Features

THE POST-WAR PERIOD AND INDEPENDENCE

Published

6 months ago

2025/08/3

Thilina Walpola

Continued from last week

NU’s Career Advances

In May of 1942, a month after the Japanese attack, NU was promoted to a higher post within the Department of Commerce and Industries. He was also seconded to serve as Deputy Commissioner in the Department of Commodity Purchase, where he was placed in charge of arranging the supply of commodities such as desiccated coconut and copra to the Food Ministry in Britain. (Interestingly, NU had selected “The Oil Seed Trade with Specific Reference to Copra” as his special subject when he applied for his M.Sc. (Econ.) degree. Correspondence from his Personal Files show that, while NU was studying at the LSE, Professor Paish, who was one of his professors, recommended NU to a London merchant dealing in edible oils, to carry out a survey of “The Trade in Edible Oils… from Production, through Importation, Distribution and Marketing to Consumers’ Demand” (N.U. Jayawardena Personal Files).

In NU’s words:

As Deputy Commissioner of Commodity Purchase, it fell to my lot to plan out the organization of the department in the early stages, particularly in regard to the purchase schemes for copra, oil and plumbago. Later I was engaged in reorganizing the operative methods of the Department and, in this connection, compiled a comprehensive code of departmental instructions.

He listed the activities of the Department of Commodity Purchase, “which was run on business lines,” and described the strength of the staff:

[There were] 11 Staff Officers including a full-time Commissioner and myself as Deputy, a store personnel of 112, and a clerical establishment of 117, while the annual turnover of the transactions of the Department exceeds Rs. 50 million. (N.U. Jayawardena Personal Files)

The Department of Commodity Purchase was based in the Bristol Hotel, which was located opposite the Cargill’s store, in the Colombo Fort. The Director of the Department was L.J.B. Turner, for whom NU had earlier worked at the Registrar General’s Office. In his rapid career ascent, NU would begin to catch up with and overtake persons for whom he had worked earlier. In 1946, he was appointed Acting Commissioner of War Risks Insurance to fill in for F. Leach, who had left the country. One may recall that it was F. Leach who had tried to appoint a Mudaliyar’s son over NU when he had applied for his first government job as a junior clerk of the District Road Committee in Hambantota (see Chapter 5).

Another Career Landmark

In June of 1946, NU was seconded to serve in the newly created post of Additional Controller of Finance and Supplies (Economics), in addition to the other posts he held. This was the first posting in the Treasury Department and it would have brought him much satisfaction, as the Treasury Department was considered to be the pinnacle of the civil service. Such a swift ascent was bound to create problems. The ‘mandarins’ of the Civil Service did not take kindly to the promotions which NU, the outsider, was given by the time he was 38, and to the multiple posts he held. Their resentment was all the more because the salary he received from these combined posts was ‘somewhat in excess of two Officers of State, one of whom was [his] superior authority’ (N.U. Jayawardena, 11 May 1987, p.3).

NU had risen on proven merit, rather than by passing the Civil Service examination, and as head of four separate departments, he received an income equal to a Class 1, Grade II official of the Ceylon Civil Service – even though he was not a member. This led the

Ceylon Civil Service Association to lodge a strong protest against NU. ( There is a letter addressed to NU in his Personal Files, dated 18 November 1946, in which the Chief Secretary wrote to inform him of his provisional appointment, to act “in addition to your own duties… as Additional Commissioner, Commodity Purchase, and Commissioner, War Risks Insurance, pending receipt of the advice of the Public Services Commission” (emphasis added). In this connection, NU described in detail a revealing episode involving the Acting Financial Secretary, C.E. Jones, which clearly exemplifies the phenomenon of the dethroning of the old guard elite – the “cultivated gentlemen” – by specialist technocrats who succeeded on merit (mentioned in the previous chapter):

