A look at global debt statistics would show that almost all countries, irrespective of their economic status, obtain loans. The USA, the second richest country on the basis of PPP index, has a debt burden of more than 100% of their GDP, which is much more than some of the developing countries such as Brunei (1.7%) and Congo (12%). Russia, a developed country, has a debt/GDP ratio of 17% only. How much debt a country could take would of course depend on its ability to pay back. When the interest rate payable on the loans is lower than the growth rate of the national product, it is considered safe to be in debt. The interest/growth ratio in developed countries is maintained around 1, which is said to be safe with no fear of default. Donors too like to deal with countries that adhere to these parameters.
Obviously, poor countries have to take loans to engage in development work. But why would a rich country like the USA take massive loans. The US has debts amounting to 30 trillion which is 110% of its GDP. From year 2000 to 2019, the US debt increased by 69%. Japan and China are among the main lenders to the US, which owes Japan USD 1.2 trillion and China USD 1.1 trillion, and it has borrowed large sums from countries like Taiwan, Brazil, Belgium, etc. The US could settle these debts or take steps to reduce it, but it prefers to have deficit budgets and meet the deficit with loans. It does that because it can afford to, but there are American economists who say the heavy debt burden could cause a crisis.
If that is the case for the USA, obviously poor countries like Sri Lanka cannot afford to run debts in the range of USD 50 Billion. Our export earnings in 2018 amounted to USD 20 billion and imports cost USD 26 billion. The deficit had to be bridged with foreign loans. Even under crisis conditions we are spending more than we earn. In 2021, export earnings were USD 14 billion while imports cost USD 21 billion.
During the last decade or so interest rates for foreign debt was fairly low, and many developing countries made use of the opportunity to borrow heavily. This money, in many instances, was not utilised judiciously but spent on unproductive projects. As a result, those countries owe record amounts of money to foreign investors, governments and other lenders. For instance, Afghanistan, Chad, Bolivia and Zimbabwe owe an astounding USD 2.1 trillion. As many as 154 countries are in economic difficulty due to such short-sighted policies. Sri Lanka also belongs in this group. Tanzania, Lebanon and Belarus are almost bankrupt. Argentina has defaulted to pay its loans for the ninth time. Covid-19 has made matters worse as it has badly affected the dollar earning capacity of these countries. Sri Lanka in trying to solve the problem in 2020 took steps, such as tax cuts, fertilizer import ban etc. that made matters worse.
For the poorest countries (all those eligible for support from the International Development Association or IDA), 2020 debt service is about $36 billion, divided in roughly equal proportions between multilateral, bilateral (mostly non-Paris Club), and commercial creditors. Sri Lanka does not qualify for IDA assistance. There are worse- off countries than Sri Lanka, some consolation!
All developing country regions are potentially seriously affected: Latin America has the highest debt service/exports ratio, Africa has the least diversified export mix, East Asia has the largest absolute amount of debt service. In normal circumstances, these amounts would simply be refinanced in global capital markets or offset by new disbursements from existing lenders. But circumstances are not normal. Credit markets have tightened, and many countries are faced with very large reductions in foreign exchange revenues. In the face of huge global economic uncertainty, it is hard to predict which countries and regions will be most vulnerable. Already, Venezuela, Argentina, and Lebanon have defaulted and face lengthy and damaging legal proceedings with each creditor trying to negotiate individually, resulting in dead-weight losses for everyone until the situation is sorted out.
One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing. It seems clear that this is not just a low-income or Sri Lankan or an African country problem. There are several calls for debt standstills to ease the burden on developing countries. Debt threatens to create a global development emergency, in much the same way as the pandemic is creating a global health emergency. Both could result in social unrest and instability. Something will have to be done by the aid giving countries, but that doesn’t mean the responsibility of developing countries are less. They have to show greater commitment in controlling corruption, waste and in good management and transparency and accountability in all their dealings. Loans should not be wasted on unproductive projects such as Mattala Airport.
All these countries need time to recover. Many developing countries simply will not have the foreign exchange to service their debt this year, notably those who are heavily indebted, are commodity dependent (two-thirds of all developing countries according to UNCTAD), have relied on large tourism earnings, or on remittances. A good example of the value of buying time is the negotiated settlement of debts in Korea in 1997-98. Similarly, Sri Lanka and all the affected countries need time to put their house in order and slowly grind back to recovery.
