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Lanka can overcome its problems while avoiding foreign debt traps Prof.TISSA VITARANA

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Sri Lanka faces a severe economic, social and political crisis. More than sixty per cent of families have incomes below the poverty line and manage on one or at most two meals per day, many going to bed hungry. The level of malnutrition is 18.4%, close to twenty per cent. That is one out of five children are malnourished, and both mental and physical development will be retarded, with grave consequences to our future generation. The floating of the Rupee and the widening budget deficit has made matters worse. The present SLPP government has aggravated this situation by publicly stating that there will be no price control and traders are free to charge whatever they like. The trader middle men are making enormous profits and prices , specially of food, are going sky high. The massive printing of currency notes, without a commensurate increase in production, has led to very high inflation. Incomes have remained static or even dropped due to staff cuts or closures affecting the private sector. On this May Day, international Labour Day, one is sad to see that the trade union movement is too weak to fight back. The horrible contract labour system has undermined the strength of the unions. On this May Day the LSSP and the socialist Left state that we are categorically opposed to the above policies and are ready to support the workers to rebuild the Trade Union movement to what it was in the 1970s. Dr.NM Perera as Finance Minister in the 1970 Coalition Government overcame the severe economic crisis (when there was little or no local industry and the country depended on imports, and the price of a ton of sugar rose from 40 pounds to 600 pounds), not only balancing the budget but even showing a surplus. Through a dual value for the Rupee, locally and in relation to the dollar, the rupee and the country remained stable, and exports were promoted.

Besides the above rupee crisis, there is a massive dollar crisis. Most governments, whether green or blue, have resorted to loans from foreign sources to bridge the adverse foreign trade gap. As a result we have a massive foreign debt burden of US$ 52 Billion and the cost of debt servicing alone is about US $ 6 Billion per year. But our foreign reserve which averaged around US $ 7 to 8 Billion is now down to well below US $ 1 Billion, nearer 500 million. Internationally accepted rating agencies like Fitch and Moody have dropped us down to the bottom value of a single C in their scale. This means that our importers cannot get their requirements quickly for the market by sending letters of credit (LCs) through our major banks. They have to send dollars. But if there are no dollars available in the banks in the country the inevitable result is an acute shortage of medicines that endanger the lives of people. The import of essential food items, of fuel, of LP gas etc. is the result. More and more queues to torture the people, the middle class as well. Galle Face and “Gota go home” is the inevitable outcome. Is it that we in Sri Lanka cannot produce these items.

Development of the national economy can make us self- sufficient in food, and healthier through a gradual shift to proper organic farming ( Eco- Agriculture). The Medicinal Drug policy of Prof.Senaka Bibile ( a member of the LSSP) enabled every Government Hospital to provide every medicine to practically every disease free of charge in the 1970 – 1975 Coalition Government period. More than 100 Third world countries have adopted his policy under WHO leadership. Some like Bangladesh have become leading exporters. Senaka created the State Pharmaceutical Corporation (SPC)for the bulk purchase of all Sri Lanka’s entire needs at rock bottom prices under the pharmaceutical name. An off-shoot, the SPMC, manufactured over 50 essential and much used drugs. A good pharmaceutical industry will prevent patients’ lives being put at risk as at present, and also give many jobs for our youth and earn dollars abroad.

The import of LP Gas, can be replaced by popularizing the Bio-gas cookers developed by the Government owned NERD institution in Jaela. The team of engineers and technicians led by Sunil Weliwita have developed this so that the energy is obtained from kitchen waste and trees and plants in the garden. There is no need to pay nearly Rs 5,000 for imported LP gas as at present. We only need some Sri Lankan entrepreneurs to invest in setting up some factories to mass produce them. Under the theme ” Smart Home Garden” it not only achieves waste disposal, but also helps to produce water.

One of the major factors provoking the peoples’ protest is the cut in electricity supply, often at unexpected times, not according to the published time schedules. This can be better organized. The shift to renewable energy ( solar, wind, and water has been extremely slow. This must be speeded up. The anaerobic fermentation of all types of waste collected in towns can be used to produce good organic fertilizer and also bio-gas. We tried to introduce this to Colombo but it failed, but I am happy that it has worked in Yatiyantota and Balangoda and a few other towns.

