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Domestic Debt Restructuring – An Alternate View

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by Romesh Bandaranaike, Ph.D.

There have been substantial and wide spread criticisms of the recently instituted Domestic Debt Restructuring (DDR) scheme carried out by Central Bank of Sri Lanka (CBSL), to reduce the Sri Lanka Government’s requirements for funding. In this article I argue that the scheme, as structured and carried out by CBSL, is appropriate, given the ground realities in the country, and that the critics have ignored a number of factors which forced CBSL to design the scheme as it did. I then suggest additional steps the Government could take to further improve its financial position in connection with past Bond issues.

The DDR Scheme

Faced with massive shortfalls in revenue, the Government recently carried out a “restructuring” of the debts it owed on Sri Lanka Rupee denominated Treasury Bills and Bonds in an effort to substantially improve Government finances, including the funds needed to service these Bills/Bonds. The two key elements of the DDR are a) Converting all Treasury Bills presently owned by CBSL to longer term Treasury Bonds, thereby substantially delaying the payment dates on these Bills; and b) Effectively “forcing” the Employees Provident Fund (EPF) and other superannuation funds to exchange most of the Bonds they hold for 12 year Bonds with somewhat lower interest payments.

They did this by threatening to increase the tax rates that EPF pays on its annual income to 30% from the present 14%, if they did not accept the Bond exchange. Since such an increase was financially worse for EPF compared with the Bond exchange, EPF opted for the latter.

CBSL estimates that the scheme would reduce the Gross Financing Needs (GFN) of the Government by 1.5%, 1% by the CBSL Bill-Bond exchange and 0.5% by the EPF Bond exchange.

The Criticisms

The principal criticisms of the DDR, from the public, Trade Unions, Economic Think Tanks, and numerous “Experts,” is that the entire burden of the DDR is being placed on the backs of the retirement savings of “poor workers” who are the members of EPF.

CBSL has justified the proposed increase in the tax rates for EPF and other superannuation funds to 30% from the present 14% on the basis that the banks have to pay the higher tax rate of 30% plus VAT. Dr. Wijewardena, a former CBSL Deputy Governor, has written several articles criticizing CBSL for not presenting the correct picture in this regard and not disclosing full information on the impacts of the restructuring on EPF members’ returns. Dr. W’s main argument is that, in the case of the banks, the tax rate applies to “net interest”, whereas, in the case of the EPF, it applies to “gross interest.” For the banks, net interest is interest earnings on its loans less the interest it pays to depositors.

In the case of EPF, Dr. W points out that EPF is not allowed to subtract the interest it pays to EPF account holders to determine its income and tax liability, and that CBSL comparison of bank and EPF tax rates is therefore misleading. In a subsequent article by Dr. W, he criticizes CBSL/EPF for not fully disclosing the cost to EPF holders of accepting the proposed DDR compared with an increase in EPF’s tax rate to 30% and the justification for accepting the Bond exchange rather than the tax increase to 30%. He goes on to add that CBSL has a conflict of interest as both the developer of Government policy and as the administrator of EPF.

My Responses to the Criticisms

The criticism that the entire burden of the DDR is on the backs of workers is factually incorrect. As stated above, two-third of the 1.5% reduction in GFN (1%) is being achieved by exchanging the Treasury Bills held by CBSL for long term Bonds. Only 0.5% of the reduction is from the exchange of Bonds held by the EPF and other superannuation funds. In other words, 67% of the restructuring cost is borne by CBSL (in effect by all citizens), while only 33% is borne by EPF account holders. Furthermore, only workers in the formal private sector contribute to the EPF/ETF, while workers in the informal private sector (e.g. farmers, fishermen, small transporters, traders and construction workers) and Government employees do not.

As a result, only about 25-30% of the workers in the country have EPF accounts. Therefore, 70-75% of workers in the country will not suffer any burden due to the EPF bond restructuring. Finally, the workers with EPF accounts also include middle and senior management of companies who cannot be called “poor workers” as referred to in the various criticisms of the present DDR scheme. It is true that this category may only be a very small percentage of those holding EPF accounts. However, their account balances are likely to be very much higher than other EPF members and the impact of the restructuring on them will be proportional to these balances.

