Sri Lanka is facing its worst economic crisis. Although successive governments may have contributed to this state of affairs, the present government stands directly accused of causing a total collapse of the economy. Three main reasons are given for this sudden downturn; the drastic tax reductions, the fertiliser ban and depletion of dollars due to artificial jacking up of the rupee causing a dollar and rupee crisis. These policies may have succeeded under different circumstances but not when the country is ravaged by a pandemic. However, the inability to foresee the unsuitability of such policies at this time is the failure of our leadership and their economic advisers. There are about 54 countries which are in debt crisis at present but none of them are as hopeless as Sri Lanka.
Historically, the reason for the weakening of the economy is the fact that the expenditure on imports has been higher than the income from exports under successive governments since 1977. In 2014, Sri Lanka spent USD 19 billion on imports while the export earnings have been just USD 11 billion. To meet the difference, we had to borrow and as a result got into debt which at present is about USD 50 billion. Worse, we have been borrowing to live high, pay back loans and even for vanity projects.
Most of the developing countries are deeply in debt and often the debt is much more than their total export earnings. This is a situation that countries with export-led economies have to cope with. Export-led growth attempts to promote the expansion of gross domestic product and per capita income with inflows from export earnings but this seldom happens.Sri Lanka’s earnings from exports was only 23% of the GDP in 2014 and it has been around that figure since 1977. If exports are to be increased to a significant level, we may have to borrow heavily to start export-oriented projects on a large scale which would take us deeper into debt, making repayment almost impossible.
Foreign direct investments and foreign funded industry are the other sources of foreign exchange. What attracts investors mainly is the cheap labour available in the developing countries. Thus, the governments of developing countries are forced to keep wages low to attract investors. The workers may be deprived of an improvement of their living standards that growth is supposed to bring. A good example is Sri Lankan estate workers.
People in countries with export-led economies must produce what people in another country want. The economy therefore depends on foreign demand, when the demand declines the economy suffers. For instance, when the Covid pandemic hit the rich countries the demand for garments dropped and the garment industry suffered. Another problem is access to foreign markets and the competition among producing countries. Further, the governments of the countries which import these items may control the quantities they import through taxes and sometimes through politically motivated sanctions. Thus, the export-led economies are at the mercy of the rich countries.
The global economic system controlled by the Western powers through the Bretton Wood Twins and Washington Consensus does not encourage developing countries to seek alternative means of growth. They give aid to those who follow their instructions which are geared for capital development at the expense of labour. Self-sufficiency is discouraged. Instead, they must remain as suppliers of few commodities and cheap labour to the global market. Sri Lanka supplies tea, garments and cheap labour to West Asia. We have not looked at alternative models. We have not attempted to produce our essential needs, such as food, medicine, building materials, etc. Though these can be locally produced, we import them using foreign exchange earned by exporting tea, garments and cheap labour. And when the demand for these falls, as it happened at the height of the pandemic, our economy becomes so weak that a bungling government could send it crashing.
In 2021, while its economy was struggling, Sri Lanka imported fruits and vegetables worth USD 380 million out of a total of USD 6 billion spent on non-essentials such as cheese, butter, ice-cream, bottled water. We need only USD 300 million to import chemical fertiliser. This was while the farmers were protesting and agriculturists were opposing the fertiliser ban. This, I see as a consequence of not having a well-developed national economy and an import-substitution programme. Self-sufficiency in food was not considered important, and catering to the super rich and tourists became a priority.
Now, the question is whether Sri Lanka will continue with export dependency. More importantly, are we going to spend more than we earn and live beyond our means? Are we going to borrow more and depend on foreign largesse? Don’t these loans and gifts come with strings attached? Will we have to cough up a few more ports or grant federalism?
What has happened has happened, there is no point in crying over spilt milk. The solution lies in our ability to learn to live within our means. We must never import more than we export, if we have no gas we must learn to find alternatives. The energy-efficient Anagi stove made of clay can be used even in Colombo flats. This could develop into an excellent cottage industry which could supply both the stove and firewood made of wood chips, sawdust or paddy husks compressed into cakes for easy storage and use in the stove. If instead the government, to pacify the protesters, import gas with borrowed dollars we will sink deeper in the debt mire. We must get along on a shoestring until we can stand on our own feet. Even IMF loans have their serious disadvantages and no country up to now has developed with IMF aid.In the long run, what Sri Lanka should do is to adopt a strategy to strike a balance between strengthening the domestic demand and export orientation. Import-substitution is a suitable policy for countries which want to come out of the debt trap. Heavy indebtedness, whether for an individual or a country, is a fetter that could restrict forward movement and freedom. It has made us part with ports, fuel storage facility, and sign agreements inimical to the national interest.
