honest and the hard working parents will be thankful to you.

Save the children before introducing any long term plans. Remember this drug mafia is very much worse than terrorists, because ministers did not get commissions from the war, but drugs bring in millions of rupees.

 

Barbara Seneviratne

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Opinion

Reduce number of vehicles on our roads

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Please allow me a short comment on the perceptive article by George Braine, in The Island ( 4th September, page 6), on renationalizing the private bus service. I hope it catches the eye of our President.

Firstly, his observation about how in Hong Kong and (Singapore too), buses are washed every day, and trains are comfortable and clean. Let alone comfort, couldn’t the “higher powers” provide us AT LEAST with CLEAN public transport, despite the now ingrained lack of hygiene in Sri Lankan society (it’s now part of Sri Lankan culture!). We have become an unhygienic people immune to uncleanliness – if you doubt this, tell me the name of ONE South Asian country which is as filthy as us. (Singapore, Indonesia, Japan, Thailand, Myanmar, Hong Kong …?). Habits such as spitting betel leaf in public, onto the pavement, throwing “Buth Parcels” on to it for the purported purpose of obtaining “merit”, by feeding the disease- infected stray dogs and cats (I almost forgot to include the rats) – this is us!. If you still doubt, go have a look at the state of our Public Toilets ANYWHERE, including the “international” Airport. Our children should be taught at an early age, how to use a toilet correctly – obviously most parents don’t know this skill.

Forty years ago, the belching buses with people hanging onto the footboard for dear life, were a common sight. It remains so today – in what aspects did we lopsidedly “Develop”? Highways – for whom?

Recently I travelled from Colombo to Galle, and last week, from Colombo to Nuwara-Eliya by car. On the Galle trip, I saw private buses tearing along, racing each other on the wrong side of the Galle Road. It was reported the following day that three had died in a head-on collision. On the Nuwara-Eliya trip, even up in the dangerous winding hills, private buses were engaged in a permanent roadrace to gather passengers.

In the very same newspaper (September 4th), on page 3, headlines read – “Three persons killed, three others seriously injured in car mishap”. It goes on to say that due to speeding, two young men sent themselves to a premature death. At least three die every day in fatal road accidents. The country’s Traffic Police are out of touch with reality. Dishing out parking fines (for the ulterior motive of collecting revenue!), watching idly as trishaws (a law unto themselves), cut across the line of traffic, allowing motorcycles to “short-cut” along the pavement, Mr Braine’s suggestion that vehicle imports should be BANNED (including Duty Free ) for five years is absolutely right! I hope the President will firmly refuse to bow to pressures in this regard, in the public interest.

He will receive fervent thanks from the public at large if he can reduce the number of vehicles on our already clogged roads. By prohibiting vehicle imports he also creates jobs for the numerous vehicle repair shops needed to keep existing vehicles in good order.

 

JAYANTA KURUKULASURIYA

 

 

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