It would be ideal if the EPF could release statistics in this regard which will allow an assessment of this element. For example, the fraction of the total EPF funds held by those with EPF balances of over Rs 5 million (say), since such persons cannot be classified as “poor workers.” Workers who have balances in EPF/ETF, built up as a result of deductions from their salaries and additional higher contributions from their employers, at least have a retirement fund they can turn to, even if it is somewhat less because of the DDR. It could conceivably be argued that the 70-75% of workers who do not have such balances, mostly working in the informal sector, are worse off or poorer than those with EPF balances. This would be a justification for placing the burden of part of the DDR on EPF account holders rather than on other, even “poorer”, workers.

In response to Dr. W’s criticisms that EPF and bank tax rates are not comparable the way CBSL has done; each year, EPF determines a percentage it will pay/accrue to the account of each EPF account holder based on the earnings by the EPF that year. This percentage is not an interest similar to that paid by banks to its depositors and is not a cost that is deductible by EPF to calculate its tax liability each year. It is simply a percentage decided by the EPF administrators to allocate the profits after tax earned by the EPF during the year. Calling this percentage an “interest” is a misnomer. Account holders in EPF are akin to shareholders in banks and not depositors.

The amounts credited by EPF to a member’s account each year, based on EPF’s earnings during the year, is not a cost incurred by EPF in generating these earnings. It is something closer to a dividend paid by a bank to its shareholders in the form of additional shares. If EPF is allowed to determine its tax liabilities by subtracting these accrued amounts, banks should be able to deduct dividend costs in determining their tax liabilities. Dr. W’s criticism of the non-comparability of bank and EPF tax rates cannot be sustained.

Dr. W uses CBSL/EPF’s own numbers on the differences in returns under the two scenarios EPF has been offered and simply multiplies it by the total EPF Bond holding value to arrive at the cost to EPF of accepting the Bond exchange. This is something that could have readily been done by anyone and Dr. W’s implication that CBSL/EPF is hiding/not fully disclosing something in its statement cannot be sustained.

The CBSL/EPF analysis is simply to show that the return to EPF is better under the scenario where it accepts the DDR option, compared to rejecting the DDR option and being subject to a 30% tax rate. This information is more than sufficient for EPF to recommend to its Board that it should accept the DDR. Dr. W than goes into the past history of taxation rates applicable to the EPF and points out that as originally envisaged EPF earnings were to be tax exempt.

He shows calculations of the losses to EPF holders of the present DDR, compared with a situation if EPF earnings were tax exempt. This is a straw man put up by Dr. W to be knocked down as part of his criticism of CBSL/EPF. It is the tax rates that are applicable to EPF today, before the DDR, that are relevant and it would have been nonsensical for CBSL to show calculations based on what if the tax rates were those that existed many years ago.

With respect to the criticism that CBSL has a conflict of interest in both being the administrator of EPF and the policy advisor recommending the DDR, I do not see any conflict. CBSL, as advisor to the Government, has made the DDR proposal which allows EPF to choose between two options, accept the proposed DDR Bond exchange or reject it and be subject to a 30% tax rate. As the administrator of the EPF, CBSL has simply analysed these two options and clearly shown that the EPF is better off accepting the Bond exchange compared with rejecting it and being subject to a 30% tax rate.

Other Relevant Issues

It is telling that none of those criticizing the present process have offered any viable alternative DDR arrangement to achieve the same objectives as the present exercise. In saying this, I am ignoring the suggestions by some parties who say there would be no need for the exercise if “The money stolen by the Rajapaksa’s is recovered” or “The large corruption in Government is reduced,” and so on. Such actions, even if they were possible, are not alternatives, because they cannot be achieved in the short or medium term, which is one of the key objectives of the DDR. Verite Research did, some time ago before the announcement of the present DDR, present some analysis on a possible DDR which included sharing the cut across all Bond holders, but, for the reasons I refer to below, this is not a viable arrangement.

