Features
Central bankers live on Short End Street; Economic planners live on Long End Street
Long End Street is not a summation of Short End Streets. Eighteen short-term crises and no long-term growth in sight!
For quite some time, there has been no agency of government dealing with long-term economic and social policy questions. Nor have universities been of any help. There has been a National Planning Department in the Ministry of Finance but we have not seen any worthwhile reports from them. M. D. H. Jayawardena, in 1956, presented in Parliament the Six-Year Programme of Investment. Soloman Bandaranaike established a National Planning Council and a Planning Department, with Princy Siriwardena as its Director. They wrote the Ten-Year Plan, better known for its readability than its depth of analysis or policy content. Ten years or so later Dudley Senanayake established a Ministry of Planning and Employment with Gamani Corea (later of high international repute) as its Permanent Secretary. The Ministry was responsible for some useful analytical work and the development of a bureaucracy responsible for plan implementation. The latter was the work of a brilliant member of the Ceylon Civil Service, Godfrey Gunatilleke, who also worked in the Ministry. The major pre-occupation of the Ministry turned out to be the annual government budget and the management of direly scarce foreign exchange, all short term considerations. They set up a bureaucratic mechanism to evaluate capital expenditure in the government budget. The Ministry won plaudits for its Foreign Exchange Budget, some analytical wok on the economy, including population projections as well as education, in both schools and universities. As the 1970s wore on, planning earned a bad press and the new government of 1971 disbanded most of that and created a Department of National Planning in the Ministry of Finance, which survives to date.
A part of the purpose of this narrative has been to bring out that, all along, government has had no outfit of economists and sociologists whose job was to study long term changes in our society and the economy and in the rest of the world and propose solutions for consideration by governments. (A brilliant exception was the work on education, that was directed by Jinapala Alles, who had graduated in chemistry and was a fast learner and was at great ease with numbers. He was also an effortless leader of a small team of self-selected competent and enthusiastic public servants.) The government depended on the Central Bank for advice on long term development of the economy. Princy Siriwardena was seconded for service in the Planning Secretariat; similarly, Gamani Corea was from the Bank. Later, he was replaced with H.A.de S. Gunasekera, likely the most brilliant economics teacher in the University of Ceylon. He taught monetary economics, essentially short term. (His favourite economist Keynes famously wrote, “In the long run we are all dead”.)
When the Ministry of Planning and Employment was established in 1965, government plundered the Central Bank to staff it: Gamani Corea, R. M. Seneviratne, N. Ramachandran, Nihal Kappagoda and G. Usvatte-aratchi. Later, W. M. Tillekeratne and A. S. Jayawardena both long term employees of the Central Bank, were appointed as the chief economist of government. Jayawardena still later became the Governor of the Bank. Several other employees of the Bank, including J. B. Kelegama, P. B. Karandawela, P. B. Jayasundera worked at high levels in successive governments and that practice continued when Mahinda Siriwardena became the Secretary to the Ministry of Finance when Anura Dissanayake became the Minister of Finance. It is mysterious that the government saw no need for specialist advisers who would identify long term economic and social problems and solutions therefor, look out for markets and technology and warn of impending pitfalls, in contrast to our mighty neighbour which had a Planning Commission that handled long term problems and a Central Bank which had learnt to handle masterly, monetary problems.
Pitambar Pant, Montek Singh Ahluwalia, Manmohan Singh, I. G. Patel and Raghu Ram Rajan were most distinguished economics policymakers and central bankers. Japan benefited greatly from the work of MITI. So did Korea from its counterpart. This is not to argue that had there been an outfit of that sort, Sri Lanka would now be rich but to warn that the Central Bank is neither equipped nor fit to fight those battles. If you scan the Central Bank Act of 2023, you will find stabilisation the most frequently recurring theme. Clause 6 reads ‘The primary object (objective?) of the Central Bank shall be to achieve and maintain domestic price stability.’ The most generous reading that the Bank may have anything to do with economic development is in Clause 6 (4) ‘In pursuing the primary object (objective?), the Central Bank shall take into account, inter alia, the stabilisation of output towards its potential level.’ Lawyers may have a field day with that and economists may beg for its meaning.
