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Devil dancing on edge of an abyss!



We are all concerned of the yawning abyss before us. Some factors are beyond our control and others have fairly possible to bypass with careful manoeuvring. There are all kinds of players lining up in this situation, each with his or her own game plans. Those in authority are hell bent on preventing surprises or political debacles.

There is an impending danger which all of us have to be mindful of. Situation manifests in different ways, and the causative factors are global, but we have to adopt mitigatory measures.

There is a debate on the issue, involving people ranging from the ordinary folks to academics.

Rising inflation

Many have started pinpointing at the rising inflation figures and most of them refer to it as a highly vicious phenomenon. They also point out that the increasing prices, printing of money and depleting foreign reserves are the contributing factors. As we are caught up in the middle of these bewilderments I happened to, playing the role of daughter “Asani in the Wijewardane episode”, (which has become extremely popular among the ordinary folks), examine and search some written facts about these highly controversial issues by more modern economists. To my extreme delight and surprise I came across the following;

“… an exceptional tax on capital is the best way to reduce a large public debt. This is by far the most transparent, just and efficient method. Inflation is another possible option, however. Concretely, since a government bond is a nominal asset,(whose price is set in advance and does not depend on inflation) rather than a real asset {whose price evolves in response to the economic situation, generally increasing at least as fast as inflation, as in the case of real estate and shares of stock}, a small increase in the inflation rate is enough to significantly reduce the real value of the public debt. With an inflation rate of 5% a year rather than 2%, the real value of public debt, expressed as a percentage of GDP, would be reduced by more than 15% (all other things equal) which is a significant amount.”

The author Thomas Piketty, who was quoted recently by an ardent Communist leader here in Sri Lanka, has addressed several age old orthodox economic pronouncements in a rather revolutionary manner while also considering the impact of such old theories in retrospect rather than the projected viewpoints when they hypothesized those, has provoked much thinking throwing more light on the subjects.

He has further said, “Indeed, it is important to understand that without an exceptional tax on capital and without additional inflation, it may take several decades to get out from under a burden of public debt as large as it that which currently exists …”

This is highly relevant for us to examine in the context of the plight we are in today.

Role of the Central Bank

What is the Central Bank doing to address the economy?

We know one thing. The Central banks do not create wealth, but they are there to redistribute it. They merely create financial assets and liabilities, which when created always balance each other. They cannot augment capital. It will be a utopian imagination to think that Central Banks could create capital under their powers. It would be absurd and astonishing if it could happen. The Central bank cannot set the rate of inflation nor can they force the economy to resume its growth. “the liquidity created by the Central Banks probably avoid deflation and depression ….”

Central Banks in their limited ways have intervened in tiding over difficult situations and at times of serious economic recessions such as what the world experienced in 2008. All economists regard Central banks as the lenders of the last resort and they will intervene in doing whatever is possible to avoid a financial collapse. Central banks are required to create the liquidity necessary to save the troubled banks, and avert a collapse in the financial system.

Foreign Exchange Crisis and depleting Reserves

Many people talk about this. Some of course use that as a criticism to accuse the government to gain political mileage. It is astonishing to note that they are also offering to help the government to overcome the problem but on conditions of joining the fray (band wagon) of the government.

So their main concern is how to get into power and not help the country to overcome a difficult period per se. What kind of politics is this ? Ours is a country which depends heavily on external sources to maintain our resources. If we analyze the potential sources we could see this clearly. Our principal sources of Exchange income are from Exports, Tourism and Foreign Remittances. The first two are certainly beyond our control. The global situations are directly applicable and influence our sources. The global situation for exports and Tourism are both extremely fragile being either affected totally or restricted in an irregular manner due to the pending Pandemic ups and downs. So, the only sector we could positively fix our aims and targets for improving is the remittance area.

Our annual income from remittances remained around 7.1 Billion US$ till 2020. But with the onset of the Pandemic and the other disadvantages built around the exchange parity rates the value of remittances drastically came down.