In the current context, timeliness means that case-by-case solutions may not be feasible. Like COVID-19, there is a need to flatten the curve of debt reschedulings, so that the peak falls within the capacity of the country to handle the crisis. Hence there is a need for the G-20, the IMF/World Bank, the U.N. or others to develop a simple debt freeze framework, that can buy time for these stricken countries. Then the problem in each country could be analyzed and remedial action suitable for each country taken. There could be a UN Security Council Resolution calling for a standstill on payment of debt service and an agreement by all creditors to abide by the UN resolution. Such measures had been taken in the past during global debt crises.
Sri Lanka is somewhat better off than most of these badly affected countries. It is a fertile country with a good base for agricultural development. Its literacy rate is high and has an educated workforce. Its garment and tourism industries are fairly well-developed, and the potential for development of industries like electronics, IT and communication is fairly good. The geographical situation of Sri Lanka in the Indian Ocean is most favourable for the development of a trade and shipping hub. If our leaders stop doing foolish things, listen to genuine scientists and economists and focus on supplying the agriculturists, planters, fishers and industrialists their requirements to develop their sectors, the country has a good chance of recovery. Our economists, managers, CEOs and entrepreneurs are second to none in the world. If there is no political interference they have the knowledge and ability to deliver.
In the energy sector, the mafia that controls it must be got rid of, and solar energy must receive highest priority. More than half of our foreign exchange earnings go for import of fuel. The sun is the only source of energy the world has, the problem is we have not tapped its resources fully. Sri Lanka must seriously go into the business of researching and manufacturing solar power capturing equipment. These things could and should have been done with the big loans that the country took in the past.
In future, loans must be kept below 50% of the GDP and the ratio between interest rate payable on loans and GDP growth rate should be maintained at one or less. The present debt burden of USD 50 B should gradually be reduced to about 10 B. Loans should never be taken for consumption or unsustainable projects that do not benefit the people. No room should be left for corruption. Therefore, corrupt politicians would not like to adopt these policies. First we must elect incorruptible politicians.
N.A.de S. AMARATUNGA
Khan’s new war game
By Zahid Hussain
IMRAN Khan’s latest change of tack has caught his opponents by surprise. For months, the federal government had braced itself for a siege, and was reinforcing security around the capital. But the PTI’s decision to call off the march and dissolve the Punjab and Khyber Pakhtunkhwa assemblies has changed the entire scenario.It all happened on the eve of the change of guard in Pindi, lending a curious twist to the power game. The change of strategy came in the garrison city as the climax to the march that was aimed at forcing the government to agree to early elections.
It is apparent that the PTI’s months-long campaign could not achieve any of its objectives. But will Khan’s new move to checkmate the fledgling dispensation work? The dissolution of the assemblies in the two most powerful provinces and the possible pulling out of PTI members from the other provincial legislatures could certainly deepen the political crisis, making it harder for the fractious ruling coalition to survive.
However, it may not be the end of the game. While the PTI leadership has approved the decision, one is still waiting for its implementation. Apparently, there should not be any complication with the two chief ministers on board, but nothing can be taken for granted until it’s done. Notwithstanding its claims, the ruling coalition at the centre seems to have no power to block the dissolution. The option of governor’s rule may not be effective in this situation.
Indeed, the dissolution of the provincial assemblies will not constitutionally bind the federal government to dissolve the National Assembly and call for general elections. But elections in the two provinces within 90 days would change the entire political dynamics.Dissolution of the assemblies in Punjab and KP will deepen the political crisis.
Meanwhile, the PTI has also decided to approach the Speaker of the National Assembly to accept the resignations of its remaining lawmakers. With the PTI members absenting themselves from its proceedings, the National Assembly had already lost its effectiveness; the acceptance of the PTI resignations would only add to its dysfunctionality.The entire episode is set to completely destabilise the system. Can a weak coalition government withstand such mounting political pressure?
What is most alarming is the impending economic collapse and looming threat of sovereign default further complicating the situation. An inept government and its clueless finance minister do not seem to have any ability to deliver the country out of this mess. The rising current account deficit and runaway inflation have stifled economic growth.
Heightening political instability makes it much more difficult to stem the rot. The country is on a slippery slope with no hope of things getting better. We are witnessing what former finance minister Miftah Ismail describes as a “consistent downward slide”. But the dire warning about the sinking ship is drowned in the cacophony of a political blame game.
It’s not just a political or economic crisis; it’s a crisis of state in the midst of anarchy. With eroding state authority, the situation appears extremely grim. The worsening political instability has given space to non-state actors.There has been an alarming rise in militancy in the former tribal districts and other parts of KP. Banned militant outfits are back in action in some districts taking advantage of weakening state authority and political instability.
