Features
Economic crisis and possible way out
By Dr. Wijeyadasa Rajapakshe,
President’s Counsel, Member of Parliament
Sri Lanka has been positioned in the third place of the weekly global inflation dashboard by John Hopkins University (US), above Turkey, Sudan and Venezuela as at 21st April 2022. As measured by the US university, inflation is as high as 119% a year. It surged to 30% in April. As for food items and medicine, the inflation is over 50%. Our total public debt has increased up to 100 % of the GDP whereas it remained as 25% in the year 1960. Our per capita income was USD 200 in 1960, but now it has reached closer to middle income country. Devaluation has caused an abysmal gap between the rupee and dollar.
Sri Lankan debt was 86.8% of the GDP in 2019, but now it has reached approximately 109% (2021). External debt has increased to US $ 51 billion. External debt as of export earning has risen to 350% in 2019. During the last two years, the value of imports has been 100% more than that of exports. Now, we are facing a massive debt and fiscal crisis and experiencing diminished liquidity and insolvency. In March, the rupee depreciated by over 40%. Foreign exchange reserves virtually remain at zero. Projected debt service stands at USD 8 billion per annum from 2022 -2026. The economy cannot take this kind of pressure.
The Sri Lankan economic crisis is not limited to the economic front; it began as a result of a political crisis, which had been simmering for the last one and a half decade. The outlook shows that the monetary authorities are struggling to stabilise the economy without much support from the citizenry due the mounting anger against corrupt rulers and officials of the Central Bank and the Treasury. A family oligarchy has made the public resentful. It is important to identify the reasons which led to the current economic crisis:
1. Sri Lanka’s foreign debt has risen up to USD 51 billion including USD 3.38 billion from China and it amounts to 10% of total debt liabilities. The amount spent by Chinese lenders on BRI (Belt and Road Initiative) projects is USD 11 billion. Borrowing at commercial lending rate from China for projects is not sustainable as most of the projects are white elephants, e. g. the Hambantota Port, the Mattala Airport, and the Lotus Tower.
2. Shady deals of the government in obtaining foreign loans for projects such as expressways and awarding contracts.
3.Imprudent and immature monetary policy adopted by the Governors of the Central Bank during the last 15 years and most of the transactions are ostensibly corrupt and disadvantageous to the country, e. g. sovereign bond issues, hedging deal, the purchase of Greek bonds, etc. Maladministration and dishonest conduct of the Central Bank have led to devaluation of the rupee. The appointment of unqualified henchmen as Governors was the reason.
4. Tax concessions to high-income earners in 2020 amounting to Rs. 600-650 billion per annum at a loss of revenue equivalent to USD 7 billion during the last two years at the then exchange rates.
5. The ill-conceived, irresponsible decision to ban agrochemicals has caused an approximately 40-50% drop in the national agricultural output, especially paddy harvest.
6. Appointment of mediocre MPs as minister to handle vital sectors such as Finance, Power and Energy, Education, Health, Highway, etc.
Similarly, appointments of unqualified and dishonest henchmen to the institutions vital to the economic development had aggravated the present crisis.
7. Failure of monetary authorities to seek IMF assistance immediately after realising that the economy was heading for crisis in early 2021.
8.Excessive money printing
9.Disorganised and unproductive public service, which has become a burden on the economy
The economy has to be revived to meet the basic needs of the populace. The government has sought assistance from friendly countries, mainly India and China, but geo-political conflicts have become obstacles to a certain extent although substantial assistance has been given. Now, the government has finally sought the assistance of the IMF, which has already supported Sri Lanka 16 times earlier.
Although we have secured IMF assistance and many other monetary agencies, our agricultural and industrial sectors have been gradually dwarfed by the ever-expanding service sector. The contribution of different sectors to the GDP is as follows:
Agriculture 8.3%
Industries 26.2%
Services 59.6%
Due to its heavy dependence on the service sector, the economy is susceptible to adverse global situations.
Corruption prevalent among politicians and bureaucrats has plunged the country into chaos. Reforms and strategies that we are in need of urgently are short-term and long-term.