Now it is in the region of approximately 3 Billion US$. The positive factor underlying this position is that we are left with a clean target of about 4 Billion US$ to chase behind to restore out original position. We have to adjust our policy packages immediately to meet this requirement. Let us find out why the amount has fallen and take steps to address the reasons. One obvious thing is the highly organised illegal fund transfer system. They offer high rates because of the currency shortage the country and the problems banking system is facing. Our policy makers should know that it is not possible to challenge this by offering the prevailing black market rate to the prospective remitters. Because the Black marketeers will increase their rate following any Govt. increase. We have to resort to schemes offering other incentives to the remitters which the black market cannot offer. The foreign employed people will get tempted and attracted by those making them to decide to send the remittances through formal channels. But the incentives we offer should be unique, uncommon and special for those employed overseas. The other important element is they should have immediate impacts. Hence our policy package should comprise of short term and medium- term benefits accruing to those remitting funds through official channels.

Offering Rs 10 as an incentive to those who can chase behind Rs 40 sounds a little awkward and not practical. Instead, we will have to offer the foreign employed persons to import vehicles under concessional duties by making them to pay all charges in foreign exchange. If they have to fulfil certain eligibility requirements to qualify for this package they will readily do so. There are many other attractive areas of importance to those employed overseas which can be extended as effective incentives to entice them to remit their earnings through official sources.

The resolution of the crisis should not be an excuse for rejected politicians to cling on to positions of power. They should be exposed for their hypocrisy so as to prevent them from deceiving the public and they will not be able to come to power in this manner. If they are interested in developing the country, they should come up with policies attractive and benefical to people.

Tennekone Rusiripala

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Territorial mindset, a recipe for disaster!



By Chani Imbulgoda

I recall a documentary on animal life on a TV channel. Describing the behaviour of lions, a caretaker said, “These lions are from the Dehiwala zoo. They are vigilant of other lions entering their territory, if one crosses the boundary they fight to death. They won’t like other lions entering their territory.” The announcer remarked, “Just like humans!”

Exactly, just like us. In the animal kingdom the survival of the fittest is the norm and not crossing others’ territory is a rule of thumb. Since the beginning of human civilisation there have been tales of battles. The Trojan war, Alexander’s, Caesar’s, Napoleon’s wars degraded human values. Saddled with cynicism, hostility and jealousy, we humans, like beasts, are at war with ‘others’ who do not fit into our ideologies or our comfort zones. History is a storehouse of tales of human battles over territories in the guise of civilisation. So-called civilisation itself was won over battles. In the local context, the native ‘Yakkhas’ were massacred by Prince Vijaya to develop ‘Sinhale’. America, Canada, Australia inherit a dark history of looting territories of indigenous people in the name of civilisation. Portugal, Spain, Britain tasted the blood of their ‘colonial slaves’. Centuries later, we have not yet shed our primary animal instincts. We battle tooth and nail to protect our territories, our autonomy, values and interests all in the guise of civilised behaviour.

We rarely welcome outsiders into our territories. In the 40s and 50s, women were kept out of men’s territory. Late British Prime Minister aka Iron Lady, Margaret Thatcher, had to struggle many years to break through another of man’s territories, the Parliament. In the movie ‘Margaret Thatcher: The Long Walk to Finchley’, she sobs to her husband that contrary to what she previously believed, despite hard work she cannot win on merit and that dedication and passion are irrelevant. One-time Prime Minister, Edward Heath condemns Thatcher’s outspoken nature to force her out of politics. Heath says that the Parliament is akin to an orchestra made up of many musicians and Thatcher is a French horn more loud than appropriate, that threatens the orchestra’s harmony.

This is how men and also women of the same flock air their resentment towards outsiders, in their own words ‘intruders’ who are colourful and loud in action. Insult, indifference, suspicion, suppression, oppression are not uncommon experiences of pioneers in anything in history or at present. I once heard a senior Professor advising a young colleague attempting to change the system for the better, “Lady, look, do not swim upstream, people would not like it.” Yes, despite good intentions any novel act breaks the harmony…That is why the Buddha had many foes. That is why the notorious thief Barabbas was chosen by the crowd over Jesus.

I tried to uproot a tiny cinnamon sapling that grew through my interlock pavement blocks, failing which I crushed it. It made me realise that this is what happens, no matter how valuable you are. If you crop up in a place where you would not be accepted, every effort is made to root out, failing which, crush you, to ensure that you would not resurface. I suppose many of us had faced similar circumstances at work places, in politics or within social circles. Why does this happen, because of ego, envy, distrust or insecurity? Or because someone deemed a threat by another individual, a leader or a group enters their territory?