Sri Lanka, being predominantly an agricultural country, must give priority to the development of agriculture. Our aim should be to curtail our dependence on imported food items, which could be produced locally. More than 50% of export earnings go for import of food items, half of which could be locally produced. Everything required for agriculture––fertiliser, pesticides and weedicides, seeds and machines––should be locally produced. Big investors may not be interested, for they cannot expect high returns, as the local market is small. Yet, the small farmers could be made into small entrepreneurs and assured of reasonable returns on their investment if the exploitation by rice mill owners and middlemen could be eliminated by government intervention. By this means a quarter of the export bill could be reduced.Renewable energy policy should be fully implemented to reduce expenditure of fuel imports. CEB engineers are not very co-operative and their resistance has to be overcome. The capacity of the petroleum refinery also should be enlarged making use of facilities available at Sapugaskanda, Trincomalee and Hambantota which would further reduce the cost of fuel imports.
Small industries mainly for local needs such as electrical items, kitchen utensils, building materials, small electronic items, fabrics, could also be gradually developed with the aim at import substitution.Sri Lanka has to learn experience and decide whether to continue with the export-led economy, which, as shown above, is subject to external factors beyond our control and which has several disadvantages, including debt accumulation and the threat of sudden collapse. Time is opportune for use to think of import-substitution. The present crisis may offer a good opportunity to make virtue out of necessity and give priority to local production.
N. A. de S. Amaratunga
An open letter to 6.9 million
Basil Rajapaksa has recently said that the Rajapaksas are not responsible for the dire situation in the country. He told the journalists not to pass the ball to him and he passed the ball to the people, especially to the 69 lakhs who voted the “Pohottuwa” into power.
So, my dear 6.9 million citizens,
You are my brothers and sisters. The Rajapaksas may blame you for the dire situation in the country but I do not blame you. I do not condemn you. For everybody makes mistakes. We are frail human beings. Now I am a senior citizen and in my life time I have been pickpocketed three times. It cost me three purses, a few thousand rupees and two ID cards to learn the lesson. But dear 6.9 million brothers and sisters your present political lesson cost all of us national bankruptcy, millions unemployed, unending queues for petrol, diesel, kerosene, cooking gas and passports, exorbitant price hikes of essentials, lack of essential medicines, looming starvation, anarchy, destruction and terrifying death. I hope you have learnt the lesson, at least by now.
Do you realise what kind of image you have shown to the world of our people, of us? Out of courtesy they will not voice it but they consider us damn fools.
Didn’t you know about the Rajapaksas and the tsunami funds? Didn’t you ever wonder how his three brats were spending like nothing and living it up like playboys? Have you never heard of Siriliya? Have you never heard of the deals between the Krish and the Rajapaksas? Didn’t you ever realise what an enormous amount of money has been wasted on useless white elephants, like the Lotus Tower, the Sooriyawewa Stadium, the Mattala Airport and the Hambantota Conference Hall? Why is it that the murderers of Thajudeen and Lasantha Wickrematunga can never be discovered? The latest revelation, from circumstantial evidence, is that Adani Group probably has dealings with the Rajapaksas. The Pandora Papers expose has raised the Rajapaksas to the notorious status of International Crooks. This is only the tip of the iceberg; if you scratch the garbage heap you’ll find more.
I cannot understand how the 69 lakhs got so thoroughly fooled by the Rajapaksas. You believed scandalous tales about infertility Kottu, infertility garments and Muslim doctors making Sinhala mothers sterile, etc. Everybody knows but nobody says who the brains behind the Easter Sunday massacre are. I guessed who it was quite soon. In any crime, the prime suspect is the one who profited most from it. Ask any police detective. The monks, intellectuals, professionals, and artistes were taken for a ride. Therefore, I do not blame you, the 69 lakhs. But the world was surprised that the citizens of Sri Lanka have such low IQ and can be so easily fooled.