Short-term measures
1.Political stability is the key factor to resolve both the prevailing social uprising and the economic crisis. Fiscal discipline. Unless the government can convince the general public that it is free of corruption and engages in transactions in a transparent manner, it may not be able to achieve political stability.
2. Increase of interest rates. (Already done)
3. The immediate steps to have a moratorium on debt, and a debt restructuring programme with the assistance of the IMF shall be the prioritised task of the authorities. International Sovereign Bonds is the major share of debt which amounts to 36% of the total and ADB multilateral debt is the second highest, amounting to 14%.
Management of debt liabilities both foreign and domestic shall include the following:
a) Moratorium on debt service (Already done).
b) Renegotiate and restructure loan and interest components.
c) Renewal and extension of SWAP arrangements,
d) Setting off part of the loans obtained at commercial interest rates for projects that do not make a significant contribution to the economy.
4. Complete ban on import of non-essential items for a limited period. Although authorities have announced such a policy, it is apparent that the importers having close links with the powerful politicians do display such items for sale.
5. Reducing the deficit of the balance of trade is extremely urgent. Laws alone will not help tackle this problem; generous support from businesses and expatriates is called for.
6. The eradication of money transfer schemes such as hawala and undial which have been adopted by the importers as well as the exporters to bypass the established banking system, the result being that the Banks do not receive dollars and the rupee depreciates.
7. Sri Lankan migrants also resorted to such informal methods of money transactions instead of sending their remittances through banks. Some of such intermediaries are directly linked to drug dealers engaged in money laundering.
8. Monetary authorities also should draw their attention to the fact that some migrants do not send their remittances to the country in protest against the current rulers, who are corrupt. Although the country was receiving around USD 600 million monthly from expatriates earlier, it now receives only about USD 250 million a month. This needs to be addressed as an extremely urgent matter to resolve the deficit of the balance of trade.
9. Immediate tax reform measures to be taken to impose direct taxes on high income earners as was the case before 2019.
10. Delay the capital expenditure on projects, more prudently by presenting a new budget to tackle the economic crisis.
Long-term measures
1. Encourage export-oriented products by extending tax concessions and providing infrastructure facilities.
2. Value addition to exports
3. Adoption of a national policy to take measures to increase the agriculture sector contribution to GDP from 8.3% up to 14% and industrial sector contribution from 26.2% to 34% (approximately) in five years.
4. Restructuring of major loss-making State institutions.
a) Ceylon Electricity Board has recorded a loss of Rs. 308 billion up to 2020.
b) Sri Lankan Airline has recorded a loss of Rs. 374 billion up to Feb. 2021.
c) Sri Lanka Railway Dept has recorded a loss of Rs. 331 billion up to 2020.
5. Restructuring of the public sector to ensure its sustainability and contribution to the national economy.
6. The establishment of development banks for sustainable development of agriculture and industrial sectors. At the commencement of the state-owned Bank of Ceylon and People’s Bank, the state was aiming to achieve the goals of industrial and agricultural sectors and it attained its goals, but after the introduction of liberal economy, those two banks also started making profits, forgetting the purpose for which they were established.
7. The curtailment of the budget deficit. Budget deficit increased up to 11.1% in 2020, whereas it was 5.5% in 2017, which is indicative of weak financing management.
8. The adoption of stringent procedure as regards appointments to all state-run institutions and to ensure that appointees have met the minimum qualifications stipulated.
9. Either amending the Assets and Liabilities Declaration Act or enacting a new law to ensure that transactions of politicians, official and government contractors are monitored to ensure their transparency.
10. Making anti-bribery laws applicable to the private sector as well.
1. 11. Restructuring of the Sri Lanka Customs. It is apparent that a substantial amount due to the treasury from the Custom is not credited due to variety of reasons.
With reports emerging that India has attacked some ‘sites’ in Pakistan and Pakistan-administered Kashmir, the question could be posed whether the stage has just been set for yet another costly India-Pakistan military conflict. Sensible opinion in South Asia could only hope that wise counsel would sooner rather than later come to prevail on both sides of the divide and that they would draw back from the brink of full-scale war.
The states concerned ought to know fully well the possible wide-ranging weighty consequences of another regional conflict. It should be plain to see that it would benefit none in the two theatres of confrontation, most particularly the relevant publics or the ‘Silent Majority’.