A pack of wolves has a leader; the protection of lions’ territory is the responsibility of the leader; the leader is the first to announce danger. No outsider can cross the boundary. We see certain lions, wolves and foxes as alphas. The mentality ‘I am the boss, I know everything’ blinds them. They live on ego, with a superiority complex, under the assumption that no one can challenge their power. If the newcomer is meek and sucks up to the leader, he or she survives and can slowly squirm their way into the pack.

I have heard parents complain about how difficult it is to enrol their kids into various sports clubs in schools. I have worked in private as well as public sector organisations, local and overseas. I have experienced antagonistic behaviour in these organisations. Driven by their insecurity, superior or inferior complexes, they would go to any lengths to harass the outsider and go to any extreme to protect his or her territory. They are myopic to the point of rejecting ideas foreign to them no matter how good they are, as they see ‘danger’ in ideas alien to them. Some group ideologies are thicker than blood. Certain professional groups rarely welcome females. They believe that women cannot meet challenges as men do and can be fiercely territorial. Many qualified and capable individuals are ostracised from organisations or industries or expelled from positions because of this territorial mindset.

A person with a territorial mindset is often overcome by thoughts of safeguarding or enhancing his or her power, control, influence and self-proclaimed status. These are primitive emotions. Taking ownership and defending what people believe belongs to them is a positive trait. But it is this mentality that subjects newcomers to agony when they grow too smart for their own good. They are stifled when the power of those with a territorial mindset is threatened. Many novel ideas and skills go to waste while some newcomers or ‘misfits’ are forced to leave their workplaces, others would continue the fight or be forced to conform.

We talk of harmony, reconciliation, tolerance and unity in diversity. Why cannot we synergize each other’s differences? A French horn would add glamour and at least amuse the audience. A garden consisting of a variety of flowers is more awe-inspiring than a garden of roses alone. Poet Khalil Gibran said that when a river enters the sea, the river is no more, it is diluted in salt water and one cannot trace the river in the sea, but the river grows larger and so does the sea. When we come out of our confining shells we are exposed to greater opportunities as well as benefits for both the newcomer and those already in that society.

(The writer holds a senior position in a state university and has an MBA from the Postgraduate Institute of Management [PIM], Sri Lanka and is currently reading for her PhD in Quality Assurance in the Higher Education Sector at PIM. She can be reached at

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Faulty decisions



Farmers protesting against the prevailing fertiliser shortage. (file photo)

The importation of chemical fertilizers, pesticides and herbicides was banned by a Cabinet Memorandum, dated April 27, 2021, to promote the use of organic fertilizers and natural pesticides. As a result, inorganic fertilisers such as urea, Triple superphosphate, Muriate of Potash and other agrochemicals (insecticides, fungicides etc.) became scarce. Agriculture Ministry in the meantime promoted manufacture of organic fertilisers (OF) but they were unable to get sufficient amounts of organic fertilisers manufactured. Most of what was available were of low quality with high C/N ratios. Agric. The Ministry is yet to produce natural insecticides, fungicides, etc. Thousands of farmers, all over the country, started to protest demanding that inorganic fertilisers and appropriate pesticides are made available, because they knew that these agrochemicals are necessary to get better yields from the crops they cultivate. The Soil Science Society of Sri Lanka, representing mostly the Soil Scientists and Agronomists of Sri Lanka, and the Sri Lanka Agricultural Economics Association, the professional body representing the agricultural economists of Sri Lanka predicted massive economic losses due to potential yield losses, with the implementation of the import ban on fertilisers and pesticides

In spite of all these protests, the Ministry of Agriculture (MOA) continued to ban import of inorganic fertilisers and pesticides, This caused immense economic and social problems to the people in general and to the farmers in particular. Farmers who cultivated Paddy in the current Maha complain of a reduction in the yields, and those who cultivated vegetables and other crops had to bear up a substantial decrease in quantity and quality of their produce. Production of maize decreased, resulting in a drop in poultry feed.

Reduction in local rice production made the government importing large quantities of rice from China and Burma. Food prices have increased causing thousands of people mainly the poor, going hungry resulting, health and social problems. Incomes of nearly two million farmers got reduced which affected their buying capacity resulting in numerous undesirable effects such as increasing unemployment, poverty and related issues. Tea small holders complained of reduction in quantity and quality of tea affecting their income, and also a decline on foreign exchange earnings which those in the Finance Ministry, Central Bank and other relevant institutions are frantically searching. All these are the result of the ban of inorganic fertilizers and pesticides, a faulty decision.