There was, before [the Acting Financial Secretary] a rather bulky file containing dispatches from the Secretary of State on a highly complex subject of Economic Relations, which it fell to my lot to study, analyse and present in the form of a comprehensive report to… the Governor… to be signed by the Financial Secretary, together with a lengthy dispatch to the Secretary of State. [This was] a subject he did not know, [and] on which he could rely without reservation on my analysis and presentation. He then handed them the file with the request that if they or their colleagues felt they could do a better job than I had done, they were free to identify such a person to take over my position and other positions I held, and also receive the aggregate emoluments I was paid. (Apart from being dependent on NU to get through his work, it is interesting to speculate whether C.E. Jones’ sympathies with NU may have been strengthened due to the fact that Jones, too, had graduated from the London University (BSc.), unlike many of the senior members of the Ceylon Civil Service who were mostly products of Cambridge and Oxfor (ibid)

Following this interview with Jones, the representatives of the Civil Service Association left NU – as he triumphantly termed it – “severely alone.” Whether he was disturbed or not by the episode, NU was not slow to see its moral. Though he noted that it spoke volumes for the Association’s sense of ‘fair play’ and ‘merit,’ it no doubt made NU aware of the pitfalls and hazards of holding important positions in public life. Chapter 10 can read online on https://island.lk/nu-at-the-london-school-of-economics/

In regard to finance, my government intends to seek expert advice with regard to changes in our financial structure which may be necessitated by the transition from a colonial to a free, national economy.

(Throne Speech, Sir Henry Monck-Mason Moore, Governor, 25 Nov. 1947)

Slaughter tapping a rubber tree

The post-war period presented the country with a series of further economic hardships and challenges. The burdens of inflation, shortages of food and other imported items, as well as rationing and a series of controls, increased in the war’s aftermath. The State continued to play an interventionist role in the market, stepping up its regulatory controls, due to the continuing shortages of essential goods and the scarcity of exchange with which to buy these goods. Stanley Wickramaratne has aptly described, the “plethora of controls” regulating the supply of goods and services, and in general the free mobility of its citizens during and after the Second World War, which

… were departmentalized by the State and named Food Control, Textile Control, Rubber Control, Tea Control, Milk Food Control, Petrol Control, Poonac Control, Price Control and Import-Export and Exchange Control…

[After] Independence these control mechanisms gradually ceased to function except the last two mentioned. (Wickramaratne, 2002)

Sri Lanka was adversely impacted by factors associated with the worldwide economic and physical destruction caused by the war and had to hold its own in a world reeling from economic breakdown. Competing for access to markets and limited resources from a weak position, Sri Lanka had few options and was held hostage to the vagaries of the international market. As a small nation with an undiversified economy, it relied heavily on the export of a few agricultural commodities – primarily tea and rubber – for a large part of its revenue. (According to Das Gupta (1949, p.9), Sri Lanka produced “only a few things, but produces them almost entirely for export,” and derived about 60% of

its income from agricultural exports, producing only a quarter to a third of its total rice requirements.) Furthermore, it was not self-sufficient in the production of essential goods and was disadvantaged by an undeveloped banking system and capital market, as well as the lack of an industrial base. Thus, Sri Lanka had next to no recourse to internal financing that could help provide a financial cushion to tide over this period, nor the means to provide the investment capital to step up local production of essential goods to replace costly imports.

There was much that needed to be worked out and negotiated, and new institutions had to be set up to help meet the needs of the soon-to-be independent Sri Lanka and the challenges of the evolving post-war economic order. In addition, financial and trade arrangements had to be planned to bridge the immediate needs of the nation. After independence, Sri Lanka would be faced with the additional challenge of asserting itself as an independent sovereign nation.

NU described his work during this period of transition as a time when he “performed the functions of the principal financial and economic adviser to the Ceylon Government” (N.U. Jayawardena Personal Files). Over the four-year period, which stretched from 1946 to 1950, NU attended and assisted in several international conferences and negotiations. On the eve of national independence, NU would rise from his position as Controller of Finance and Supplies (Economics) to become both Controller of Exchange and Controller of Imports and Exports, and would set up the machinery for the operations of exchange control.