Amarananda Jayawardena was the last Governor of the Central Bank who had understood that the central bank was equipped to handle short term problems and that not always valiantly, and that it had neither the tools nor the resources to plan and engineer long term development. As Governor, he did not speak for the government on long term economic and social problems, although prior to assuming duties as Governor of the Bank, he had been the chief economist of the government. Jayawardena knew all too well the nature of the tools and the resources he had and how far he could confidently aim and shoot. It was simply silly to produce a Five-year Road Map (no matter how colourful the accompanying graphics), when a central bank mainly used transactions in the short-term financial assets market to move interest rates and the demand for money. The Bank of England, for most of the 20th century, used Commercial Paper with two ‘good names’ at its Discount Window. Short-term and long-term rates of interest, normally, behave in a predictable relationship, although occasionally, and in volatile times, that relationship may become inverted. (I am not well read on recent Fed and the Riks Bank market operations.)
The economists at the Central Bank are experts in monetary policy and are rarely knowledgeable about economic growth. An exception was S. B. D. de Silva and he found writing a half page note to the Centra Bank Bulletin (monthly) stultifying. He left the Bank quite young and continued studying economics until the very end of his life. As undergraduates they may have read on economic growth and development but as professionals in the central bank, it is unlikely that they kept working on problems in that area. They may also have learned, some time, that there has been no central bank credited with spearheading economic development in any country. Therefore, to pretend that they can advise the government on economic planning, is a hobby which they would be wise to desist from.
We did a splendid job of saving our new born children and their mothers as indicated in low infant mortality and maternal mortality rates. We scored an even more resounding victory in educating all our children. If we have any claim to any civilizing missions in the 20th century, these two stand out. Beside them, we have been mostly failures. The economy has advanced only laggardly. It has miserably failed to exploit excellent opportunities to sell in burgeoning markets, output employing a healthy and educated labour force. Japan, South Korea, China, Vietnam, south India, Ethiopia, Rwanda and several other countries, all (except Japan) late comers to the game compared to Sri Lanka, succeeded in doing just that. It is wrong to blame governments alone for poor economic growth, as many do. Most economic activity in this country is run by the private sector and leaders there have made poor use of opportunities.
When ministers of government and its employers collect bribes, private sector persons pay bribes. The markedly rapid economic growth in Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Keralam and poor growth in Madhya Pradesh, Uttar Pradesh, Bihar and many others in the north east are under the same central government dispensation, sharply pointing to differences in the quality of business leadership in the two groups. ‘Big business’ here run betting shops, supermarkets, hospitals, import and market household equipment, banks and insurance companies and, most ambitiously maintain construction companies. (In the widely watched IPL cricket matches 2026, Sri Lanka advertised regularly a Betting Centre!) Tourism in this country is the business of small-scale enterprises with low productivity. The ubiquitous kade with a stock-in-trade of less than one hundred thousand rupees, borrowed from a relative or a friend, is a sign of rampant unemployment and not of budding entrepreneurship. When you go to consult a doctor in a private hospital in Colombo and wait endless hours, count the number of men and women employees idling, supervised by a proportionately large number of idling supervisors. Where are the large-scale manufacturing and service companies, selling the world over, where economies of scale abound in the 21st century? So far as I recall, there has been no Initial Public Offering (IPO) of shares in the Colombo Stock Market during the last 7 years. Nor have multinational companies established here any large factories or offices.
Is the air we breathe deathly to enterprise?
by Usvatte-aratchi
Features
‘Lord Edgware Dies’
It has been some time since I read an Agatha Christie, the plot of which I cannot remember. So, I was delighted to find on the shelves of a friend Lord Edgware Dies, which I had a vague memory of, but no certainty about who had done it.
When I read it, I found that my memory of who was probably the killer was correct, but I could not be certain and the red herrings Christie threw in were so diverting that until almost the very end I wondered if I had been wrong.
The plot is very simple. Jane Wilkinson, who is married to Lord Edgware, tells him that she is desperate for a divorce since she is in love with a very proper Anglo-Catholic peer, Lord Melton, but Edgware refuses to divorce her. She asks Poirot to talk to him, which he does, and is surprised to find that Edgware has told Jane he is prepared to give her a divorce. This was, after he had categorically refused, through a letter, which Jane said she had not received.