Never mind all that; now let us talk about how to remedy the damage done to yourselves, us and the country. Here are a few methods to keep the right attitude to the current reality.
No.1: Never tolerate or get used to the hardships we are going through. If you are in a queue, curse the government loud enough so that at least the men in front and behind can hear you. The problem is not organising the queue more efficiently; the problem is there should not be any queues. The scarcity of petrol and diesel is a deliberate ploy by the heartless government to suppress the protest by the people. The only solution is a new stable and respected government and sending Rajapaksas to jail. Curse the government when the power cut begins. When you go shopping, curse the government loudly for the high prices of things or their lack. Keep the public aware of the hardships they unjustly endure. Never allow them to get used to it. Rage, rage against Gota and the 225 thieves.
No. 2: Either organise yourself or get somebody to organise small neighbourhood groups everywhere in your village, town and work place. Get in touch with someone in the Aragalaya and tell them you are ready for a final showdown.
No. 3: Write a letter of appreciation and encouragement to each one of the people who are at the Gotagogama. Or send a Thank You card for the sacrifices they are making for us and for our children. Here is their address: (Name) The Library, Gotagogama, Galle Face, Colombo 2.
No. 4: If you believe in a Universal Force or God, as I do, pray insistently with grief and groans and ask him to save our country from the rapacious scoundrels and killers who are holding our people by the scruff of the neck and robbing them clean.
No. 5: The evil government is driving us to a famine and starvation. Let us not be selfish. Let us share what we have or what little we have with those who do not have anything. Let us be always kind and considerate to our fellow citizens whoever they maybe.
Forget race, religion, language or whatever divides us. All of us are brothers and sisters in this national calamity, all children of Mother Lanka. Let us save her and ourselves together.
Down with the Ali Baba and the 225 thieves!
Fraternally your co-citizen,
Fr Chryso Pieris SJ
We will remember, and we will be grateful
by Krishantha Prasad Cooray
For as long as the human race has organised itself into sovereign nations, no country has had a story of limitless success. Nations and empires alike have risen and fallen, over thousands of years. Every language has phrases like “it takes a village” to remind us of the limitations of individual people and the need to work together. Similarly, no nation will ever thrive in isolation. The fate of every country is dependent on its relationships with other countries, with allies who share their values and who support each other in times of need.
History is littered with examples of countries that have been beset by natural disasters, militarily crippled, ridden with diseases, targeted by terrorism or economically ruined. What separates those who overcome these challenges from those that don’t is the willingness of other countries to come to their aid.
After World War II, for example, when the Axis powers were roundly defeated, it was the countries that vanquished them who stepped in to rebuild them. Indeed, without the aid of the Allies, neither Germany nor Japan would have grown into the economic powerhouses they are today.
The Marshal Plan, an American initiative, enabled West Germany and other West European nations to rise from the ashes of war and gain rapid economic development.
Japan, on the other hand, had far fewer friends. As European victims of German aggression feared the prospect of a united Germany, Asian victims of Japanese aggression feared a remilitarised Japan. Cold War politics too played a role, with the Soviet Union accusing the United States of planning to turn Japan into a military camp against itself and China. It was only at the San Francisco Peace Conference in 1951 that a peace treaty was finally signed, ending the occupation of Japan, restoring Japanese independence, and putting the country on a path to prosperity.
At that conference, it was then Sri Lankan Finance Minister Junius Richard Jayawardena, who spoke most persuasively about the case for making peace with Japan as an independent non-occupied nation. Jayewardene reminded the audience that prior to the barbarity of World War II, Japan had long been a staunch ally of other Asian nations. “It is because of our age-long connections with her, and because of the high regard the subject peoples of Asia have for Japan when she alone, among the Asian nations, was strong and free and we looked up to her as a guardian and friend,” he reminded the assembled world leaders.
Japan has never forgotten, and even today, memorial statues and plaques across Japan mark the country’s gratitude to J.R. Jayewardene. Sri Lanka, at the time, had nothing to gain from the vanquished Japanese. But we came to the aid of a nation in need and did the correct thing. A quarter century later, when J.R. Jayewardene became President of Sri Lanka, our relationship with Japan became one of the cornerstones of Sri Lanka’s subsequent prosperity.