Declining Terms of Trade

By the war’s end, Sri Lanka had managed to accumulate substantial foreign-exchange surpluses, which were largely due to increased earnings from stepped-up rubber production, a reduction in imports during wartime as well as payments for basing the British South East Asia Command in Sri Lanka. However, as pointed out by Das Gupta (1949, p.31), these surpluses were “a measure not so much of prosperity but of privation,” since during the war, these could not be utilized as desired to purchase essential imports, and consumption had to be curtailed at great hardship to the population. Furthermore, following the war, these hard-earned savings actually lost value in real terms as the prices of imports rose sharply and the rise in the export price of rubber – Sri Lanka’s major export – did not keep pace. The restoration of Malaysian and Indonesian rubber stocks to the world market, and consequent increase in supply, had a somewhat dampening effect on the world price of rubber.

Sri Lanka’s foreign-exchange surpluses were quickly depleted, even though consumption continued to be restricted by the government to meet this dilemma. Ironically, by the year 1947, although imports were reduced to about the same level they had been in 1938, the economy experienced a balance-of-payments crisis, owing to a decline in the terms of trade. The case of rice imports starkly illustrates the economic dilemma Sri Lanka faced. According to Das Gupta, in 1947, Sri Lanka imported half the quantity of rice it had in 1938, but the bill for this was about two and a half times what it had been in 1938 (ibid, pp.90-91).

Workers loading dry goods in a Colombo warehouse

NU’s Link with Oliver Goonetilleke

In 1945, Oliver Goonetilleke (OEG) was appointed to the prestigious post of Financial Secretary – one of the three Officers of State – as the first (and last) Sri Lankan to hold this position. NU would now work more closely with him. In 1946, on one of his first high-level visits abroad, NU accompanied OEG to the UK to assist him in the negotiations with the British government on “post-war financial issues affecting Sri Lanka” (Ceylon Civil List, 1950, p.86). According to Jeffries, during this period one of the chief areas of negotiation involved “the continual struggle to secure an economic price for Ceylon rubber” (1969, p.106). When Indonesia and Malaysia fell under Japanese control during the war, both Britain and its allies relied heavily on Sri Lanka to step up production to meet the shortfall in this critical war material. At the war’s end, Sri Lanka’s rubber yields were adversely affected due to the wartime “slaughtertapping” (over-tapping) of its rubber trees. ( Das Gupta stated that at least one-quarter of all the rubber trees in Sri Lanka had been slaughter-tapped during the war.) According to Jeffries:

The [Sri Lankan rubber] industry had already sacrificed its interest in order that the war might be won, but now Ceylon was being expected to compete on equal terms in the market with Malaya and Indonesia whose plantations were in full production after the enforced wartime rest. (Jeffries, 1969, p.106) ( Sri Lanka’s strong reliance on rubber for its revenue continued into the early 1950s. In 1952 R.G. Senanayake, who was Minister of Trade and Commerce, negotiated a Rubber-Rice Pact with the People’s Republic of China, in which the former agreed to purchase Sri Lanka’s entire annual output of rubber for five years at a premium, in exchange for rice supplied at a price well below the world market price (see de Silva & Wriggins, 1988, pp.269-71).)

OEG, who had a reputation as an astute negotiator, would have reminded the British government of Sri Lanka’s loyal support and sacrifices made during the war and of Britain’s moral obligation towards Sri Lanka. His skills of persuasion were legendary both in Sri Lanka and in Britain. A British government official was said to have woefully remarked that, “after shaking hands with him, it was advisable to check that all one’s fingers were there” (ibid, p.82). OEG once described himself as “no chicken in either strategy or in tactics” (ibid, p.74); and NU characterized him as someone who was “uncommonly intelligent,” and “highly imaginative… astute to the point of being uncanny, and an able negotiator” (quoted in de Zoysa manuscript, p.15).

Negotiations in London took place over a period of three and a half months from the end of July to mid-November 1946. An interesting side note to this episode is that during this time, NU visited his professors at the London School of Economics to inquire into the possibilities of resuming studies for his interrupted M.Sc. degree. He apparently had not abandoned hopes of completing his studies for a postgraduate degree. Although records show that his professors were amenable to this proposition, NU’s career again overtook him and he never completed this degree (LSE Student Records on N.U. Jayawardena).