That night Edgware is murdered, after Jane had been to see him, or so the butler said, and also Edgware’s secretary. But Jane had been that evening at a grand dinner many miles away, where a dozen fellow guests could swear to her presence.
There was a solution however to the mystery of two Jane Wilkinsons, namely a skilful impersonator called Carlotta Adams who, in the opening chapter had impersonated Jane Wilkinson, who had also been at the performance. But when Poirot goes to see her, he finds that she had been found dead on the morning after Edgware had been killed, of an overdose. And in her bag was a gold case, with a strange inscription, that contained the drug, along with a pair of pince-nez.
Her maid said she had written a letter to her sister in America and posted it the previous night. Poirot asks Inspector Japp to get the letter, and a transcript is received from America, and in it the name of Edgware’s nephew Ronald Marsh is mentioned; he had taken Carlotta to dinner after her performance, with which the book opens, and had then set her a challenge. Japp arrests Marsh, but Poirot is not happy and asks for the original of the letter, which the sister sends him. That shows that a page is missing, and the tear is obvious, though that raises the question as to why it had not simply been cut.
Matters are further complicated by the fact that Marsh had gone in a taxi to the Edgware house, along with Edgware’s daughter Geraldine, in the interval of an opera which had previously seemed to provide them with cast iron alibis. Geraldine had gone in to fetch her pearls so that Marsh could raise money he needed, and thus had an opportunity to kill Edgware, as did Marsh, for the driver said he had got out of the taxi while waiting and gone into the house.
Marsh explained why he had gone to the house on the night of the murder as having followed Bryan Martin, an American actor, who had been in love with Jane, whom he saw go into the house with a key. But there was no one visible when he entered, and Geraldine almost immediately came down and they left together. And Martin too has become an object of suspicion to Poirot, for he had been to see him before the murders were discovered with a story of being followed by a man with a gold tooth – a story Poirot immediately realized was false when he was asked how old the man was, and was told he was young, for young people did not have gold teeth.
A heap of French money Edgware had got for a trip to Paris was missing, but since Marsh had no need for it after his cousin’s offer of help, Poirot deduces that it must have been taken by the butler, who has disappeared. Christie has stressed that he is astonishingly handsome, unusual in a butler, and Poirot notes a resemblance to Martin, so he thinks the mysterious man going into the house must have been him.
Incidentally, later Poirot assumes that Edgware’s change of mind was because he was involved in some scandal, and I believe Christie intends us to see the cause of this in his handsome butler, though this is not specified.
Meanwhile, Poirot has asked Japp to find out the provenance of the case found in Carlotta’s handbag, and it turns out to have been made in Paris, specially commissioned, and collected by a woman with pince-nez.
But then another murder occurs—that of another guest at the grand dinner, which provided Jane with her alibi. The victim is an actor who had been bemused when Jane, at a lunch, thought the Judgment of Paris referred to the city. He told Hastings he wanted to see Poirot, but was killed before he could get to the appointment. Poirot had rushed there when told about his request, but it was too late.
Meanwhile, Poirot has tried out the pince-nez on Edgware’s secretary, but she could not see through these. It was only a chance remark heard outside the theatre that led him to try them out on Wilkinson’s maid Ellis, a spare pair that had been appropriated for the night of the murders.
Poirot then lays things out, having summoned Martin and told him that he probably suppressed Edgware’s letter, as he had been dropped by then and he did not want Jane to marry another. But after teasing Martin, Poirot says that Jane was in fact the murderer, and she got Carlotta to impersonate her at the dinner while she went to the house and killed her husband. After meeting Carlotta later and checking with her through a call that she had
not been rumbled, Jane had gone ahead with the murder – she put veronal into her drink and the case with veronal into the handbag. She forgot to take out the pince-nez she had used earlier to imitate an American. Carlotta had registered as the American in a hotel and Jane had gone to see her, and there they exchanged identities. After seen the letter, she made use of it by tearing off the page that referred to her, and the S of She, so that the person who had challenged Carlotta to impersonate her seemed to be a man.
There is a coda in which Jane, condemned to death, writes to Hastings, still full of pride at her ingenuity hoping she will be remembered.