In fact, in connection with the mentioned initial military attacks, the Pakistani side has gone on record that some civilian lives have been lost. Such losses could burgeon in the event of full scale hostilities. These costs could of course be staggering and unimaginable in the event the nuclear option is resorted to by the sides, going forward.
Accordingly, the hope of the peace-loving world-wide is likely to be that India and Pakistan would give negotiations a chance and resolve their differences peacefully. It would be in the best interests of the world for the champions of peace to join their voices to that of UN chief Antonio Guterres and call on the sides to negotiate an end to their differences.
The utter helplessness and misery of the people of the Gaza ought to drive home afresh the horrors of war. Currently the news is that the Gazans are literally starving to death. Food and other essentials provided by UN agencies are reportedly being prevented by Israel from getting to the hapless people of Gaza. So dire is their situation that concerned quarters are calling on the compassionate worldwide to provide the Gazans with food, water and other essentials voluntarily. This SOS would need to be heeded forthwith.
Accordingly, it could be inferred that most formal arrangements, including those that are generally under the purview of the UN, geared to providing emergency humanitarian assistance to the needy, have, for all intents and purposes, been rendered ineffective in the Gaza. The UN cannot be faulted for this state of things; rather, Israel should be held accountable in the main for it.
The matter of accountability is central to the dramatic slide into lawlessness the world has been experiencing over the past few decades. As could be seen, International Law is no longer fully applicable in the conflict and war zones of the world because it is not being adhered to by many state and non-state aggressors. That the UN is hapless in the face of such lawlessness is plain to see.
We have of course the Middle East wherein International Law has fallen silent for quite a while. How could it be otherwise, when Israeli aggressions are being winked at by the US, for which the policy of backing Israel is almost sacrosanct?
Moreover, under President Donald Trump, it is difficult to see the US changing policy course on the Middle East. Trump made vague promises of bringing peace to the region in the run-up to his reelection but has done nothing concrete by way of peace-making. Consequently, complete lawlessness prevails in the Middle East. US policy towards Israel counts as another example of how the self- interest of US central administrations blinds them to their international obligations, in this case Middle East peace.
However, the commentator could be criticized as being biased if he holds only Israel responsible for what has befallen the Middle East. It has been the position of this columnist that Israel’s security needs should be taken cognizance of by its state and non-state adversaries in the Middle East and acted upon if the basis is to be laid for a durable Middle East peace. Inasmuch as Palestinian statehood must be guaranteed, the same should be seen as applicable to Israel. The latter too enjoys the right to live in a secure state of its own, unopposed by its neighbours.
The Ukraine of today is also sad testimony to the ill consequences of powerful, aggressor states wantonly disregarding International Law and its obligations. Nothing could justify Russia in invading Ukraine and subjecting it to a condition of Longsuffering. Clearly, Ukraine’s sovereignty has been violated and such excesses go to the heart of the current state of ‘International Disorder’. Of course the same stricture applies to the US in relation to its military misadventures in Afghanistan and Iraq, to name just two such modern examples.
There is no ducking the fact, then, that civilian publics in the mentioned theatres of war and outside, are being subjected to the worst suffering as a consequence of the big powers’ self-aggrandizement schemes and military misadventures. Longsuffering becomes the tragic lot of the people who have nothing to do with such unbridled power ambitions.
One would not be exaggerating the case if he states that civilian publics count for almost nothing in the present ‘International Disorder’. Increasingly it is becoming evident that from the viewpoint of the big powers and authoritarian governments the people are of little or no importance. Considering that self-aggrandizement is of the paramount interest for the former the public interest is coming to be seen as inconsequential.
Consequently, not much of a case could be made currently for the once almost reverentially spoken of ‘Social Contract’. For, the public interest does not count for much in the scrambles for power among the major powers who are seen at the popular level as the principal history-makers.
It is in view of the above that much is expected of India. Today the latter is a ‘Swing State’ of the first importance. Besides being a major democracy, it is one of the world’s principal economic and military powers. It possesses abundant potential to help to put things right in international politics. If there is one state in Asia that could help in restoring respect for International Law, it is India.