Independence

Earlier in 1942, when the British government entered into discussions with India on the question of its independence, the Sri Lankan leadership also began to place pressure on the British regarding the same issue. According to Charles Jeffries, the Civil Defence Department

became the regular meeting place for “the triumvirate” of D.S. Senanayake, Oliver Goonetilleke and Ivor Jennings, who planned and worked out the negotiating points and strategies that would be undertaken towards this goal (Jeffries, pp.68-69). By 1943, this group had managed to wrest preliminary terms of agreement from the colonial government. In December 1944, a Commission composed of Lord Soulbury, Sir Frederick Rees and Frederick Burrows visited the island, and the resulting Soulbury Constitution (1947) introduced to the country a parliamentary government with a cabinet system for the first time. Elections were held under this constitution in August and September 1947, and the newly founded United National Party (UNP) formed the government. Its leader, D.S. Senanayake became the first Prime Minister of Sri Lanka and J.R. Jayewardene (JR) was appointed Finance Minister.

Working with J.R. Jayewardene

NU worked with JR in various official capacities over a period of nearly six years. He first came to know JR in 1946, when NU was appointed, along with his colleague K. Williams, to the Treasury in the newly created positions of Controller of Finance and Supply (Economics) – a year before JR assumed office as Finance Minister. NU was to work for him successively in his capacities as Controller of Exchange, Deputy Governor and Governor of the Central Bank.

NU found JR to be an unassuming and courteous Minister, who was never “intellectually stubborn or arrogant,” and who possessed a “fine sense of humour.” He found him “more ready to learn than to talk” and felt he “brought to bear a trained… [and] legal mind”

(N.U. Jayawardena, c.1985, p.59). According to NU:

JR wanted facts and their analysis, but would not accept any rendering of analysis unless he was convinced of its validity… He was thus more concerned with the substance and less with the detail… JR was quick to perceive and was not slow to decide, which he did with deliberation but once he had decided he remained unshakeable unless new facts or new situations emerged to justify the review of decisions taken. (ibid)

For NU, working for JR was “both a demanding duty and an intellectual pleasure” (ibid). He found in JR an eagerness to learn – a quality which NU himself valued and shared. JR, a lawyer by profession, felt he needed a grounding in economics. NU worked closely

with him, explaining the economic realities to the Minister – as did Professor B.B. Das Gupta of the Economics Department of the University, whom JR consulted on economic issues. The new Finance Minister had to absorb his lessons quickly, as he had to contend with several technically complex issues and crises during this period, including the international negotiations that led to two Sterling Assets Agreements with the UK, setting up the exchange control machinery required to ensure the success of these agreements, as well as laying the groundwork for the creation of a Central Bank. NU would be centrally involved in all of these areas.

Controller of Exchange

NU was appointed Controller of Exchange in April 1947. This was a prestigious post in which he was the implementer of some “purely central banking functions,” including “the determination of foreign exchange rates, control of foreign exchange holdings of commercial banks, and arrangements for forward cover” (N.U. Jayawardena, 1950, p.11). Exchange control originally came into operation in Sri Lanka upon the outbreak of war in Europe in September 1939, and was initially restricted to financial transactions in the non-sterling area. NU started out with a “skeleton staff” of nine members, working from an office on the first floor of the De Mel Building on Chatham Street (N.U. Jayawardena, 1949, p.29).

Near the end of 1947, Sri Lanka suffered a severe drain on its “overseas balances,” which was also causing “serious financial difficulties” to Britain. This crisis resulted in the government’s tentative decision to extend exchange control to include the sterling area – in other words, it would now cover “all financial transactions between Ceylon and the outside world” (ibid, p.10; and N.U. Jayawardena, 1950, p.3). Before undertaking this step, NU was sent to spend a “short but useful period” at the Reserve Bank of India in Mumbai to study the exchange control operations of that institution.( . A couple of months earlier, in September 1947, India had already extended her controls to cover the sterling area, due to similar circumstances (N.U. Jayawardena, 1949, p.10). He later spent additional time studying the exchange control operations at the Bank of England to obtain further technical training. When exchange control was extended to cover the sterling areas in June 1948, NU was appointed full-time Controller of Exchange and relieved of his other duties to enable him to devote his full energies and attention to exchange control (ibid, p.12).