Features
Desilt reservoirs, learn from our ancient irrigation systems
by Prof. O. A. Ileperuma
Silting of reservoirs is a major problem today affecting our hydropower production and irrigation systems. The main Mahaweli reservoirs are silted to a considerable extent reducing the water holding capacity of them. Due to poor soil management practices, floodwaters deposit large amounts of silt in these reservoirs. When the Polgolla reservoir was fully drained about two years back, one could see mountains of silt in the lower reaches of the reservoir. A rough estimate is that 50% of the total capacity of these reservoirs has been lost to siltation. This is a serious issue which affects not only power and agriculture but also flood control.
Our ancient irrigation systems ensured that desilting of reservoirs took place under royal decree where all users of the reservoirs were ordered to carry out desilting of reservoirs during the dry season. The clay thus collected was used in making bricks for the construction of great stupas which dot the landscape of our ancient kingdoms. This ensured that the reservoirs had their full capacity filled with water for the next cultivating season. Our ancient kings were clever enough not to construct reservoirs by blocking main rivers such as the Mahaweli. A classic example is the Minipe left canal where they tapped only the surface water of Mahaweli. Even the bigger tanks such as Nuwara Wewa and Parakrama Samudraya were fed with minor rivulets. There were also other ingenious features in the cascade irrigation systems built by the ancient kings, such as mud sluice canals and forest reservations between the reservoirs in the cascade system. These reservations helped trap silt and remove excess nutrients, which could otherwise contribute to increasing salinity as water flowed from one reservoir to another.
- Parakrama Samudraya
- Kalawewa
- Kotmale
A classic engineering marvel is the former Yoda Ela, which carries water from Kalawewa to Nuwara Wewa and Tissa Wewa. It is 87 km long although the straight distance between these points is only about 40 km. The gradient of this canal is about 10 cm per km or 6 inches per mile. Yodha Ela functions as a moving reservoir and feeds about 4,600 hectares of paddy lands. It is a winding canal with about 120 smaller reservoirs on its way. It was constructed during the reign of King Dhatusena around 459 AD and later expanded by King Parakramabahu by connecting more reservoirs to the network. Unfortunately, during the Mahaweli project our modern-day engineers constructed a concrete canal replacing the winding path of this Yoda Ela also called Jaya Ganga. This effectively removed the ability of the old Yoda Ela to remove silt and nutrients. The bank of this Ela has wet zone trees such as jak and areca nut growing well. They take up the nutrients from the flowing stream making the water suitable for irrigation later.
Ancient Mesopotamian civilisations depended on dams constructed along the two main rivers, Euphrates and Tigris. After continuous irrigation of their fields over several thousand years, salinity of the irrigated lands increased making them unsuitable for agriculture. People died due to famine and this clearly illustrates the danger of blocking main rivers for agriculture. There is scientific evidence that the salinity of paddy soils in the Mahaweli C area is increasing.
We saw the devastation caused by Cyclone Ditwah. The sluice gates of the Kotmale Reservoir were opened, and Kandy and Peradeniya were flooded. If the reservoir had had greater storage capacity, couldn’t the opening of the gates have been delayed? This may not be an argument that modern-day engineers would readily accept, and I am not an irrigation expert. These ideas may well be naïve. But most of us tend to think of reservoirs mainly in terms of hydropower generation and irrigation, while their role in flood control receives much less attention. The question therefore deserves serious consideration. Could restoring lost reservoir capacity through desilting help improve our ability to manage extreme rainfall and reduce flood risks?
Desilting our reservoirs should be considered a national priority.
Features
Losing out to Ethiopia
Export diversification – Missing the wood for the trees – Part III
by Gomi Senadhira
In Sri Lanka, the word “Ethiopia” is often used as disparaging slang to describe individuals or areas experiencing extreme poverty, starvation, or severe economic hardship. This linguistic habit originated in the 1980s with the Western media coverage of the devastating Ethiopian famine of 1983-85. That media coverage shocked the world but also left an outdated and offensive global stereotype that the country is permanently starving. Much has changed since then. By now, with an annual growth rate of around 9%, it is the fastest-growing economy in sub-Saharan Africa. Ethiopia has also emerged as a highly competitive exporter and is challenging not only its competitors in the region but also countries like Sri Lanka. This article is on how Sri Lanka has lost ground to Ethiopia (and a few other countries) in the GCC markets for agricultural and floricultural products.