CBSL in its original presentation to the Cabinet, and subsequently to the public, argued that it would be prudent to exclude the Banks from the DDR exercise, because these institutions were already under stress as a result of COVID related business failures and because the banks would also be taking a hit from the future restructuring of USD Bonds, some of which are held by them.

CBSL was of the view that such an exclusion was essential to ensure financial system stability. None of those criticizing the present DDR arrangements have objected to this and I concur with that view. Even if the banks are able to bear the burden of some restructuring of the domestic bonds they hold, bank stability is also dependent on public perception, and excluding them from the DDR has certainly had a positive impact on such perception.

There are two unstated conditions applicable to the DDR exercise which have received no mention in the ongoing discussions. First, the DDR should be concluded in a short time frame since it will be a pre-condition to the restructuring of foreign currency debt. Second, it must be carried out in a legally valid manner. A Government Bond is a legal contract between the Government and the holder of the Bond.

The Government is legally obligated to pay the interest coupon and the principal of the Bond on specified dates according to this legal contract. The Government has no legal authority to change the conditions of this Bond. It could, of course, pass a new law in Parliament giving itself the authority to make changes to existing Bonds. In doing so, however, if all Bond holders are not treated equally (in particular, if the bank holdings of Bonds are excluded), there are bound to be legal challenges in the Courts to any such changes, and the changes may well be struck down by the Courts.

Even if such changes are not struck down, this process can take considerable time to be determined and would not be achievable in the time frame required for the DDR process to be concluded as discussed previously. The present DDR has finessed the issue of different treatments of Bond holders by making it “voluntary”, albeit by holding a gun to the head of the EPF and superannuation funds in the manner detailed earlier. This is draconian, but effective.

As per CBSL statistics presented in connection with the original DDR proposal, the total outstanding amount of Treasury Bonds at that time was Rs. 8,700 billion. Of this amount Rs 1,644 billion is held by “Others”, after excluding the banks and EPF and superannuation funds being subject to the DDR. Even if the banks are excluded from the DDR to ensure “financial system stability” reasons mentioned previously, it would have been ideal if the “Others” holding the Rs 1,644 billion in outstanding Bonds were subject to some “restructuring”, in the form of cuts in coupon rates and/or face value, or an extension of the tenor of these Bonds.

If this was done, the benefit of these cuts could have been passed on in the form of a reduction in the burden passed onto EPF and superannuation funds. However, such an unequal treatment where some Bond holders (the banks) are excluded, even if the necessary legislation is passed, would certainly have resulted in legal challenges which would, at the least, have delayed the process as I have pointed out earlier, or even been found unconstitutional by the Courts.

Further Actions in Respect of Bonds

Very high yield rate Bonds (over 20% yield) were issued by the Government during the period prior to the announcement of the DDR (April 8, 2022 to March 13, 2023) as a consequence of severe financial shortages faced by the Government. Bidders for these Bonds added a premium to the bid yield rates, expecting a future restructuring of these Bonds as part of the DDR they knew was coming. By being excluded from the DDR, these Bond holders have enjoyed a “windfall profit.” It is not possible to specifically target these Bonds for a cut in coupons or face value, because many of the original holders may have sold some of these Bonds and have already earned the windfall profits.

[The buyers of the Bonds would only receive a “normal” profit in the form of coupon payments and final redemption.] Furthermore, in the case of individual Bond holders, their windfall profit would be in the form of a capital gain, which only attracts a tax rate of 10%. Corporates/ banks in the same situation would be paying a tax of 30% on their capital gains. I propose that the Government should “claw back” some of these profits by imposing a special windfall tax rate of 50% applicable to all profits derived from these Bonds. If the original purchaser has not sold the Bonds, the coupon interest and the capital gains on final face value redemption should also be taxed at 50%.

There would be some complications in structuring this tax, since some high yield Bonds may have changed hands within the period that high yield Bonds were still being issued, which means that the initial purchaser would only have made a small capital gain and the next buyer would still be enjoying the high coupon rate or subsequently selling the Bond for a large capital gain. A proper structuring of the 50% windfall tax can ensure that the taxes fall on those making the windfall profits. A tax of the type proposed will clearly be borne by the wealthy, who would have been the purchasers of these Bonds, and go some way towards balancing the burden imposed on less wealthy parties as a result of the DDR.

