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High govt. revenue and low foreign exchange reserves High foreign exchange reserves and low govt. revenue!

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First shipment of vehicles imported to Sir Lank after the lifting the ban on automobile imports

Government has permitted, after several years, the import of motor cars. Imports, including cars, were cut off because the government then wisely prioritised importing other commodities vital to the everyday life of the general public. It is fair to expect that some pent-up demand for motor vehicles has developed. But at what prices? Government seems to have expected that consumers would pay much higher prices than had prevailed earlier.

The rupee price of foreign exchange had risen by about half from Rs.200 per US$ to Rs.300. In those years, the cost of production of cars also had risen. The government dearly wanted more revenue to meet increasing government expenditure. Usually, motor cars are bought by those with higher incomes or larger amounts of wealth. Taxes on the purchase of cars probably promote equity in the distribution of incomes. The collection of tax on motor cars is convenient. What better commodity to tax?

The announced price of a Toyota Camry is about Rs.34 million. Among us, a Camry is usually bought by those with a substantially higher income than the average middle-income earner. It is not a luxury car like a Mercedes Benz 500/ BMW 700i. Yes, there are some Ferrari drivers. When converted into US dollars, the market price of a Camry 2025 in Sri Lankan amounts to about $110,000. The market price of a Camry in US is about $34,000, where it is usually bought by income earners in the middle-middle class: typically assistant professors in state universities or young executives. Who in Lanka will buy a Camry at Rs.34 million or $110,000 a piece?

How did Treasury experts expect high revenue from the import of motor cars? The price of a Toyota Camry in US markets is about $34,000. GDP per person, a rough measure of income per person in US, was about $ 88,000 in 2024. That mythical ‘average person’ in US in 2024, could spend about 2.5 month’s income and buy a Toyota Camry. Income per person, in Lanka in 2024, was about $ 4,000. The market price of a Camry in Lanka is about $ 133,000. A person in Lanka must pay 33 years of annual income to buy a Toyota Camry in 2025.

Whoever imagined that with those incomes and prices, there would be any sales of Camry in Lanka? After making necessary adjustments (mutatis mutandis), Toyota Camry’s example applies to all import dues increases. Higher import duties will yield some additional revenue to government. How much they will yield cannot be answered without much more work. High import duties will deter people from buying imported goods. There will be no large drawdown of foreign exchange; nor will there be additional government revenue: result, high government foreign exchange reserves and low government revenue.

For people to buy cars at such higher prices in 2025, their incomes must rise substantially (unlikely) or they must shift their preferences for motor cars and drop their demand for other goods and services. There is no reason to believe that any of those changes have taken place. In the 2025 budget, government has an ambitious programme of expenditure. For government to implement that programme, they need high government revenue. If the high rates of duties on imports do not yield higher government revenue as hypothesised earlier, government must borrow in the domestic market. The economy is not worthy of raising funds in international capital markets yet.

If government sells large amounts of bonds, the price of all bonds will fall, i.e. interest rates will rise, with two consequences. First, expenditure on interest payments by government will rise for which they would need more revenue. Second, high interest rates may send money to banks rather than to industry. Finding out how these complexities will work out needs careful, methodically satisfactory work. It is probable that if government borrows heavily to pay for budgetary allocations, the fundamental problem arising out of heavy public debt will not be solved.

The congratulatory comments made by the Manager of IMF applied to the recent limited exercise of handling the severity of balance of payments and public debt problems. The fundamental problem of paying back debt can be solved only when the economy grows fast enough (perhaps 7.5 % annually) for several years. Of that growth, perhaps, half (say 4 % points) need to be paid back for many years to reduce the burden of external debt.

Domestic use of additional resources can increase annually by no more than 3.5 percent, even if the economy grows at 7.5 percent per year. Leaders in society, including scholars in the JJB government, university teachers and others must highlight the problems and seek solutions therefor, rather than repeat over and over again accounts of the problem itself.