Considering the above, India, one believes, is obliged to bear the responsibility of keeping South Asia free of any more long-running, wasting wars that could aggravate the material hardships and socio-economic blights of the region. Thus, India would need to consider it imperative to negotiating peace with Pakistan.
Under the Global-Ise Australia Advanced Sports Development Programme, a delegation of 15 swimmers from Lyceum International School, Wattala, had the remarkable opportunity to train and experience high-performance sports development in Melbourne, Australia.
The 10-day programme was carefully curated to offer intensive training, educational exposure, and cultural experiences for the young athletes.
The swimmers underwent specialised training through Swimming Victoria’s elite programme, held at some of Melbourne’s premier aquatic facilities.
Visit to Victorian Parliament
Each day began as early as 5:00 a.m. and continued until 7:00 p.m., ensuring a rigorous and enriching schedule that mirrored the standards of international competitive swimming.
Beyond training, the programme offered a wide array of experiences to broaden the students’ horizons.
Morning training
The tour group explored iconic landmarks such as the Victorian Parliament and the Melbourne Cricket Ground (MCG), and enjoyed shopping at Chadstone – The Fashion Capital. They also experienced the natural beauty of Victoria with visits to Yarra Valley Chocolaterie & Ice Creamery, and Cardinia Reservoir Park, where they observed kangaroos in their natural habitat.
An academic highlight of the tour was the group’s exclusive visits to three of Australia’s leading universities: the University of Melbourne, Monash University, and Deakin University. These visits aimed to inspire students and showcase the vast educational opportunities available in Australia.
Checking out the scene at Yarra Valley Chocolaterie & Ice Creamery
As part of the cultural immersion, Global-Ise hosted a traditional Australian BBQ at the Tim Neville Arboretum in Ferntree Gully. The students also enjoyed a variety of diverse culinary experiences each evening, further enriching their understanding of local and international food cultures.
The tour concluded with a celebratory dinner at the Spicy Wicket Restaurant, where each participant received a presentation in recognition of their involvement.
Enjoying an Aussie BBQ for lunch
The evening was made especially memorable by the presence of Pradeepa Saram, Consul General of Sri Lanka in Victoria.
Global-Ise Management—Ken Jacobs, Johann Jayasinha, and Dr Luckmika Perera (Consultant from the University of Melbourne)—did a magnificent job in planning and the execution of the advanced sports programme.
Coaches from Sri Lanka presenting a plaque to Global-Ise Management team
Ken Jacobs (centre), Johann Jayasinha, and Dr Luckmika Perera (on the right
Hi! How’s the beauty scene keeping with you?
Phew, this heat is awful but there is nothing that we can do about it.
However, there are ways and means to take care of your skin and I will do my best to help you in every way I can.
Well, this week, let’s go for a Bright, Smooth Skin.
Gram flour (also known as besan) is a traditional skincare ingredient known for its:
* Natural exfoliating properties.
* Ability to absorb excess oil.
* Gentle brightening and tan-removal effects.
* Suitability for all skin types, especially oily and acne-prone skin.
You will need 01–02 tablespoons gram flour (besan) and rose water, or raw milk, to make a paste.
You could add the following two as optional add-ins: A pinch of turmeric (for extra glow), and a few drops of lemon juice (for oily skin and pigmentation)
Add the gram flour to a small bowl and mix in the rose water (for oily/sensitive skin) or raw milk (for dry skin) slowly.
Stir well to make a smooth, spreadable paste—not too thick, not too runny.
Now apply this mixture, evenly, to your damp face and neck, and let it sit for 5–10 minutes (don’t let it dry completely if you have dry skin).
Gently massage in circular motions using wet fingers—this helps exfoliate.
Rinse off with lukewarm water, and then pat your skin dry.
Use it 02–03 times a week for best results.
Skin Benefits:
* Removes dirt, sweat, and oil without stripping natural moisture.
* Gently exfoliates dead skin cells, revealing smoother skin.
* Brightens the complexion and fades mild tanning.
* Helps clear clogged pores and reduce pimples.
* Leaves skin fresh and glowing—perfect for humid climates.
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