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Some Strengths and Weaknesses of the Budget Speech 2022

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By Dr Laksiri Fernando

The budget speech that the Minister of Finance Basil Rajapaksa delivered in Parliament on 12 November 2021 was fairly structured with the following sections. That is a positive.

1. Preface.

2. ‘Global Challenges.’

3. Our Strengths.

4. The Challenges Before Us.

5. Policy Synopsis.

6. Development of the National Economy.

7. Revenue Proposals.

8. Macro-Economic Vision for Revival.

9. Conclusion.

But its content was the question owing to boasting, half-truths, contradictions, and unachievable pronouncements. If the Opposition was serious about countering the wrong policies, weaknesses, errors, etc., of the Budget, it could have possibly used the same format. Democratic politics is not about a ‘gang war’ between the government and the Opposition as appears to be the case in today’s Parliament. Debates should be more critical on the flawed policies with alternative perspectives being offered. .

In parliamentary democracies, there are ‘shadow cabinets’ and ‘shadow ministers.’ There should be a ‘Shadow Minister for Finance.’ It is mainly his/her role to present counter arguments, expose false data, and criticise misleading policies. The Opposition also should have a ‘official website’ where they could publish counterarguments or counter budgetary policies. Of course, it is also the duty of the media (as it is fairly done), academics and journalists to do the same critically and objectively.

A Family Preface?

The Preface correctly says, “We are passing through perhaps the most painful period of human civilisation.” This should mean the environmental disasters, Covid-19 pandemic and deaths, increasing poverty in poor countries, and evolving economic crises worldwide and others. Of course, these are challenges even in Sri Lanka. As a solution, he says:

“I first come to learn the concept of ‘Challenging the Challenges’ for the betterment of the public in my ancestral home in Madamulana. The Rajapaksas have a history of never being daunted by challenges. Mr. D. M. Rajapaksa, who is known as the “the Lion of Ruhuna”, who represented the second State Council in 1936, is known by the entire country. He is my father’s elder brother (loku thaththa).”

If the Minister was serious about the public nature of the challenges, he should not have given purely a family perspective on the subject. His phrase ‘Challenging the Challenges’ is a common phrase in many languages and in quotations of many authors. Tracing it to Madamulana may be suitable to a D.M. Rajapaksa oration, but not to a preface of a Budget speech.

He does not stop there. In the remaining eight paragraphs of the Preface (1.4 to 1.11) he boasts of his family, loku thatha, thatha, aiya, malli, thama, and their achievements. This is undoubtedly a record in Budget speeches in the world. He places Mahinda Rajapaksa at the center of this legacy who, in fact, got disgracefully defeated in 2015. This is what the Minister says: “The Hon. Prime Minister Mahinda Rajapakse, who is today in this House, is at the centre of the Rajapaksa Political Legacy.”

There is no mention of other Ministers, the Cabinet, or its collective responsibility. Not a word about other parties or its leaders other than what he has created as Podu Jana Peramuna.

Challenging the Global Challenges

The Finance Minister is correct in briefly outlining five global challenges: (1) increasing global social and economic disparities between the rich and the poor, (2) the slow progress in achieving the (UN) sustainable goals, (3) increasing environmental catastrophes, (4) limited assistance from bi-lateral and multilateral institutions, and (5) challenges in adopting to the post-pandemic ‘new normal.’

The degeneration of moral and ethical standards worldwide, particularly among political leaders with corruption, deals, misdeeds, and authoritarianism, is not mentioned at all.

However, without much relevance, he states, “The impact is worse on countries with trade focused economies such as ours compared to those economies dominated by the manufacturing sector.”

Even if his ‘vision’ of turning the present economy of Sri Lanka from ‘trade focused’ to ‘manufacture dominated,’ is commendable, the global challenges that he has outlined have nothing much to do with the difference. To my knowledge of economics, trade and manufacture are complimentary. While Sri Lanka undoubtedly should promote manufacture, a balanced approach might be the best without promoting one against the other as he has done. It is in the same section that he has arrived at a figure of Rs. 500 billion.

“The opportunity to provide such services, both domestically and externally has been curtailed, resulting in a loss of income. As a result, the loss of revenue to the country and the Treasury has been unlike any other year before. The loss to the Treasury, according to our estimates, is over Rs. 500 billion.”

The nature of local productions and nature of exports undoubtedly are reasons for our economic predicaments and underdevelopment. Therefore, it will be commendable if the government makes genuine efforts to change the situation. But the claim that this year’s loss to the Treasury of Rs. 500 billion is purely a result of this economic imbalance is unbelievable unless the government supplies concrete evidence for the claim. This loss or a major part of it appears to be a result of mismanagement of imports and exports, and the enormous tax concessions given to the rich by the last Budget. Without direct import controls, higher taxes could have been imposed on unnecessary or luxury imports. Dialogues with importers could have been another measure.