Growth must not only be fast and sustained but also exports heavy. The reasoning is as follows. This economy is highly import-dependent. One percent growth in the economy required 0.31% percent increase in imports in 2012 and 0. 21 percent increase in 2024. The scarcity of imports cut down the rate of growth of the economy in 2024. Total GDP will not catch up with what it was in (say) 2017, until the ratio of imports to GDP rises above 30 percent.

The availability of imports is a binding constraint on the rate of growth of the economy. An economy that is free to grow will require much more imports (not only cement and structural steel but also intermediate imports of many kinds). I guess that the required ratio will exceed 35 percent. Import capacity is determined by the value of exports reduced by debt repayments to the rest of the world. The most important structural change in the economy is producing exports to provide adequate import capacity. (The constant chatter by IMF and the Treasury officials about another kind of structural change confuses the issue.) An annual 7.5 percent growth in the economy requires import capacity to grow by about 2.6 percent annually.

This economy needs, besides, resources to pay back accumulated foreign debt. If servicing that accumulation requires, takes 4% points of GDP, import capacity needs to grow by (about) 6.6 percent per year, for many years. Import capacity is created when the economy exports to earn foreign exchange and when persons working overseas remit substantial parts of their earnings to persons in Lanka. Both tourism and remittances from overseas have begun to grow robustly. They must continue to flow in persistently.

There are darkening clouds raised by fires in prominent markets for exports from all countries including those poor. This is a form of race to the bottom, which a prominent economist once called ‘a policy to beggar thy neighbour (even across the wide Pacific)’. Unlike the thirty years from 1995, the next 30 years now seem fraught with much danger to processes of growth aided by open international trade. East Asian economies grew phenomenally by selling in booming rich markets, using technology developed in rich countries.

Lanka weighed down with 2,500 years of high culture ignored that reality. The United States of America now is swinging with might and main a wrecking ball to destroy that structure which they had put up, one thought foolishly, with conviction. Among those storms, many container ships would rather be put to port than brave choppy seas. High rates of growth in export earnings seem a bleak prospect. There yet may be some room in the massive economies of China and India.

Consequently, it is fanciful to expect that living conditions will improve rapidly, beginning with the implementation of the 2025 budget. It will be a major achievement if the 2025 budget is fully implemented, as I have argued earlier. Remarkable efforts to cut down on extravagance, waste and the plunder of public funds will help, somewhat; but not enough. IMF or not, there is no way of paying back accumulated debt without running an export surplus sufficient to service debt obligations.

Exports are necessary to permit the economy to pay off accumulated debt and permit some increase in the standard of living. Austerity will be the order of the day for many years to come. It is most unlikely that the next five years will usher in prosperity.

By Usvatte-aratchi



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Mannar’s silent skies: Migratory Flamingos fall victim to power lines amid Wind Farm dispute

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Victims: Flamingos / Birds found dead in Mannar

By Ifham Nizam

A fresh wave of concern has gripped conservationists following the reported deaths of migratory flamingos within the Vankalai Sanctuary—a globally recognised bird habitat—raising urgent questions about the ecological cost of large-scale renewable energy projects in the region.

The incident comes at a time when a fundamental rights petition, challenging the proposed wind power project, linked to India’s Adani Group, remains under examination before the Supreme Court, with environmental groups warning that the very risks they highlighted are now materialising.

At least two flamingos—believed to be part of the iconic migratory flocks that travel thousands of kilometres to reach Sri Lanka—were found dead after entanglement with high-tension transmission lines running across the sanctuary. Another bird was reportedly struggling for survival.

Professor Sampath Seneviratne, a leading ornithologist, expressed deep concern over the development, noting that such incidents are not isolated but indicative of a broader and predictable threat.

“These migratory birds depend on specific flyways that have remained unchanged for centuries. When high-risk infrastructure, like poorly planned power lines, intersect these routes, collisions become inevitable,” he said. “What we are witnessing now could be just the beginning if proper mitigation measures are not urgently implemented.”

Environmentalists argue that the Mannar region—particularly the Vankalai wetland complex—is one of the most critical stopover sites in South Asia for migratory waterbirds, including flamingos, pelicans, and various species of waders. The sanctuary’s ecological value has also supported a niche with growing eco-tourism sector, drawing birdwatchers from around the world.