To place this suggestion in perspective, between April 8, 2022 and March 13, 2023 all Bonds issued by CBSL had yield rates in excess of 20%. The total face value of such Bonds was Rs 1,233 billion. The weighted average yield on these Bonds was 27.89% and the weighted average coupons in these Bonds was 19.09%. The latest four-year Bond yield rate is approximately 15% and this is likely to drop further.

As a result, any seller today of an average high yield Bond would make a significant capital gain on the sale and would need to pay substantial taxes to the Government at the proposed 50% windfall tax rate. As per CBSL statistics in the original CBSL presentation to the Cabinet, approximately 63.5% of all Bonds at that time were held by the banks and the “Other” category. If this percentage is also applicable to the high yield Bonds referred to above, the banks and the “Other” category would be holding Rs 777 billion of these Bonds.

Advocata has recently analysed EPF’s Bond portfolio prior to the DDR Bond exchange and concluded that EPF’s share of high yield Bonds was proportionately much less than for other Bond holders. Therefore, banks and “Others” would probably be holding even more than the above mentioned Rs 777 billion in such high yield Bonds which, in turn, will mean that a 50% windfall tax on the profits from these Bonds will result in substantial tax revenues for the Government.

An aside at this point is that for some unclear reason there is no withholding tax (WHT) applied to the interest earnings on Bonds as in the case of interest earnings from deposits in banks and finance companies. I have made inquiries as to why this is so from several senior Government officials and have not received any explanation for the practice.

It may well be that some Bond holders do not even have income tax files and that they are evading all taxes payable on Bond interest. Since Bond holders are all likely to be at the highest tax bracket given the minimum sizes of Bond investments, I suggest that a WHT of 30% be applied to all Bond interest payments. Holders are free to file tax returns and seek a refund if they have been taxed in excess of their liability due to such a WHT. I have been told there is some complication in applying WHT to Bond interest held by foreigners. If that is indeed the case, foreign holdings of Bonds could be excluded.

Conclusions

The economy of the country is in dire straits as a result primarily of bad/foolish policies of recent past Governments (including those by CBSL under its previous two Governors and Monetary Boards at that time) coupled with the endemic corruption inherent in the system. The present Governor of CBSL and his professional colleagues are facing very difficult conditions and are striving to get the country’s finances back on track.

I can understand trade unions, workers and other similar entities objecting to the implementation of policies which directly impact them, irrespective of whether such policies are needed to solve the country’s issues. But, why is it that so called “experts” and think tanks do not recognize the ground realities of what is practically achievable and support the efforts of CBSL rather than criticizing these efforts in print and at discussion forums?

(The author is an economist with wide experience in policy formulation and implementation in the Ministry of Finance and has worked at CEO level in both public and private sectors.



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Humanitarian leadership in a time of war

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Sri Lanka Navy rescuing survivors of the US torpedo attack on IRIS Dena last week

There has been a rare consensus of opinion in the country that the government’s humanitarian response to the sinking of Iran’s naval ship IRIS Dena was the correct one. The support has spanned the party political spectrum and different sections of society. Social media commentary, statements by political parties and discussion in mainstream media have all largely taken the position that Sri Lanka acted in accordance with humanitarian principles and international law. In a period when public debate in Sri Lanka is often sharply divided, the sense of agreement on this issue is noteworthy and reflects positively on the ethos and culture of a society that cares for those in distress. A similar phenomenon was to be witnessed in the rallying of people of all ethnicities and backgrounds to help those affected by the Ditwah Cyclone in December last year.

The events that led to this situation unfolded with dramatic speed. In the early hours before sunrise the Dina made a distress call. The ship was one of three Iranian naval vessels that had taken part in a naval gathering organised by India in which more than 70 countries had participated, including Sri Lanka. Naval gatherings of this nature are intended to foster professional exchange, confidence building and goodwill between navies. They are also governed by strict protocols regarding armaments and conduct.