Sri Lanka – A Pioneer in the Agriculture and Floricultural Market in the GCC
As discussed in Part II of this article, by the mid-1980s Sri Lanka had established a strong foothold in the GCC’s fruit, vegetable, and floricultural market. Geographical proximity and well-established shipping and air links gave Sri Lanka a strong comparative advantage over Southeast Asian and African nations. Thailand, Vietnam, and Kenya were not even in the market. At that time, Ethiopia was experiencing (as BBC news reports described) “a biblical famine”.
The market was not very large, but it was lucrative and growing. Trade Minister Lalith Athulathmudali as well as the Chairman of the Export Development Board, Victor Santiapillai, who visited Kuwait (and the GCC countries), recognised the market potential for these products and encouraged us to continue with our work. The minister was particularly keen to further develop links between the market for these products, exporters, and his Export Production Villages (EPVs). So, it was becoming a successful case not only for export diversification but also for transferring gains from exports directly to rural households.
From Trailblazer to Tailender
As a result, even by the beginning of this century Sri Lanka had a larger market share than most of its competitors from Asia or Africa. But since then, our competitiveness has weakened significantly. The tables below provide a comparative snapshot of Sri Lanka’s performance vis-à-vis Thailand, Vietnam, Kenya and Ethiopia in the GCC market for vegetables, fruits and floricultural products. As illustrated therein, in 2001 Sri Lanka was ahead of Thailand, Kenya and Ethiopia in this small but rapidly growing market. Since then, we have fallen behind Thailand, Kenya and many other countries in that lucrative market. If this trend continues, Sri Lanka will fall behind Ethiopia within the next few years. (See Table 1)
In the GCC market for vegetables (covered in HS chapter 07), Sri Lanka was ahead of most other competitors in 2001. As illustrated in Table 1 , Sri Lanka had failed to develop this market, while Thailand, Kenya, and even Ethiopia had very efficiently increased their market shares. The GCC is a market to which Sri Lanka can supply some vegetables, like cabbages, by sea. It appears Sri Lanka had also failed to exploit this mode of supply.
We can see a similar trend in the market for fruits. Vietnam, Kenya, and Thailand have emerged as major players, while exports from Sri Lanka have staggered on slowly. In this segment, Vietnam has emerged as a leading player during the last twenty years and the GCC imports from Viet Nam have shot up from US$44 thousand in 2001 to US$346 million by 2024. In part one of these articles, I discussed the remarkable increase of jackfruit exports from Vietnam “…just $3 million in 2015 to an impressive $236.8 million in 2023” while most of our jackfruit production rots under the trees. This explains how countries develop their markets, geographically and product-wise. (See Table 2)
Sri Lanka’s performance has been weakest in the market for floricultural products (HS Chapter 06), which groups live trees, cut flowers, and ornamental foliage. When we first entered the market in the 1980s, the market was dominated by the Netherlands, and Kenya and Ethiopia were not even in the market. At that time, we identified the Gulf states as a market where Sri Lanka could have a dominant presence due to geographical proximity. Even in 2001, Sri Lanka was ahead of Kenya, Ethiopia, and Thailand. But by now, Kenya has emerged as the dominant supplier. Ethiopia is also expanding its market share and is the third-largest exporter. (See Table 3)
Missing the Wood for the Trees
In the mid-1980s, Sri Lanka first established its foothold in the GCC market. Since then, Thailand, Vietnam, Kenya, and even Ethiopia have moved well ahead of us and have become leading players. Why did we lag behind in our export diversification efforts in general and, more particularly, in the GCC market?
The reasons are very clear. After the initial attempts in the 1980s and early 1990s, Sri Lanka has not been proactively involved in identifying, developing, and promoting new products and markets, or protecting and further developing new markets already established. The focus has simply been on traditional exports: tea, coconut, cinnamon, and garments, while other products were almost ignored. In essence, we have been and continue to focus intensely on a narrow group of products and markets, and we have lost sight of the bigger picture.
(The writer can be reached at senadhiragomi@gmail.com)
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