Executive Director of the Centre for Environmental Justice, Dilena Pathragoda, said the incident underscores the urgency of judicial intervention and stricter environmental oversight.

“This tragedy is a direct consequence of ignoring scientifically established environmental safeguards. We have already raised these concerns before court, particularly regarding the location of transmission infrastructure within sensitive bird habitats,” Pathragoda said.

“Renewable energy cannot be pursued in isolation from ecological responsibility. If due process and proper environmental impact assessments are bypassed or diluted, then such losses are inevitable.”

Conservation groups have long cautioned that the installation of wind turbines and associated grid infrastructure—especially overhead transmission lines—within or near sensitive habitats could transform these landscapes into lethal zones for avifauna.

An environmental activist involved in the ongoing legal challenge said the latest deaths validate earlier warnings.

“This is exactly what we feared. Development is necessary, but not at the cost of biodiversity. When projects of this scale proceed without adequate ecological assessments and safeguards, the consequences are irreversible,” the activist stressed.

The debate has once again brought into focus the delicate balance between renewable energy expansion and biodiversity conservation. While wind energy is widely promoted as a clean alternative to fossil fuels, experts caution that “green” does not automatically mean “harmless.”

Professor Seneviratne emphasised that solutions do exist, including rerouting transmission lines, installing bird diverters, and conducting comprehensive migratory pathway studies prior to project approval.

“Globally, there are well-established mitigation strategies. The issue here is not the absence of knowledge, but the failure to apply it effectively,” he noted.

The timing of the incident is particularly worrying. Migratory flamingos typically remain in Sri Lanka until late April or May before embarking on their return journeys. Conservationists warn that if hazards remain unaddressed, larger flocks could face similar risks in the coming weeks.

Beyond ecological implications, experts also highlight potential economic fallout. Wildlife tourism—especially birdwatching—contributes significantly to local livelihoods in Mannar.

 Repeated reports of bird deaths could deter eco-conscious travellers and damage the region’s reputation as a safe haven for migratory species.

Environmentalists are now calling for immediate intervention by authorities, including a temporary halt to high-risk operations in sensitive zones, pending a thorough environmental review.

They stress that protecting animal movement corridors—whether elephant migration routes or avian flyways—is a fundamental pillar of modern conservation.

As the controversy unfolds, one question looms large: can Sri Lanka pursue sustainable energy without sacrificing the very natural heritage that defines it?

Pathragoda added that for now, the sight of fallen flamingos in Mannar stands as a stark reminder that development, if not carefully planned, can carry a heavy and irreversible cost.

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‘Weaponizing’ religion in the pursuit of power

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President Donald Trump; miscalculating in M-E / Ayatollah Khomeini; Architect of Iranian Revolution

A picture of US President Donald Trump apparently being prayed for by supporters, appearing in sections of the international media, said it all loud and clear. That is, religion is being flagrantly leveraged or prostituted by politicians single-mindedly bent on furthering their power aspirations.

Although in the case of the US President the trend took on may be an exceptionally graphic or dramatic form, the ‘weaponizing’ of religion is nothing particularly new, nor is it confined to only religiously conservative sections of the West. For example, in South Asia it is an integral part of politics. The ‘South Asian Eight’ are notorious for it and it could be unreservedly stated that in Sri Lanka, the latter’s ethnic conflict would be more amenable to resolution if religion was not made a potent weapon by ambitious politicians of particularly the country’s South.

The more enlightened sections of Christian believers in the US may not have been able to contain their consternation at the sight of the US President apparently being ‘blessed’ by pastors claiming adherence to Christianity. Any human is entitled to be blessed but not if he is leading his country to war without exhausting all the options at his disposal to end the relevant conflict by peaceful means.

More compounded would be his problem if his directives lead to the death of civilians in the hundreds. In the latter case he is stringently accountable for the spilling of civilian blood, that is, the committing of war crimes.