When the exhibition ended open war between the United States and Iran had not yet broken out. The three Iranian ships that participated in the exhibition left the Indian port and headed into international waters on their journey back home. Under the protocol governing such gatherings ships may not be equipped with offensive armaments. This left them particularly vulnerable once the regional situation changed dramatically, though the US Indo-Pacific Command insists the ship was armed. The sudden outbreak of war between the United States and Iran would have alerted the Iranian ships that they were sailing into danger. According to reports, they sought safe harbour and requested docking in Sri Lanka’s ports but before the Sri Lankan government could respond the Dena was fatally hit by a torpedo.

International Law

The sinking of the Dena occurred just outside Sri Lanka’s territorial waters. Whatever decision the Sri Lankan government made at this time was bound to be fraught with consequence. The war that is currently being fought in the Middle East is a no-holds-barred one in which more than 15 countries have come under attack. Now the sinking of the Dena so close to Sri Lanka’s maritime boundary has meant that the war has come to the very shores of the country. In times of war emotions run high on all sides and perceptions of friend and enemy can easily become distorted. Parties involved in the conflict tend to gravitate to the position that “those who are not with us are against us.” Such a mindset leaves little room for neutrality or humanitarian discretion.

In such situations countries that are not directly involved in the conflict may wish to remain outside it by avoiding engagement. Foreign Minister Vijitha Herath informed the international media that Sri Lanka’s response to the present crisis was rooted in humanitarian principles, international law and the United Nations. The Convention on the Law of the Sea (UNCLOS) which was adopted 1982 provides the legal framework governing maritime conduct and obliges states to render assistance to persons in distress at sea. In terms of UNCLOS, countries are required to render help to anyone facing danger in maritime waters regardless of nationality or the circumstances that led to the emergency. Sri Lanka’s response to the distress call therefore reflects both humanitarianism and adherence to international law.

Within a short period of receiving the distress message from the stricken Iranian warship the Sri Lankan government sent its navy to the rescue. They rescued more than thirty Iranian sailors who had survived the attack and were struggling in the water. The rescue operation also brought to Sri Lanka the bodies of those who had perished when their ship sank. The scale of the humanitarian challenge is significant. Sri Lanka now has custody of more than eighty bodies of sailors who lost their lives in the sinking of the Dena. In addition, a second Iranian naval ship IRINS Bushehr with more than two hundred sailors has come under Sri Lanka’s protection. The government therefore finds itself responsible for survivors but also for the dignified treatment of the bodies of the dead Iranian sailors.

Sri Lanka’s decision to render aid based on humanitarian principles, not political allegiance, reinforces the importance of a rules-based international order for all countries. Reliance on international law is particularly important for small countries like Sri Lanka that lack the power to defend themselves against larger actors. For such countries a rules-based international order provides at least a measure of protection by ensuring that all states operate within a framework of agreed norms. Sri Lanka itself has played a notable role in promoting such norms. In 1971 the United Nations General Assembly adopted a resolution declaring the Indian Ocean a Zone of Peace. The initiative for this proposal came from Sri Lanka, which argued that the Indian Ocean should be protected from great power rivalry and militarisation.

Moral Beacon

Unfortunately, the current global climate suggests that the rules-based order is barely operative. Conflicts in different parts of the world have increasingly shown disregard for the norms and institutions that were created in the aftermath of the Second World War to regulate international behaviour. In such circumstances it becomes even more important for smaller countries to demonstrate their commitment to international law and to convert the bigger countries to adopt more humane and universal thinking. The humanitarian response to the Iranian sailors therefore needs to be seen in this wider context. By acting swiftly to rescue those in distress and by affirming that its actions are guided by international law, Sri Lanka has enhanced its reputation as a small country that values peace, humane values, cooperation and the rule of law. It would be a relief to the Sri Lankan government that earlier communications that the US government was urging Sri Lanka not to repatriate the Iranian sailors has been modified to the US publicly acknowledging the applicability of international law to what Sri Lanka does.