The return of militants to Swat valley more than a decade after they were driven out from the region by the Pakistan military indicates a failure of our national security policy. The reported presence of heavily armed men is reminiscent of the bad old days of Pakistani Taliban control in 2008. The resurgence of the militant network in Swat does not seem to be an isolated phenomenon. The TTP is now active in the former tribal areas too, particularly Waziristan.
Curiously, their activities seem to have increased after Pakistani security agencies entered into peace negotiations with the militant outfit operating from their sanctuaries across the border in Afghanistan earlier this year.
There is a strong suspicion that the militants returned to Swat as a result of a deal. Most of them had fled to Afghanistan after the military operation in 2009. They have reportedly been joined by local radical groups.In the midst of political chaos in the country, the TTP has called off a tenuous ceasefire and ordered the militants to launch attacks across the country. There is nothing surprising about the announcement; the ceasefire had never been implemented.
The so-called peace negotiations seem to have given space to the militants. According to media reports, the interior ministry has warned of some TTP factions joining the militant Islamic State group.Thousands of people have turned out in various parts of Khyber Pakhtunkhwa in recent weeks to protest against the resurgence of militancy and the inaction of the security agencies.
The residents have not forgotten the days when the rampaging Taliban had established a reign of terror in the area. The reassertion of militant groups could further destabilise the country.
Meanwhile, in the midst of chaos, the country has a new army command. The transition may have defused the controversy over the appointment but the challenges before the new chief are daunting. Although the security establishment has pledged to keep itself out of power politics, it may not be that easy, given how deeply the military is entrenched in the power structure.
There is always the danger of it getting sucked into the fray, with the political forces at war with each other.
Imran Khan’s latest move to dissolve the provincial assemblies may have pushed the ruling coalition into a corner but it has also intensified the political confrontation and deepened the chaos.The former prime minister can force the government to agree to an election date a few months earlier than the end of the National Assembly term. But it is doubtful that this would calm matters.
A major question is whether the warring sides can sit together to agree on a mechanism for free and fair elections. More important is how to deal with the worsening economic crisis and the resurgence of militancy that present a serious threat to national security.
The writer is an author and journalist.
Bali Declaration: Is it the clarion call to #endTobacco?
By SHOBHA SHUKLA, BOBBY RAMAKANT – CNS
Tobacco use is among the unhealthy behaviours that result in preventable burden of cancers, strokes, and heart diseases, said Budi Gunadi Sadikin, Indonesia’s health minister. In Indonesia tobacco use is the second largest risk factor for untimely deaths, he added. World Health Organization had earlier underlined that without clamping tobacco use, we cannot deliver on the promises enshrined in the Sustainable Development Goals.
Indonesia has walked the talk on building a grounds-up movement against tobacco. In 2011, twelve Mayors had come together to forge a Mayors’ Alliance to advance tobacco control in their respective cities. Today in 2022, there are over 150 Mayors of different Indonesian cities that are part of this Alliance, who are adapting as well as enforcing local laws to reduce tobacco use, said Dr Bima Arya Sugiarto, Co-Chair of Asia Pacific Cities Alliance for Health and Development (APCAT) and Mayor of Bogor City in Indonesia. “Mayors’ Alliance has been the main driver for banning tobacco advertising and promotion, as well as preventing tobacco industry interference in public policy” he said.
Both were speaking at the opening ceremony of 7th Asia Pacific Summit of Mayors (7th APCAT Summit or #APCAT2022) being held in Bali, Indonesia.Another sterling example of grounds-up tobacco control movement in Indonesia is the fact that “as of November 2022, over 300 cities have adopted the local smokefree laws,” said Dr Bima Arya.
That is why Indonesian health minister called for stronger partnerships “to reduce tobacco use” and “expand the on-the-ground effective programmes for tobacco control.”
“I would like to extend my gratitude to Mayors who have passed local smokefree laws. It is important for central government to collaborate with local governments to achieve tobacco control,” said the Indonesian health minister.
Despite alarming levels of tobacco industry interference, it is indeed commendable that Mayors and sub-national leaders of Indonesia have been able to advance tobacco control.
Agrees Kelly Larson of Bloomberg Philanthropies: “We acknowledge the role of sub-national leaders in Indonesia and commend the Mayors of over 300 cities who have passed local smokefree laws, that protect 75% of the country’s population from the hazards of tobacco smoke.” Kelly Larson shared that prioritising tobacco control and public health in New York resulted in increased life expectancy of 2 years for its citizens.
Not surprisingly, tobacco industry and its front groups are trying to create hurdles when local sub-national leaders try to advance tobacco control and health promotion. Effective enforcement of strong tobacco control laws hurt the industry profits. For instance, in 2017, Bogor City had become the first Indonesian city to implement a point-of-sale tobacco display ban as part of its smokefree law. But soon after a legal battle ensued. Finally, in February 2020, the city of Bogor won the court case when Supreme Court had upheld its ban on the display of tobacco products at point-of-sale.