Today, Sri Lanka finds itself crippled by an unprecedented crisis. Our people are in abject financial peril. Over a quarter of the country is starving and malnourished. The economy is paralyzed and many children are unable to reach schools due to fuel shortages. Electricity has become a luxury, and essential medicines have become scarce.
This is not the doing of the people but the result of mismanagement by corrupt, incompetent and short-sighted politicians holding the reins of power for their own gain. These politicians benefited. The people suffered. They suffer as I write and will suffer for a long time more to come.
It is tragic to see a country as resilient as Sri Lanka, with a proud history, being reduced to such a state. One day, I have no doubt that my country will rise again. But we will only do so with the support of friends, who will speak in solidarity and act in support.
Sri Lanka is but the first country to see its economy collapse at the mercy of corruption and rising global food and oil prices. It won’t be the last. Before long, other poorly managed countries will also begin to waver. Each stumbling nation can be rescued one at a time, but if several countries all collapse together, the chain reaction could paralyze the economies of not just the region, but the entire world. Sri Lanka, in particular, is ripe for rescue.
The people are clamouring for serious institutional and constitutional reform. If these reforms are coupled to both humanitarian aid and commercial investments, the payoff will be not just a monetary one, but one of deep gratitude.At this time, if people, institutions and nations alike come to the aid of the Sri Lankan people, that aid is needed like never before. Doing so will help avert or minimize a humanitarian crisis like Sri Lanka has never known. Any country can make a contribution to help feed the starving, heal the sick, employ the unemployed, light up a classroom, and take other steps to help Sri Lanka to jumpstart its economy.
It was such words of support, and deeds of solidarity that helped Japan in 1951, and for which Japan has remained grateful so many decades later. Likewise, such a word, such a deed, will be remembered by Sri Lanka and Sri Lankans, those who are suffering right now, those who survive, and their children. It is a brand of gratitude that is special because it is altruistic. People will remember, ‘they didn’t have to, they had nothing to gain, but they did anyway.’ We will remember, and we will be grateful.
Ohe Innava ; ban on Russian tennis players; greed leads via deceptive satisfaction to disaster
Sins of the leaders suffered by innocents
This beautiful island seems to be at a standstill and its people rather dazed, confined to homes or queues for days on end (no longer hours). Maybe, Jaffna and its southern neighbouring Vanni are better equipped mentally and stoically to withstand these vagaries of fortune and carry on their lives as they know well, through experience (1983 to 2009 and even thereafter), with inbuilt mental and physical resistance. The government that should be so very occupied looking after its people, and MPs and their bosses mandated to do so, only continue emanating hot air and cruise around in their gas guzzlers, of course, in protected areas. They feel the anger of the people: righteous, justified and ready to burst forth in flames of anarchy at the first ignition. One VIP speaks to the public of imminent arrival of ships laden full with fuel and cooking gas; and another VVIP on further necessity to tighten belts and suffer. All of us are near suffocation because of the mistakes, corruption, extravagance and bl… idiocy of those who ruled us.
The biggest man, almost daily, gathers sundry officers to his vast meeting hall and while they gaze at him, some mindlessly but none interrupting, pontificates mostly on how they should be alleviating the hardships of the population. He singlehandedly caused farmers and now us immense deprivation. He thought his mea culpa would exonerate him. The ex-PM and doing-just-as-they bid ex-Gov of CB sit out in comfort on the look out to escape. The dethroned VIP heir is creeping back to meetings where he is not justified being in. Dreams of a glorious return? Shatter them to bits, you people are NOT coming back ever to power. 20 million people, including kids, know you all too well now and the bung screwed on tight on criticism popped off, released mostly by the peaceful protesters of Mynagama and GotaGoGama. Thank goodness for them!
Cass listened to the articulation of peaceful protesters in Havelock Town carrying succinct boards and good sense and intelligence in their heads as relayed by 8.30 pm Newsline of MTV TV One on Tuesday 28 late evening. What emerged was most forceful censure of the powers that were and are. ‘Go home Gota’ they said in unison and decently. What sort of a skin does one need to enable one to stay on when disliked so intensely and shown the exit explicitly by millions here and overseas. The protective skin of the armed forces is not available, one presumes. As is said, the soldiers’ old mothers can barely make ends meet with soaring prices and fathers are in queues, so how expect them to turn against their own suffering people even though commanded to do so?