The country’s own experience of internal conflict has shaped public consciousness in important ways. Sri Lanka endured a violent internal war that lasted nearly three decades. During that period questions relating to the treatment of combatants, the protection of civilians, missing persons and accountability became central issues. As a result, Sri Lankans today are familiar with the provisions of international law that deal with war crimes, the treatment of wounded or disabled combatants and the fate of those who go missing in conflict. The country continues to host an international presence in the form of UN agencies and the ICRC that work with the government on humanitarian and post conflict issues. The government needs to apply the same principled commitment of humanitarianism and the rule of law to the unresolved issues from Sri Lanka’s own civil war, including accountability and reconciliation.

By affirming humanitarian principles and acting accordingly towards the Iranian sailors and their ship Sri Lanka has become a moral beacon for peace and goodwill in a world that often appears to be moving in the opposite direction. At a time when geopolitical rivalries are intensifying and humanitarian norms are frequently ignored, such actions carry symbolic significance. The credibility of Sri Lanka’s moral stance abroad will be further enhanced by its ability to uphold similar principles at home. Sri Lanka continues to grapple with unresolved issues arising from its own internal conflict including questions of accountability, justice, reparations and reconciliation. It has a duty not only to its own citizens, but also to suffering humanity everywhere. Addressing its own internal issues sincerely will strengthen Sri Lanka’s moral standing in the international community and help it to be a force for a new and better world.

BY Jehan Perera

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Language: The symbolic expression of thought

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It was Henry Sweet, the English phonetician and language scholar, who said, “Language may be defined as the expression of thought by means of speech sounds“. In today’s context, where language extends beyond spoken sounds to written text, and even into signs, it is best to generalise more and express that language is the “symbolic expression of thought“. The opposite is also true: without the ability to think, there will not be a proper development of the ability to express in a language, as seen in individuals with intellectual disability.

Viewing language as the symbolic expression of thought is a philosophical way to look at early childhood education. It suggests that language is not just about learning words; it is about a child learning that one thing, be it a sound, a scribble, or a gesture, can represent something else, such as an object, a feeling, or an idea. It facilitates the ever-so-important understanding of the given occurrence rather than committing it purely to memory. In the world of a 0–5-year-old, this “symbolic leap” of understanding is the single most important cognitive milestone.

Of course, learning a language or even more than one language is absolutely crucial for education. Here is how that viewpoint fits into early life education:

1. From Concrete to Abstract

Infants live in a “concrete” world: if they cannot see it or touch it, it does not exist. Early education helps them to move toward symbolic thought. When a toddler realises that the sound “ball” stands for that round, bouncy thing in the corner, they have decoded a symbol. Teachers and parents need to facilitate this by connecting physical objects to labels constantly. This is why “Show and Tell” is a staple of early education, as it gently compels the child to use symbols, words or actions to describe a tangible object to others, who might not even see it clearly.

2. The Multi-Modal Nature of Symbols

Because language is “symbolic,” it does not matter how exactly it is expressed. The human brain treats spoken words, written text, and sign language with similar neural machinery.

Many educators advocate the use of “Baby Signs” (simple gestures) before a child can speak. This is powerful because it proves the child has the thought (e.g., “I am hungry”) and can use a symbol like putting the hand to the mouth, before their vocal cords are physically ready to produce the word denoting hunger.

Writing is the most abstract symbol of all: it is a squiggle written on a page, representing a sound, which represents an idea or a thought. Early childhood education prepares children for this by encouraging “emergent writing” (scribbling), even where a child proudly points to a messy circle that the child has drawn and says, “This says ‘I love Mommy’.”

3. Symbolic Play (The Dress Rehearsal)

As recognised in many quarters, play is where this theory comes to life. Between ages 2 and 3, children enter the Symbolic Play stage. Often, there is object substitution, as when a child picks up a banana and holds it to his or her ear like a telephone. In effect, this is a massive intellectual achievement. The child is mentally “decoupling” the object from its physical reality and assigning it a symbolic meaning. In early education, we need to encourage this because if a child can use a block as a “car,” they are developing the mental flexibility required to later understand that the letter “C” stands for the sound of “K” as well.