While exposing how tobacco industry approaches election candidates to influence public policy, Mayor of Bogor City Dr Bima Arya said in 7th APCAT Summit opening session that “every candidate of local elections was approached by the tobacco industry…”
#APCAT2022 Declaration gives hope for a better tomorrow
“We, the delegates of the 7th Asia Pacific Summit of Mayors, recognize that APCAT is a vital platform to share experiences, shape local actions, and secure greater leadership as well as look for synergistic actions between specific health and development programmes.
We commit to accelerate progress towards eventually ending tobacco use, as well as preventing the avoidable burden of NCDs, eliminating Tuberculosis, and improving synergy between health and development programmes and promoting integrated responses where possible, thereby reducing disease burden and averting untimely deaths, by:
– Leading effective implementation of tobacco control programmes that include smokefree environments; a complete ban on tobacco advertising, promotion, and sponsorship; promotion of larger graphic health warnings with plain packaging on tobacco packs; smoking cessation programmes; and a ban on electronic cigarettes, heated tobacco products, shisha, and other similar products;
– Working with national government and policy makers to raise taxes and prices on unhealthy commodities (such as, but not limited to, tobacco products, alcohol, sugary and sweetened beverages);
– Ensuring accountability to prevent interferences and rejecting funding, logistics, donations, or grants from, and partnerships with, any entity related to any unhealthy commodity industries (such as, but not limited to, tobacco, alcohol, sugary and sweetened beverages);
– Investing in tobacco control for prevention of tuberculosis, non-communicable disease, and stunting. It includes smoking cessation in TB and NCD clinics, and family health programs; universal screening for TB and NCDs
– Adopting One Health approaches and processes to ensure that “a healthy city is a resilient city”.
Every tobacco-related death is preventable
The 7th Asia Pacific Summit of Mayors, which opened today in Bali, Indonesia, is jointly organised by the Asia Pacific Cities Alliance for Health and Development (APCAT), Ministry of Health, Republic of Indonesia; Ministry of Home Affairs, Republic of Indonesia; National Centre for Health Promotion, Ministry of Health, Cambodia; Bloomberg Philanthropies; Cities of Bogor, Denpasar and Klungkung of Indonesia; Balanga City, Philippines; Association of All Health Offices Indonesia (ADINKES), Indonesia Mayor and Regent Alliance, Indonesian Public Health Association; Udayana Central; Campaign for Tobacco Free Kids, Vital Strategies; Tobacco Free Generation International, The International Union Against Tuberculosis and Lung Disease (The Union); APCAT Parliamentarians and Asia Pacific Media Alliance for Health and Development (APCAT Media).
Over 1000 national and sub-national leaders, public health experts are attending the 7th APCAT Summit in Bali, Indonesia in person and virtually. Participants include mayors, governors, ministers, members of parliament, tobacco control advocates, and media from across the Asia Pacific region.
Over 8.67 million people die of tobacco use every year (out of which one million die due to second and third-hand tobacco smoke). Despite the crippling onslaught of COVID-19 public health emergency and humanitarian crises, tobacco industry has heightened its deceptive strategies to protect and expand its markets. In addition to the mountainous death toll and avoidable disease burden, tobacco use has also resulted in an annual economic loss of nearly USD 2 trillion to the global economy.
Achieving food security:Integrated plan necessary
BY Dr. C. S. Weeraratna
According to United Nations’ Committee on World Food Security, “Food security is achieved when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life. The Food and Agriculture Organization (FAO) and World Food Pogramme (WFP) estimate that 6.3 million Sri Lankans are facing moderate to severe acute food insecurity. This could be attributed mainly to shortage of food and high food prices. The latest WFP assessment reveals that 86 percent of families are buying cheaper, less nutritious food, eating less and in some cases skipping meals altogether. This unfortunate situation is the result of many factors among which are poverty, unemployment, decrease in land productivity, scarcity of foreign exchange reserves, depreciation of the local currency, etc. The report further states that the production of maize, mostly used as animal feed, is about 40 percent below the past five-year average, with negative effects on poultry and livestock production. Likewise, the production of vegetables, fruit, and export-oriented crops, such as tea, rubber, coconut, and spices, is well below average, causing a significant decline in households’ income and export revenues. The total cereal import requirement in 2022 is estimated at 2.2 million mt. In the first six months of 2022, more than 930,000 mt of cereals were imported, leaving an outstanding import requirement of 1.27 million mt. Given the persisting macroeconomic challenges, there is a high risk that the remaining import requirement will not be met.