However, the US along with Israel did just that in the recent bombings of Iran, for instance. The majority of the lives lost were those of civilians. If the US President is endowed with a Christian conscience he would have paused to consider that he is guilty of ordering the taking of the life of another human which is forbidden in the teachings of Jesus Christ.

Moreover, the ‘pastors’ praying over the US President should have thought on the above lines as well. May be they were in an effort to curry the President’s favour which is as blame-worthy as legitimizing in some form the taking of civilian lives. Apparently, the realisation is not dawning on all Christian conservatives of the US that some of these ‘pastors’ could very well be the proverbial false prophets and the latter are almost everywhere, even in far distant Sri Lanka.

However, the political reality ‘on the ground’ is that the Christian Right is a stable support base of the Republican Right in the US. Considering this it should not come as a surprise to the seasoned political watcher if the Christian Right, read Christian fundamentalists, are hand-in-glove, so to speak, with President Trump. But it is a scathing indictment on these rightist sections that they are all for perpetrating war and destruction and not for the fostering of peace and reconciliation. Ideally, they should have impressed on their President the dire need to make peace.

That said, political commentators should consider it incumbent on themselves to point out that religion is being ‘weaponized’ in Iran as well. Theocratic rule in Iran has been essentially all about perpetuating the power of the clerical class. The reasons that led to the Islamic Revolution in Iran are complex and the indiscreet Westernization of Iran under the Shah dynasty is one of these but one would have expected Iran to develop from then on into a multi-party, pluralistic democratic state where people would be enjoying their fundamental rights, as enshrined in the Universal Declaration of Human Rights, for example.

Moreover, Iran should have taken it upon itself to be a champion of world peace, in keeping with its Islamic credentials. But some past regimes in Iran had vowed to virtually bomb Israel out of existence and such regional policy trajectories could only bring perpetual conflict and war. Considering the current state of the Middle East it could be said that the unfettered playing out of these animosities is leading the region and the world to ‘reap the whirlwind’, having recklessly ‘sowed the wind’.

However, religious fundamentalism-inspired conflict and war has spread well beyond the Middle East into almost every region since 1979, the year of the Islamic Revolution in Iran. So much so, knowledgeable opinion now points out that religious identity has come to replace nationalism as a principal shaper of international politics or “geopolitics”, as quite a few sections misleadingly and incorrectly term it.

Elaborating on the decisive influence of religious identity, the well known and far traveled Western journalist Patrick Cockburn says in his authoritative and comprehensive book titled, ‘The Age of Jihad – Islamic State and the Great War for the Middle East’ at page 428 in connection with the war in Chechnya ; ‘If nationalism was not entirely dead, it no longer provided the ideological glue necessary to hold together and motivate people who were fighting a war. Unlike the Islamic faith, it was no longer a belief or a badge of identity for which people would fight very hard.’ (The book in reference was published by VERSO, London and New York).

In his wide coverage of Jihadist Wars the world over Cockburn goes on to state that today a call from a cleric could motivate his followers to lay down no less than their lives for a cause championed by the former. The 9/11 catastrophe alone should convince the observer that this is indeed true.

However, as often pointed out in this column, there is no alternative but to foster peace and reconciliation if a world free of bloodshed and strife is what is being sought. Fortunately we are not short of illustrious persons from the East and West who have shone a light on how best to get to a degree of peace. Besides Mahatma Gandhi of India, who was the subject of this column last week, we have former President of Iran Mohammad Khatami, who made a case for a ‘Dialogue of Civilizations’ rather than a ‘Clash of Civilizations’.

The time is more than ripe to take a leaf from these illustrious personalities, for, the current state of war in the Middle East has raised the possibility of a war that could transcend regional boundaries. The antagonists are obliged to exhaust all the peaceful options with the assistance of the UN system. Besides, war cannot ever have the blessings of the sane.

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Venerable Rahula Thera’s 35-year green mission and national Namal Uyana

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Venerable Rahula Thera

It was 35 years ago, on March 28, 1991, that Venerable Rahula Thera, then a young monk, embarked on a journey to the Na forest in Ulpathagama, Palagama, in the Anuradhapura District. Today, three and a half decades later, this mission stands as living proof of the enduring bond between Buddhist philosophy and the natural world.