Bloated ‘Our Strengths’

It is quite superficial to talk about ‘our strengths’ just after talking about global challenges as if Sri Lanka were at the forefront of changing the world! At the beginning of this talk is the boast about Rajapaksa family and its leadership again. Both the President and the Prime Minister are praised. If the Budget speech was following a kind of SWOT (strengths, weaknesses, opportunities, and threats) analysis, with the strengths, the weaknesses also could have been discussed. That is the way to go about economic change.

Among the strengths, there is only one paragraph with four sentences on Infrastructure: “Our infrastructure facilities are of high standard. The quality of our ports, airports, telecommunications, highways, roads, and electricity supply are very good.” Of course, there are certain aspects to be ‘proud’ about, but some are still in preparation (ports). What about railways? They are still in the colonial heritage.

The Minister suddenly says: “Also, through the 100,000-kilometre road project and the 5,000 bridges programme, the byroad network will be strengthened further, and the entire country will become a single network.” This 100,000 km roads programme was there even in the last budget, the only addition being the 5,000 bridges. Perhaps, there is a new determination to go ahead because, as alleged by many people, these road constructions are beneficial to political supporters.

The third strength is named “Non-aligned, friendly international relations.” Nine international organisations are particularly mentioned like ‘the World Bank, the Asian Development Bank, the European Union, the Japan International Cooperation Agency (JICA), the Kuwait Fund, the French Development Agency, the KfD, Korean International Cooperation Agency (KOICA) the OPEC for International Development, and the UN.’

There is no mentioning of the IMF under friendly organisations.

It is also surprising and intriguing that China or Chinese organisations are not mentioned as friendly countries or organisations. Mahinda Rajapaksa’s budget speech last year had much emphasis on China. It might be too early, however, to speculate whether this shows a shift of alliances in the international context and relations.

Question of IMF?

However, under the next section on ‘the challenges before us,’ the IMF is mentioned with some negativity. Basil Rajapaksa refers to Dr. N. M. Perera’s budget speech of 1970/71 ostensibly to prove his argument.

“In that he [N. M. Perera] states that instead of building foreign exchange reserves, we have used it for the importation of goods creating a foreign reserve crisis and, thereby, seeking the support of the International Monetary Fund (IMF). From the first IMF facility in 1961, successive governments have resorted to short term assistance from the IMF, and our leaders and financial sector experts have failed in introducing a sustainable long-term programme to manage our foreign reserves.”

There is no question that a country should try to manage its foreign exchange reserves without going to the IMF, if possible. I believe that is what Dr. N. M. Perera said and tried to do it. Of course, there were others who went to the IMF as an easy escape.

However, during recent administrations (Rajapaksa and Wickremesinghe) there has been a tendency to go for various dubious sources to seek foreign exchange loans and assistance when facing depleted reserves. Although no direct conditions are attached from these sources, these loans and deals have been a major reason for Sri Lanka’s deteriorating foreign exchange conditions throughout the years. There is no proper solution proposed in the Budget 2022 to this paradoxical situation.

Sri Lanka should not hesitate to go to the IMF. That is the most reliable and resourceful multilateral organisation, almost like a UN agency to deal with foreign exchange crises and reserves of member countries. It is up to the government to deal with the IMF properly, and negotiate any conditions attached when seeking foreign exchange or other assistance.



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The challenge of being positive about SAARC

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The RCSS forum addressed by SAARC Secretary General Ambassador Md. Golam Sarwar in progress. (Pic courtesy RCSS)

It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.

Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.

However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?

There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.

The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.

Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.

Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.

The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.

On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.

In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.

Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.

Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.

The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.

These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.

Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.

There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.

However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.

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OPA seminar examines Sri Lanka’s economic recovery, resilience and growth pathways

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(L to R) Dr Achinthya Koswatte, Anushan Kapilan, Dr Harsha Aturupane, Bhanu Wijeyaratne, Vice President, OPA and moderator of the discussion, and Eng Chamil Edirimuny, General Secretary, OPA, at the head table.

A seminar, “Sri Lanka’s Economic Crossroads: Navigating Recovery, Resilience and Growth” was recently held by the Organisation of Professional Associations of Sri Lanka (OPA) at the OPA Auditorium, bringing together economists, OPA members, and professionals from diverse fields for an insightful discussion on Sri Lanka’s economic recovery and future growth prospects.