There is no need to go begging to the IMF for dollar loans. These take over 3 months to arrive and the amounts are small e.g. US $ 300 to 600 million. The conditions are harmful to us e.g. the insistence that Sri Lanka permits uncontrolled imports, the major cause of our present problem. We get into more debt. Instead what should be done is to negotiate a Moratorium on our debt with our creditors. This is common practice when countries are faced with crises like ours. I am told that Uruguay and Argentina have done so this time. The principle is to delay our annual debt servicing payments, which was US $ 6 Billion last year, for about 5 years. This would mean that we save about US $ 30 Billion , which can ensure our peoples’ needs as well as be used for productive development. Why has the SLPP Government not done this yet?

Why are we sending out valuable raw material at rock bottom prices, as was done during British rule. We have the best graphite in the world in Bogala and other places which is being converted into the wonder material, Graphine, which is being used to produce a whole range of goods in UK and Europe. The latter is spending over one billion Euro on related research. Why are we sending the mineral rich earth from Pulmoodai in ship loads abroad. The Ilmenite alone is a source of Titanium dioxide, a base for all paints. From the latter is obtained Titanium , a highly priced substance essential for the aeronautics industry. What about the Phosphate deposits in Eppawela that the McMorran Co. of USA tried to steal from us for a pittance. But the LSSP stopped with our former General Secretary, Batty Weerakone, defeating the move in the Supreme Court.

We have so many raw materials as the basis for industry. As the Minister of Science and Technology I targeted setting up one technology transfer centre in in each Administrative Division. I succeeded in 263 out of the 341 ( LTTE was a obstacle). In the 5 years I was Minister 12,643 entrepreneurs emerged, all SMEs, a majority also providing jobs. I am glad to learn that more than a thousand of them are exporting their products. Hi Tech is important for large industry. I planned and developed SLINTEC as the only Nanotechnology Centre in South Asia, the 18th in the world. One benefit is that Dr. Kottegoda and her team have produced in a pilot plant, nanoparticles with 43% nitrogen. But our SLPP Government chooses to buy from India Nanoparticles with only 4.7% Nitrogen at a huge cost.

When are we going to think of developing our country, and not to line certain peoples’ pockets. It is also high time that the tax policy is changed and the upper limit raised from 14% to 75%.



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Weerawansa’s wife sentenced to RI

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Lawyers appearing for Shashi Weerawansa, MP Wimal Weerawansa’s wife, yesterday (27) appealed against a Colombo Magistrate’s Court decision to sentence their client to two years rigorous imprisonment.Colombo Chief Magistrate, Buddhika Sri Ragala found her guilty of submitting forged documents to obtain a diplomatic passport circa 2010. The Colombo Magistrate’s Court also imposed a fine of Rs. 100,000 on Mrs. Weerawansa. If the fine is not paid she will have to serve an extra six months.

Additional Magistrate Harshana Kekunawala announced that the appeal would be called for consideration on 30 May.The case against Mrs. Weerawansa was filed by the CID after a complaint was lodged on 23 January 2015 by Chaminda Perera, a resident of Battaramulla.

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Unions predict end of energy sovereignty

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By Rathindra Kuruwita

A government decision to allow all privately-owned bunker fuel operators to import and distribute diesel and fuel oil to various industries was a rollback of the nationalisation of the country’s petroleum industry and another severe blow to energy sovereignty of the country, trade union activist of the SJB Ananda Palitha said yesterday.Earlier, Minister of Power and Energy, Kanchana Wijesekera Tweeted that ‘approval was given to all the Private Bunker Fuel Operators to Import and provide Diesel and Fuel Oil requirements of Industries to function their Generators and Machinery. This will ease the burden on CPC and Fuel Stations provided in bulk’.Commenting on the decision, Palitha said that according to the existing law those companies only had the power to import, store and distribute fuel for ships. Those companies did not have the authority to distribute fuel inside the country, Palitha said.

“Only the Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Corporation (LIOC) can distribute fuel inside the country. There is a controversy about the licence given to the LIOC as well. If the government wants other companies to import fuel, it needs to change the laws. The Minister does not have the power to make these decisions. A few months ago the Gotabaya Rajapaksa administration used to rush Bills that adversely affected the country through Parliament. Now, since they don’t have a majority in parliament, they are using the Cabinet to make decisions that are detrimental to the country’s interests.”