The cricket matches between the Aussie team and a revived, zestful Sri Lankan team have been giving solace to a major section of our people. That is fine, since one needs to divert one’s mind and also grab whatever respite one can from the ongoing disaster that is our beloved country.
Cassandra is a tennis buff deriving not only sporty enthusiasm but also aesthetic satisfaction by watching good players on court. How so the latter, one may query. Just watch a good player and witness his/her playing is ballet like in postures and grace; a fine synchronization of muscle and limb. And for Cassandra the best is to watch the Wimbledon matches, the players and linesman and ball pickers all in white. Maybe Cass is conservative, a throw back on her upbringing, but discipline even in what the players wear is pleasing to her. Wimbledon times are not so inconvenient to us as matches start there at 3.30 (it was said) and so by 8.00 pm one can watch them over sports channels. It’s when the US Open is on that one has to watch into all hours of our night.
Wimbledon has banned Russian players and so men’s world number 1 Daniil Medvedev is out – banned; so also number 8 Andrey Rublev and women’s numbers 6 and 13 – never mind names, difficult to even spell. Great pity, especially regards Medvedev – almost humble on court – but again proof that sins of the leaders fall on ordinary heads. The organisers of Wimbledon decided in April to ban players from Russia and Belarus in response to Russia’s invasion of Ukraine. So, ex KGB Putin’s fear of European Union’s expansion of influence and protection, or greed for expansion of Russian controlled territory or even a desire to re-establish a sort of USSR have impacted on innocent sportsmen and women.
Greed may be satisfied temporarily but degraded shame is permanent result
‘Bollywood actress of Sri Lankan origin’ as Jacqueline Fernandez is named by S Venkat Narayan and other media persons, has again been questioned by the Indian Enforcement Directorate (ED) on the gifts of dollars and expensive items given her and her family members by billionaire conmen Sukesh Chandrashekhar. Cass is not flogging a dead horse (or much alive, lovely mare here) but quoting this tidbit from Tuesday June 28 press, wishing to impress on herself and her readers that avarice and boundless greed lead to retribution and perhaps heart searing regret. It is obvious Jackie entertained the conman, and very intimately we suppose, to be worth all those millions gifted to her. It surely cannot be love. That explanation for the close liaison is good for the fairies to narrate. She was motivated by desire for quick immense wealth. And she has landed flat on her face: passport impounded, reputation gone, and with it admirers and Salman Khan too perhaps, and sure shot no offers of further stardom. She was catapulted to be top of the beauts on par with now exclusive Aishwaria Rai Bachchan. And what has avarice brought her to?
Cass in her age earned wisdom warns young beauties not to gamble on good looks. Many are the girls who did so and surely are cast aside and also fearful now since tables have been turned on their benefactors mostly by the sensible young ones of GotaGoGama. Where’s that beauty queen whose crown was snatched as placed on her by political influence, who accompanied Lohan R to Welikada prison in short shorts to view the gallows? We heard many a chick was given jobs, sometimes double at Sri Lankan, with no English ability, etc. No wonder our airline nose-dived and is still on that perilous down swing but sustained by government monetary life lines. Many were the discards given employment in Sri Lankan.
Another point: definitely a too flogged horse: are those who plundered government money and assets by the millions, nay billions happy and leading fine lives. Nay, No and Nein! They may be safe and their stolen wealth intact and in no danger of being confiscated, but their minds? Wellbeing? They cannot have such thick hides that satisfying the five senses brings them peace of mind? Again, a thundering NO. Reputations ground to dust; friends disappeared; and the door to a return to political power shut bang. Jolly good for those damned thieves who sent our country down to the depths. We will rise, that’s for sure. We have good people in the majority.
On that rousing note of determination to rise from the depths, Cassandra wishes you bye, for now. May its enforced curtailment of normal routines; immense difficulties and future bleakness not depress you too much. We as a country can only now go upwards, hit rock bottom as we are.
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