The event was held under the patronage of Jayantha Gallehewa, President of the OPA, and was jointly organised by the National Issues Committee (NIC) and the Seminars, Workshops and Programmes Committee of the OPA. The event reaffirmed the organisation’s commitment to advancing professional excellence, fostering insightful intellectual engagement, facilitating interdisciplinary knowledge exchange and creating a constructive platform for informed dialogue on issues of national importance.

The panel of speakers comprised Dr. Harsha Aturupane, Lead Economist and Programme Leader for Human Development at the World Bank for Sri Lanka and the Maldives; Dr. Achinthya Koswatta, Senior Lecturer in Economics at the Open University of Sri Lanka, and Anushan Kapilan, Lead Economist at Verité Research.

In his welcome address, the President of the OPA emphasised that Sri Lanka was at a critical juncture in its economic recovery journey where sustained reforms, effective implementation, and collective national commitment are essential to achieving long-term stability, resilience and inclusive growth. He noted that the country had experienced one of the most severe economic crises in its history with the economy contracting by 7.8 percent in 2022 and a further 11.5 percent in 2023, resulting in significant economic and social challenges.

Delivering his introductory remarks Bhanu Wijeyaratne, Vice President of the OPA and Chairman of the National Issues Committee, underscored the need to move beyond short-term economic stabilisation towards a comprehensive agenda of structural transformation. He observed that the economic crisis had revealed deep-rooted weaknesses within the economy, including persistent fiscal pressures, rising public debt, foreign exchange limitations, and insufficient diversification of the export base. He stressed that addressing these challenges through strategic reforms, institutional strengthening and long-term economic planning would be essential to establishing a more resilient and competitive economy.

While acknowledging recent positive developments, including improved inflation management, tourism recovery and signs of economic stabilisation, Wijeyaratne stressed the need to advance reforms aimed at strengthening fiscal discipline, enhancing productivity, improving competitiveness, developing human capital and reinforcing governance and institutional effectiveness.

He further highlighted the important role of professionals, businesses, academia and other stakeholders in contributing to evidence-based dialogue and supporting Sri Lanka’s journey towards a resilient, inclusive and sustainable economic future.

Delivering the keynote presentation, Dr. Harsha Aturupane provided a comprehensive assessment of Sri Lanka’s economic prospects within the broader context of global economic transformation. He argued that Sri Lanka functioned as a small open economy whose performance is significantly influenced by developments in the global marketplace. External factors could not be controlled, and the country must strengthen its domestic capacity and resilience to respond effectively to international economic shifts, he noted.

Tracing the evolution of global economic systems, Dr. Aturupane highlighted the transition from ideological divisions between state-controlled and market-oriented economies towards increasingly pragmatic approaches focused on growth, competitiveness and development. He noted that Sri Lanka’s own economic journey reflects a similar evolution, with contemporary policy debates now centred on practical solutions for sustainable economic progress.

The presentation also examined the transformative impact of globalisation. Dr. Aturupane observed that global economic integration had enabled several East Asian economies, including South Korea, Singapore, Taiwan and Hong Kong, to achieve remarkable economic advancement through export-led growth strategies. Sri Lanka similarly benefited from this process through the expansion of its apparel industry and increased integration into global value chains.

Turning to Sri Lanka’s recovery programme, Dr. Aturupane emphasised that the ongoing stabilisation process should be viewed as a national programme supported by the International Monetary Fund rather than solely as an IMF initiative. He observed that strong worker remittances, improved tourism earnings, enhanced government revenue mobilisation and prudent import management have contributed significantly to economic stabilisation.

Despite this progress, he cautioned that rebuilding foreign exchange reserves and meeting future debt obligations remain major challenges. He underscored the need to strengthen export performance, attract investment and generate sustainable foreign exchange earnings to ensure long-term economic resilience.

The discussion also focused on monetary stability, inflation management and exchange-rate policy. Dr. Aturupane stressed that maintaining price stability was fundamental to sustainable growth and household welfare, while sound monetary policy remains essential for preserving economic confidence.

Looking beyond stabilisation, he argued that Sri Lanka must transition towards a broader economic transformation agenda. Sustainable growth, he noted, will depend on expanding productive capacity through investment, technological advancement, innovation, skills development and structural reforms.

Among the key constraints identified was the high cost of energy, which continues to affect competitiveness and investment attractiveness. Dr. Aturupane emphasised the importance of improving efficiency and affordability within the energy sector to enhance Sri Lanka’s business environment.

He further highlighted the social dimensions of the crisis, noting the rise in poverty and economic vulnerability among households. Strengthening social protection systems and ensuring inclusive growth, he argued, must remain central components of the national development agenda.

Another critical challenge identified was Sri Lanka’s demographic transition. With an ageing population, outward migration and evolving labour market dynamics, the country is increasingly confronting labour shortages in several sectors. Dr. Aturupane suggested that greater automation, increased labour-force participation and strategic workforce planning would be necessary to address these emerging realities.