This extension of controls “multiplied the volume of work manifold,” demanding “a new orientation of policy on principles which bore little relationship to the practices pertaining to non-sterling area transactions” (The increased scale of operations can be put into perspective if one bears in mind that at that time, 60% of all imports and 70% of all exports were transacted with sterling-area countries (see de Silva & Wriggins, p.220).

Also, earlier, exchange control was limited to a few but not all countries in the non-sterling area, and these “transactions were mainly derived from instructions received from the Secretary of State for the Colonies” (N.U. Jayawardena, 1949, p.11). (ibid, p.11). With the introduction of extended controls, every transaction involving foreign trade or foreign remittances had to pass through the Exchange Control Department and therefore required close coordination with other government departments such as Customs, the Post Office, Import and Export Control, and Food Control. In addition, an advisory committee, which included the heads of the main banks such as the Bank of Ceylon and the Imperial Bank, was formed to give advice to the Controller.

A comprehensive manual was drawn up and distributed to banks and authorized exchange dealers as well. A large number of staff members had to be recruited to carry out the expanded operations, requiring the Department to locate to more spacious quarters on York Street. ( The extent and rate of increase in staff numbers gives some indication of the onerous nature of exchange control operations. After relocating to York Street, by the end of 1948, a mere one and a half years after NU took over as Exchange Controller, the staff would increase to 191 members. “Congested conditions” later necessitated a further move to more spacious quarters in Echelon Barracks, some time in 1950 (N.U. Jayawardena, 1949, p.32).

In spite of the recruitment of additional staff, NU noted that: “it was still necessary to work long hours at a stretch to keep the machinery of control working and to avoid delays and inconvenience to the… public.”

Another challenge during the first year of operations was to train the staff, who initially did not have the technical knowledge required to carry out these controls. According to NU, it was “to their credit that they overcame this handicap in a short time” (N.U. Jayawardena,

1949, p.11). In his Administrative Report for the year 1949, NU described the year as a “trying and strenuous year” for his staff. He proudly noted that it gave him “no little pleasure to record that the Department of Exchange Control has, on the whole, maintained a high

reputation… an achievement of which every member of the staff should justly be proud” (N.U. Jayawardena, 1950, p.22). NU described exchange control as “an irksome restriction,” however, noting that it was a necessity at that time to promote a “more equitable distribution of goods in short supply.” Nonetheless, NU’s firm belief in the superiority of the market mechanism clearly comes out in this report, when he speculates about alternatives to exchange control, asking whether its ends could not be better served by:

methods based on the alternative principle of regulating the demand for foreign currencies at a stable exchange rate through the price mechanism. This is undoubtedly a question with many implications, administrative, economic and financial… It… deserves close study… by everyone who naturally resents the irksome restrictions of control. (ibid, p. 23, emphasis added)

A Passion for Work

There was no cutting back on his working hours when NU reached the position of Controller of Exchange. As before, a twelve-hour workday was the rule – with eighteen hours not being unusual. His daughter Neiliya recalls how NU would often ask her mother to

bring her for a drive and to pick him up in office:

I remember my mother and myself going to the Exchange Controller’s office, and sitting in the car for an hour or more waiting for my father to finish work. But he always kept us waiting. His assistant would bring bundles and bundles of files when he finally came down and put them in the luggage boot. This was always after 7:30 or 8 p.m.

Neiliya recalls how at other times:

I would have my dinner and go with my mother and pick him up. I would be given an ice-cream cone on the way home. He would go home and have a shower, have dinner and sit with his files from about 10 p.m. and work until around 2 a.m. He would then get up at 5 a.m., work until 7.30 a.m. and we would see him at his desk on our way out to school.