Marking the 35th year of this green mission, Rahula Thera’s relentless dedication has transformed the National Namal Uyana into an environmental landmark admired not only across Sri Lanka but around the globe, as well.

When studying the life of Venerable Rahula Thera, one cannot ignore the profound connection between Buddhism and the environment. Buddhism is a philosophy deeply attuned to nature. The historical use of the sacred “Na Ruka” by all four Buddhas: Mangala Buddha, Sumana Buddha, Revata Buddha, and Sobhita Buddha — for enlightenment —demonstrates that from time immemorial, Buddhism has maintained a sacred bond with the Na tree. From the birth of Siddhartha to his enlightenment, the propagation of the Dharma, and even the great Parinirvana, all of these milestones unfolded in verdant, living landscapes.

Venerable Rahula Thera did not embark on the Namal Uyana mission seeking government support or personal gain. His commitment sprang from a deep devotion to the Buddha’s teachings on grove cultivation. A grove cultivator is one who spreads compassion for nature. As the Vanaropa Sutta teaches:

Venerable Rahula Thera reclaimed Namal Uyana which was then under the control of timber smugglers and treasure hunters. The term “Wanawasi” does not merely mean living in a forest; it signifies finding rest and enlightenment through nature, free from the destructive roots of greed, sin, and delusion.

Another defining aspect of Venerable Rahula Thera’s 35-year mission is the purification of the human mind. He has consistently taught the thousands who visit Namal Uyana that a person who loves a tree will never harm another human being. As the Dhamma proclaims:

It is important to remember that Venerable Rahula Thera devoted his life, without fear, speaking the truth and taking necessary action, tirelessly advancing the national mission he began. From 1991 to the present, he has worked with every government elected by the people, maintaining impartiality and independence from political ideology. Yet, he never hesitated to raise his voice fearlessly against any individual, of any rank or party, who committed wrongdoing.

Religious and Social Mission

The National Namal Uyana is not merely a forest; it is a magnificent heritage site, dating back to ancient times. Scattered across the landscape are boundary walls, the remains of ancient monastery complexes, and stone carvings believed to date back to the reign of King Devanampiyatissa. In earlier centuries, this sacred land had served as a meditation sanctuary for hundreds of monks. The name “National Namal Uyana,” by which this ecological and archaeological treasure is known today, was introduced by Venerable Rahula Thera in 1991. The government’s later recognition of the site as the National Namal Uyana stands as a significant achievement for both religion and national heritage.

Venerable Rahula Thera is a monk who has lived a life of renunciation. A striking example of this is his decision not to assume the position of Chief Incumbent of the National Namal Uyana Viharaya, instead entrusting the temple to the Ramanna Nikaya and its trustees. In doing so, he set a precedent for the contemporary Sangha. The Thera himself stated that he was merely the trustee of Namal Uyana, not its owner.

Legacy and Continuing Inspiration

The 35th anniversary of Venerable Wanawasi Rahula Thera’s arrival at Namal Uyana is not merely the commemoration of a period of time; it is a message of nature to future generations. Through his work, the Thera revived the ancient Hela tradition of loving trees and venerating the environment as something sacred. This religious and environmental mission remains unforgettable.

The revival experienced by Namal Uyana, after the arrival of Venerable Wanawasi Rahula Thera, is beyond simple description. Some of the major accomplishments achieved under his leadership include:

* Securing and protecting the largest Rose Quartz (Rosa Thirivana) reserve in South Asia.

* Restoring the Na forest spread across hundreds of acres, providing shelter to numerous rare plants and animal species.

* Transforming the area into a living centre for environmental education, offering practical learning experiences for thousands of schoolchildren and university students.

* Drawing the attention of world leaders and international environmentalists to Sri Lanka’s unique environmental heritage.

In recognition of his immense contribution to environmental conservation, Venerable Rahula Thera was honoured with the Presidential Environment Award and the Green Award in 2004—a significant moment in his life. Yet the Thera himself has always remained devoted to the work rather than the recognition it brings, making such appreciation even more meaningful.

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