In August, the Cabinet removed the ban probably realising the utter foolishness of the decision to ban import of inorganic fertilisers and pesticides. However, it is too late as it takes time to import fertilisers and other agrochemical which were in short supply due to the ban.

The main reason given for banning importation of inorganic fertilisers was that it caused chronic kidney disease with unknown aetiology (CKDU). Several research studies have been conducted since the year 2000, when it was reported to occur in some parts of the country. The findings of these studies do not indicate that there is any relationship between CKDU and fertilisers. CKDU has not been reported in many countries such as China (393 kg/ha) India (175 kg/ha) and United Kingdom (245 kg/ha) where the amount of fertilisers used per hectare is much larger than that of Sri Lanka (138 kg/ha). Note- the fertiliser consumption data given are for 2018 and are based on values given by Food and Agriculture Organization.

The growth rate of Sri Lanka has declined after 2015 . It dwindled to 4.5% in 2016 and 3.1% in 2017 and in 2020 it was -3.6 %. The Trade Deficit ( the difference between exports and imports- TD) shows a decrease but at present it stands at 6.1 US$ billion. Exchange rate continued to increase from Rs. 111 to a US $ in 2010 to Rs, 186 in 2020. Currently it is around Rs. 200. According to Central Bank, External Debt in Sri Lanka increased to 51117.43 USD Million in the third quarter of 2021. These figures indicate that Sri Lanka is heading towards an unprecedented economic crisis. Hence, the government need to implement appropriate strategies to increase exports and reduce imports.

Sri Lanka annually imports food worth Rs. 300 billion. Most of the food imported such as sugar, milk food, lentils, onion, maize, etc., involving around Rs. 200 billion can be locally produced, thereby reducing expenditure on food imports. In view of the current shortage of foreign exchange, it has become extremely important to promote the production of food locally which hitherto have been imported. The plantation sector, which includes tea, rubber, coconut, cashew, sugarcane and minor exports crops such as cinnamon, cardamom, cocoa ,plays a very important role in the economy of the country earning a substantial amount of foreign exchange, Hence, it is important to implement strategies to increase the productivity of the food crop and plantation crops sectors. Inorganic fertilisers, synthetic pesticides and herbicides play a very important role in this regard.

However, the Government is emphasizing that organic fertilisers (OF) are used in the coming yala season as well . Those in the government who made this faulty decision need to realise that OF can never replace inorganic fertilisers and that it can only be supplementary. They need to give serious consideration to the bitter experience of the farmers who applied OF to their crops during the current Maha. The Government needs to understand this fact and reconsider this faulty decision if they want to increase local food and export crop production.

In the year 2022, there will be a severe shortage of food negatively affecting food security, unless the government implements a realistic and effective programme from the beginning of 2022 to solve this issue. Implementation of foolish decisions such as to replace inorganic fertilisers with organic fertilisers, as done in 2021 is not going to solve this problem. Among the 17, he Sustainable Development Goals (SDGs) adopted by the United Nations in 2015, several are related to increase crop production. The Sustainable Development Council of Sri Lanka has a responsibility for coordination, facilitation, monitoring, evaluation and reporting on the implementation of strategies related to development of the agriculture sector in Sri Lanka.

As indicated by Edgar Perera, a former Director of the Dept. of Agricultural Development (Ref. The Island of 17 Jan, 2022) the most appropriate thing to be done is to use OF as a soil re-conditioner along with chemical fertilisers, which will give the much-needed plant nutrients in adequate quantities, to achieve the required yield levels which will be sufficient to meet the national targets.

Dr. C. S. Weeraratna

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Have pity on Afghans



A camp sheltering displaced Afghans.

Is there no end to the torment inflicted on the ordinary people of Afghanistan, by the United States?

Having being defeated militarily, and decamping ingloriously within 24 hours, like thieves in the night, the USA now inflicts starvation and destruction on Afghanistan from a “safe distance”.! Money that rightly belonging to the Afghan State is being withheld by the American dominant Financial system. Let this be a lesson to us.

A report in The Island of 17 January revealed that Afghan families were selling children and their organs in order to survive.

After all, what crime did the Afghans commit in resisting an invading foreign power? Sri Lanka should seek ways of offering direct Aid at least in small ways, to Afghanistan, whether the Americans approve or not.


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