To be continued

(Excerpted from N.U. JAYAWARDENA The first five decades)
By Kumari Jayawardena and Jennifer Moragoda ✍️

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Features

Theocratic Iran facing unprecedented challenge

Published

15 hours ago

2026/01/15

Sahan Weerasooriya

Anti-government protests in Tehran (BBC)

The world is having the evidence of its eyes all over again that ‘economics drives politics’ and this time around the proof is coming from theocratic Iran. Iranians in their tens of thousands are on the country’s streets calling for a regime change right now but it is all too plain that the wellsprings of the unprecedented revolt against the state are economic in nature. It is widespread financial hardship and currency depreciation, for example, that triggered the uprising in the first place.

However, there is no denying that Iran’s current movement for drastic political change has within its fold multiple other forces, besides the economically affected, that are urging a comprehensive transformation as it were of the country’s political system to enable the equitable empowerment of the people. For example, the call has been gaining ground with increasing intensity over the weeks that the country’s number one theocratic ruler, President Ali Khamenei, steps down from power.

That is, the validity and continuation of theocratic rule is coming to be questioned unprecedentedly and with increasing audibility and boldness by the public. Besides, there is apparently fierce opposition to the concentration of political power at the pinnacle of the Iranian power structure.

Popular revolts have been breaking out every now and then of course in Iran over the years, but the current protest is remarkable for its social diversity and the numbers it has been attracting over the past few weeks. It could be described as a popular revolt in the genuine sense of the phrase. Not to be also forgotten is the number of casualties claimed by the unrest, which stands at some 2000.

Of considerable note is the fact that many Iranian youths have been killed in the revolt. It points to the fact that youth disaffection against the state has been on the rise as well and could be at boiling point. From the viewpoint of future democratic development in Iran, this trend needs to be seen as positive.

Politically-conscious youngsters prioritize self-expression among other fundamental human rights and stifling their channels of self-expression, for example, by shutting down Internet communication links, would be tantamount to suppressing youth aspirations with a heavy hand. It should come as no surprise that they are protesting strongly against the state as well.

Another notable phenomenon is the increasing disaffection among sections of Iran’s women. They too are on the streets in defiance of the authorities. A turning point in this regard was the death of Mahsa Amini in 2022, which apparently befell her all because she defied state orders to be dressed in the Hijab. On that occasion as well, the event brought protesters in considerable numbers onto the streets of Tehran and other cities.

Once again, from the viewpoint of democratic development the increasing participation of Iranian women in popular revolts should be considered thought-provoking. It points to a heightening political consciousness among Iranian women which may not be easy to suppress going forward. It could also mean that paternalism and its related practices and social forms may need to be re-assessed by the authorities.

It is entirely a matter for the Iranian people to address the above questions, the neglect of which could prove counter-productive for them, but it is all too clear that a relaxing of authoritarian control over the state and society would win favour among a considerable section of the populace.

However, it is far too early to conclude that Iran is at risk of imploding. This should be seen as quite a distance away in consideration of the fact that the Iranian government is continuing to possess its coercive power. Unless the country’s law enforcement authorities turn against the state as well this coercive capability will remain with Iran’s theocratic rulers and the latter will be in a position to quash popular revolts and continue in power. But the ruling authorities could not afford the luxury of presuming that all will be well at home, going into the future.

Meanwhile US President Donald Trump has assured the Iranian people of his assistance but it is not clear as to what form such support would take and when it would be delivered. The most important way in which the Trump administration could help the Iranian people is by helping in the process of empowering them equitably and this could be primarily achieved only by democratizing the Iranian state.

It is difficult to see the US doing this to even a minor measure under President Trump. This is because the latter’s principal preoccupation is to make the ‘US Great Once again’, and little else. To achieve the latter, the US will be doing battle with its international rivals to climb to the pinnacle of the international political system as the unchallengeable principal power in every conceivable respect.