Palitha said that the controversial government move would further weaken the CPC, and that the ultimate aim of the Rajapaksa-Wickremesinghe government was to make the Ceylon Electricity Board (CEB) purchase fuel from private distributors. With a weakened CPC and a CEB under the mercy of private companies, the Sri Lankan state would have little control over the country’s energy sector, he warned.

“The CEB already can’t pay the CPC, and therefore how can it pay private companies? It will have to sell its assets. This is another step in the road to fully privatise the energy sector. When this happens no government will be able to control inflation or strategically drive production through fuel and energy tariffs. The people will be at the mercy of businessmen and the government will only be a bystander,” he said.

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Modi government moves to ‘solve’ Katchatheevu issue

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The Narendra Modi government is mulling restoring the traditional rights of Tamil Nadu fishermen in Katchatheevu, an uninhabited island of 285 acres, sandwiched between India and Sri Lanka in the Palk Bay, with the BJP hoping the move could lift its political fortunes in the southern state.The government will push Sri Lanka to implement “in letter and spirit” the 1974 agreement reached between Indira Gandhi and Sirimavo Bandaranaike, then prime ministers of India and Sri Lanka, on the island.This will have to be done by withdrawing the “Executive Instructions” issued in 1976 without questioning Sri Lanka’s “sovereignty” over Katchatheevu, sources aware of the internal discussions in the BJP told the Indian newspaper, Deccan Herald.

Sources added that the discussions were “ongoing” at “various levels” including reaching out to Tamil political parties in Sri Lanka. The recent visit of TN BJP chief K Annamalai to Sri Lanka is also part of the outreach. Many feel the instructions issued in 1976 “superseded the provisions of the legally valid” pact between India and Sri Lanka, thus making Katchatheevu a subject of dispute in the Palk Bay.While the 1974 agreement gave away Katchatheevu, which was part of the territory ruled by the Rajah of Ramanathapuram, to Sri Lanka, the 1976 pact drew the maritime boundary between India and Sri Lanka in the Gulf of Mannar and Bay of Bengal.

“We cannot disturb the agreement signed in 1974. We are now finding ways and means to implement the agreement in letter and spirit. All we plan is to ask Sri Lanka to invoke Article 6 of the Katchatheevu pact. If Sri Lanka agrees, the issue can be sorted through Exchange of Letters between foreign secretaries of both countries,” a source in the know said.Another source said the time is “ripe” to push forward on the issue. “With fast-changing geopolitical situation in the region, we believe Sri Lanka will slowly come around and accept the rights of our fishermen,” the source said.

“The opinion within the party is that time is ripe to push this cause, with Sri Lanka beginning to realise that India can always be relied upon, given PM Ranil (Wickremesinghe) is pro-India.”

Articles 5 and 6 of the 1974 agreement categorically assert the right to access of the Indian fishermen and pilgrims to Katchatheevu and state that the “vessels of Sri Lanka and India will enjoy in each other’s waters such rights as they have traditionally enjoyed therein”.

However, fishermen from India were prohibited from fishing in the Sri Lankan territorial waters around Katchatheevu in 1976 following the signing of an agreement on the maritime boundary. The battle for fish in the Palk Bay has often ended in Indian fishermen being attacked by Sri Lankan Navy for “transgressing” into their waters.The BJP, which is yet to make major inroads in Tamil Nadu, feels a “solution” to the long-standing issue will give the party the much-needed momentum ahead of the 2024 Lok Sabha polls and provide a chance to get into the Tamil psyche. Political analysts feel that it might also allow the BJP to needle the DMK and the Congress by pointing out that it has restored the rights “surrendered by them,” to Tamil fishermen

Senior journalist and Lanka expert R Bhagwan Singh said: “If BJP succeeds in its efforts, it will certainly help the saffron party in the coming elections.”

But a source said the move will “take time”. “We don’t want to rush and create an impression we are forcing Sri Lanka. We will take it slow. We will take every stakeholder into confidence and reach an amicable settlement with Sri Lanka. All we want to do is restore traditional rights of our fishermen,” the source said.CM Stalin also raised the issue at an event on Thursday, telling Modi that this is the “right time” to retrieve Katchatheevu.

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