In view of this situation, President of Sri Lanka has launched a programme to ensure food security in the country. The vision of this Food Security Programme is to ensure every citizen has access to enough food at a reasonable price to lead an active and healthy life and to ensure that no citizen of the country should starve due to lack of food and no child should be a victim of malnutrition.
Food Security was not an issue in the past. Even a few years ago we were almost self sufficient in rice. But, the foolish decision of the former President of Sri Lanka Mr. Gotabaya Rajapaksa banning imports of fertilizers such as urea and other agrochemicals affected local production of rice causing us to import rice which has resulted in lowering of food security level. Not only rice production, production of maize, mostly used as animal feed, vegetables, fruit, and export-oriented crops, such as tea, rubber, coconut, and spices, have been affected.
National food insecurity is due to many factors. Among these are wild elephants roaming in some of the dry zone villages causing death to many and destroying crops, Chronic Kidney Disease affecting thousands of farmers in the dry zone, inadequate water supply, lack of reasonable transport facilities, non availability of fertilizers such as urea, and other agrochemicals at correct times, inability to sell the produce at reasonable prices, land degradation etc. House-hold Food Security is closely related to the economy which has deteriorated during the last few years mainly due to drop-in crop production and several other factors. Prices of most food items have been on a steady rise since the last quarter of 2021 and reached a record high in August 2022, with the year-on-year food inflation rate at nearly 94 percent, further limiting the purchasing power of households.
According to Dept. of Census and Statistics around 14.3 % (nearly 3 million) are below poverty level. Unemployment, lack of resource production factors such as land and/or capital are the main factors causing poverty. Ill-health and sickness among family members, addiction to drugs and alcohol, frequently occurring natural disasters such as floods and droughts in some parts of the country, inborn defects such as deformities, blindness, inadequate knowledge on nutrition also tend to affect food security among households.
Land Degradation: One of the important contributory factors for the decline in the productivity of land is Land Degradation. Soil erosion, soil compaction, and nutrition depletion, cause productivity of land to decline, making crop production less profitable. In view of the importance of land degradation, the Ministry of Environment, in 2005, established an expert committee on Land Degradation and mitigating the effects of drought in SL. This committee comprised a number of experts in the field of land management and the main role of the committee was to advice the Ministry of Environment, on issues related to controlling land degradation. At the first national symposium on Land Degradation held in 2010, organized by the Ministry of Environment and the expert committee on Land Degradation, the participants, who were representing many land-related institutions in the country, revealed that a substantial amount of soil/ha/year is lost due to soil erosion. They were of the view that urgent action such as implementation of proper land use planning and the soil conservation and environment act etc. need to be taken by the relevant organizations to control land degradation.
Milk is an important food item for people, especially children. The total annual expenditure on importing milk and other dairy products is around Rs 40 billion. If we are to reduce our trade deficit which is around US. $ 10 billion annually and increase food security, increasing local milk production is important. To increase local milk production, a few years ago, the Government brought down 5000 heifers from New Zealand and Australia. The heifers imported were distributed among middle-scale entrepreneurs in Nuwara Eliya, Matale, Kandy, Kurunegala and Badulla districts. According to newspaper reports the Government had spent Rs. 520,000 per heifer and sold it to farmers at a lower rate of Rs. 200,000. It has been reported that some of the imported cows suffer from Bovine Viral Disease (BVD) and around 200 out of the 5,000 heifers imported to Sri Lanka have died without contributing to local milk production. Simply importing high yielding cattle will not increase milk production, unless they are properly fed and appropriate veterinary services are provided. Cattle imported from countries such as New Zealand and Australia are not acclimatized to local conditions and hence their productivity tends to decline. The farmers complain of insufficient pasturelands to feed the cattle. There is no appropriate programme to cultivate improved pastures such as Brachiaria sp. Napier and CO3. Pasture grasses can be grown under coconut but there was no effective programme to improve pasture production. It is foolish to import cattle to enhance milk production in the country without implementing an integrated programme to upgrade local cattle, making available cattle feed and improving veterinary practices in the country.
There are numerous organization in the country involved in various aspects of food security which is related to several Sustainable Development (SD) Goals. Authorities such as SDG council, Agric. Ministry, Paddy Marketing Board, Institute of Post Harvest Technology, Pulses and Grain Research and Production Authority, Research Institutes etc., need to take cognizance of all these issues and develop an integral plan and implement it if they are keen to achieve Food Security in the country.
R. Sampanthan: ‘We cannot go on like this’
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