4. Language as a Tool for “Internal Thought”

Perhaps the most fascinating fit is the work of psychologist Lev Vygotsky, who argued that language eventually turns inward to become private speech. Have you ever seen a 4-year-old talking to himself or herself while building a toy tower? “No, the big one goes here….. the red one goes here…. steady… there.” That is a form of self-regulation. Educators encourage this “thinking out loudly.” It is the way children use the symbol system of language to organise their own thoughts and solve problems. Eventually, this speech becomes silent as “inner thought.”

Finally, there is the charming thought of the feasibility of conversing with very young children in two or even three or more languages. In Sri Lanka, the three main languages are Sinhala, Tamil and English. There are questions asked as to whether it is OK to talk to little ones in all three languages or even in two, so that they would learn?

According to scientific authorities, the short, clear and unequivocal answer to that query is that not only is it “OK”, it is also a significant cognitive gift to a child.

In a trilingual environment like Sri Lanka, many parents worry that multiple languages will “confuse” a child or cause a “speech delay.” However, modern neuroscience has debunked these myths. The infant brain is perfectly capable of building three or even more separate “lexicons” (vocabularies) simultaneously.

Here is how the “symbolic expression of thought” works in a multilingual brain and how we can manage it effectively.

a). The “Multiple Labels” Phenomenon

In a monolingual home, a child learns one symbol for an object. For example, take the word “Apple.” In a Sri Lankan trilingual home, the child learns three symbols for that same thought:

* Apple (English)

* Apal

(Sinhala – ඇපල්)

* Appil

(Tamil – ஆப்பிள்)

Because the trilingual child learns that one “thought” can be expressed by multiple “symbols,” the child’s brain becomes more flexible. This is why bilingual and trilingual children often score higher on tasks involving “executive function”, meaning the ability to switch focus and solve complex problems.

b). Is there a “Delay”?

(The Common Myth)

One might notice that a child in a trilingual home may start to speak slightly later than a monolingual peer, or they might have a smaller vocabulary in each language at age two.

However, if one adds up the total number of words they know across all three languages, they are usually ahead of monolingual children. By age five, they typically catch up in all languages and possess a much more “plastic” and adaptable brain.

c). Strategies for Success: How to Do It?

To help the child’s brain organise these three symbol systems, it helps to have some “consistency.” Here are the two most effective methods:

* One Person, One Language (OPOL), the so-called “gold standard” for multilingual families.

Amma

speaks only Sinhala, while the Father speaks only English, and the Grandparents or Nanny speak only Tamil. The child learns to associate a specific language with a specific person. Their brain creates a “map”: “When I talk to Amma, I use these sounds; when I talk to Thaththa, I use those,” etc.

*

Situational/Contextual Learning. If the parents speak all three, one could divide languages by “environment”: English at the dinner table, Sinhala during play and bath time and Tamil when visiting relatives or at the market.

These, of course, need NOT be very rigid rules, but general guidance, applied judiciously and ever-so-kindly.

d). “Code-Mixing” is Normal

We need not be alarmed if a 3-year-old says something like: “Ammi, I want that palam (fruit).” This is called Code-Mixing. It is NOT a sign of confusion; it is a sign of efficiency. The child’s brain is searching for the quickest way to express a thought and grabs the most “available” word from their three language cupboards. As they get older, perhaps around age 4 or 5, they will naturally learn to separate them perfectly.

e). The “Sri Lankan Advantage”

Growing up trilingual in Sri Lanka provides a massive social and cognitive advantage.

For a start, there will be Cultural Empathy. Language actually carries culture. A child who speaks Sinhala, Tamil, and English can navigate all social spheres of the country quite effortlessly.

In addition, there are the benefits of a Phonetic Range. Sinhala and Tamil have many sounds that do not exist in English (and even vice versa). Learning these as a child wires the ears to hear and reproduce almost any human sound, making it much easier to learn more languages (like French or Japanese) later in life.

As an abiding thought, it is the considered opinion of the author that a trilingual Sri Lanka will go a long way towards the goals and display of racial harmony, respect for different ethnic groups, and unrivalled national coordination in our beautiful Motherland. Then it would become a utopian heaven, where all people, as just Sri Lankans, can live in admirable concordant synchrony, rather than as splintered clusters divided by ethnicity, language and culture.