Concluding his presentation, he emphasised the need to improve governance, strengthen institutions, enhance competitiveness and create an enabling environment for private sector investment. Sri Lanka’s future success, he noted, will depend on its ability to move decisively beyond crisis management towards a development model founded on resilience, innovation, productivity and inclusive growth.

Dr. Achinthya Koswatta reiterated the importance of policy consistency and predictability in fostering investment and industrial development. She observed that frequent policy changes create uncertainty and discourage long-term investment decisions, whereas stable and coherent policy frameworks build confidence and support sustainable economic transformation.

Meanwhile, Anushan Kapilan highlighted the substantial progress achieved in restoring macroeconomic stability following the recent crisis. He noted significant improvements in fiscal performance, including increased government revenue, reduced reliance on debt financing and a historically low fiscal deficit.

He further observed that public debt levels are declining faster than anticipated, economic growth has exceeded expectations and inflation has been brought under control more rapidly than forecast. Nevertheless, he cautioned that the recovery remains uneven, particularly within the industrial sector and that many households have yet to experience a meaningful improvement in living standards.

The seminar was expertly coordinated by Eng. Chamil Edirimuni, Vice President of the OPA and Chairman of the Seminars, Workshops and Programmes Committee, while the technical moderation and interactive discussion session were facilitated by Bhanu Wijeyaratne, Vice President of the OPA and Chairman of the National Issues Committee.

The event was attended by Tisara De Silva, President-Elect of the OPA, Eng. Ravi Rupasinghe, General Secretary, Past Presidents, members of the Executive Council, representatives of the General Forum and professionals representing a wide range of disciplines.

The seminar concluded with a vibrant exchange of ideas and perspectives, reaffirming the importance of evidence-based policy dialogue, institutional collaboration and collective national commitment in advancing Sri Lanka’s economic recovery, resilience and sustainable growth.

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Her roots run deep in Sri Lanka

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Samantha Kay: Now based in the UK Samantha’s biggest passion is helping people, especially women, build confidence and believe in themselves Today, her focus is on radio, podcasting and coaching women Whenever she visits Sri Lanka, she says she loves spending time on the beautiful south coast, especially Hikkaduwa and Mirissa She released a song with 90s music icon Angie Brown, which reached No. 9 in the UK Club Charts

Yes, for UK-based presenter and artiste Samantha Kay, home is where the heart – and the roots – are. And her roots run deep in Sri Lanka.

In an exclusive interview with The Island, Samantha says “I’m proud to be Sri Lankan. My mum is from Kandy and my dad is from Colombo, so Sri Lanka has always held a very special place in my heart.

“Whenever I visit Sri Lanka, I love spending time on the beautiful south coast, especially Hikkaduwa and Mirissa. It’s somewhere I always feel connected to my roots and completely at peace.”

Now living in Bournemouth, on the south coast of England, where, she says, she is lucky to be close to some of the UK’s most beautiful beaches, including the iconic Sandbanks, Samantha has built a career that refuses to fit into one box.

She is a radio presenter, podcast host, singer-songwriter, personal trainer and life coach.

“I genuinely love the variety because every role allows me to connect with people and, hopefully, make a positive difference in someone’s day.”

Of course, music has taken her far.

One of her proudest achievements, she says, was releasing a song with 90s music icon Angie Brown, which reached No. 9 in the UK Club Charts.

She also reached the final stages of The X Factor and performed at Wembley Stadium in front of thousands.

Beyond music, Samantha competed in bikini bodybuilding across the UK, winning several titles. “It taught me discipline, resilience and self-belief,” she recalls.

Today, her focus is on radio, podcasting and coaching women. Her podcast encourages people to live life on their own terms rather than feeling pressured to follow society’s expectations.

Says Samantha: “Whether someone is single, changing careers, travelling solo or simply trying to find their purpose, I want them to know that it’s never too late to create a life that feels authentic. If you’ve ever felt like you don’t fit into the box, maybe you were never meant to.”

Samantha Kay also spent a year in Dubai, performing at five-star hotels, including FIVE, and coaching at the iconic outdoor gym on Palm Jumeirah.

“I taught strength and conditioning classes, and hosted wellness retreats, combining my passion for music, health and inspiring others.”

However, with family matters calling her back to the UK, she made the choice to return. “Family comes first,” she says.

Looking ahead, Samantha plans to grow her radio and podcast work, release more music, and expand her wellness retreats.

“My biggest passion is helping people, especially women, build confidence and believe in themselves,” she says.

“Wherever my career takes me, I hope to continue inspiring others to live with courage, kindness and authenticity, while never forgetting my Sri Lankan roots.”

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