A Helpful Summary Checklist for Parents

* Do Not Drop a Language:

If you stop speaking Tamil because you are worried about English, the child loses that “neural real estate.” Keep all three languages going.

* High-Quality Input:

Do not just use “commands” (Eat! Sleep!). Use the Parentese and Serve and Return methods (mentioned in an earlier article) in all the languages.

* Employ Patience:

If the little one mixes up some words, just model the right words and gently correct the sentence and present it to the child like a suggestion, without scolding or finding fault with him or her. The child will then learn effortlessly and without resentment or shame.

by Dr b. J. C. Perera

MBBS(Cey), DCH(Cey), DCH(Eng), MD(Paediatrics), MRCP(UK), FRCP(Edin), FRCP(Lond), FRCPCH(UK), FSLCPaed, FCCP, Hony.
FRCPCH(UK), Hony. FCGP(SL)

Specialist Consultant Paediatrician and Honorary Senior Fellow, Postgraduate Institute of Medicine, University of Colombo, Sri Lanka

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SIMPSON’S … set to carve a distinct sonic identity

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SIMPSON’S: Quite active in the scene here

It is, indeed, encouraging to see our local artistes working on new formats, where their music is concerned.

Variety is the spice of life, they say, and I do agree, especially when it comes to music.

Blending modern synth textures, ambient layers and soulful undertones, the group SIMPSON’S is set to carve a distinct sonic identity within Sri Lanka’s contemporary music landscape.

Their vision, they say, is not simply to produce songs, but to create emotional atmospheres – experiences that elevate, energise and resonate, both locally and beyond.

This four-piece outfit came into the scene, less than two years ago, and they are already making waves with their debut single ‘Balaporottuwak’ (Hope).

The song, I’m told, marks the beginning of a new sound, and at the forefront of ‘Balaporottuwak’ is the group’s lead vocalist and guitarist, Ryo Hera, who brings a rich cultural heritage to the stage.

As a professional Kandyan Wes dancer, Ryo’s commanding presence and textured vocals bring a distinct energy to the band’s sound.

‘Balaporottuwak’

Ryo Hera: Vocals for ‘Balaporottuwak’

is more than just a debut single – it’s a declaration of intent. The band is merging tradition and modernity, power and subtlety, to create a sound that’s both authentic and innovative.

With this song, SIMPSON’S is inviting listeners to join them on an evolving musical journey, one that’s built on vision and creativity.

The recording process for ‘Balaporottuwak’ was organic and instinctive, with the band shaping the song through live studio sessions.

Dileepa Liyanage, the keyboardist and composer, is the principal sound mind behind SIMPSON’S.

With experience spanning background scores, commercial projects, cinematic themes and jingles across multiple genres, Dileepa brings structural finesse and atmospheric depth to the band’s arrangements.

He described the recording process of ‘Balaporottuwak’ as organic and instinctive: “When Ryo Hera opens his voice, it becomes effortless to shape it into any musical colour. The tone naturally adapts.”

The band’s lineup includes Buddhima Chalanu on bass, and Savidya Yasaru on drums, and, together, they create a sound that’s not just a reflection of their individual talents, but a collective vision.

Dileepa Liyanage: Brings
structural finesse and
atmospheric depth to the
band’s arrangements

What sets SIMPSON’S apart is their decision to keep the production in-house – mixing and mastering the song themselves. This allows them to maintain their unique sound and artistic autonomy.

“We work as a family and each member is given the freedom to work out his music on the instruments he handles and then, in the studio, we put everything together,” said Dileepa, adding that their goal is to release an album, made up of Sinhala and English songs.

Steering this creative core is manager Mangala Samarajeewa, whose early career included managing various international artistes. His guidance has positioned SIMPSON’S not merely as a performing unit, but as a carefully envisioned project – one aimed at expanding Sri Lanka’s contemporary music vocabulary.

SIMPSON’S are quite active in the scene here, performing, on a regular basis, at popular venues in Colombo, and down south, as well.

They are also seen, and heard, on Spotify, TikTok, Apple Music, iTunes, and Deezer.

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