That is, Realpolitik considerations would be the main ‘stuff and substance’ of US foreign policy with a corresponding downplaying of things that matter for a major democratic power, including the promotion of worldwide democratic development and the rendering of humanitarian assistance where it is most needed. The US’ increasing disengagement from UN development agencies alone proves the latter.

Given the above foreign policy proclivities it is highly unlikely that the Iranian people would be assisted in any substantive way by the Trump administration. On the other hand, the possibility of US military strikes on Iranian military targets in the days ahead cannot be ruled out.

The latter interventions would be seen as necessary by the US to keep the Middle Eastern military balance in favour of Israel. Consequently, any US-initiated peace moves in the real sense of the phrase in the Middle East would need to be ruled out in the foreseeable future. In other words, Middle East peace will remain elusive.

Interestingly, the leadership moves the Trump administration is hoping to make in Venezuela, post-Maduro, reflect glaringly on its foreign policy preoccupations. Apparently, Trump will be preferring to ‘work with’ Delcy Rodriguez, acting President of Venezuela, rather than Maria Corina Machado, the principal opponent of Nicolas Maduro, who helped sustain the opposition to Maduro in the lead-up to the latter’s ouster and clearly the democratic candidate for the position of Venezuelan President.

The latter development could be considered a downgrading of the democratic process and a virtual ‘slap in its face’. While the democratic rights of the Venezuelan people will go disregarded by the US, a comparative ‘strong woman’ will receive the Trump administration’s blessings. She will perhaps be groomed by Trump to protect the US’s security and economic interests in South America, while his administration side-steps the promotion of the democratic empowerment of Venezuelans.

Features

Silk City: A blueprint for municipal-led economic transformation in Sri Lanka

Published

15 hours ago

2026/01/15

Sahan Weerasooriya

Mayor Saman Samarakoon (L) / J.M.C. Jayasekera (R)

Maharagama today stands at a crossroads. With the emergence of new political leadership, growing public expectations, and the convergence of professional goodwill, the Maharagama Municipal Council (MMC) has been presented with a rare opportunity to redefine the city’s future. At the heart of this moment lies the Silk City (Seda Nagaraya) Initiative (SNI)—a bold yet pragmatic development blueprint designed to transform Maharagama into a modern, vibrant, and economically dynamic urban hub.

This is not merely another urban development proposal. Silk City is a strategic springboard—a comprehensive economic and cultural vision that seeks to reposition Maharagama as Sri Lanka’s foremost textile-driven commercial city, while enhancing livability, employment, and urban dignity for its residents. The Silk City concept represents more than a development plan: it is a comprehensive economic blueprint designed to redefine Maharagama as Sri Lanka’s foremost textile-driven commercial and cultural hub.

A Vision Rooted in Reality

What makes the Silk City Initiative stand apart is its grounding in economic realism. Carefully designed around the geographical, commercial, and social realities of Maharagama, the concept builds on the city’s long-established strengths—particularly its dominance as a textile and retail centre—while addressing modern urban challenges.

The timing could not be more critical. With Mayor Saman Samarakoon assuming leadership at a moment of heightened political goodwill and public anticipation, MMC is uniquely positioned to embark on a transformation of unprecedented scale. Leadership, legitimacy, and opportunity have aligned—a combination that cities rarely experience.

A Voluntary Gift of National Value

In an exceptional and commendable development, the Maharagama Municipal Council has received—entirely free of charge—a comprehensive development proposal titled “Silk City – Seda Nagaraya.” Authored by Deshamanya, Deshashkthi J. M. C. Jayasekera, a distinguished Chartered Accountant and Chairman of the JMC Management Institute, the proposal reflects meticulous research, professional depth, and long-term strategic thinking.

It must be added here that this silk city project has received the political blessings of the Parliamentarians who represented the Maharagama electorate. They are none other than Sunil Kumara Gamage, Minister of Sports and Youth Affairs, Sunil Watagala, Deputy Minister of Public Security and Devananda Suraweera, Member of Parliament.

The blueprint outlines ten integrated sectoral projects, including : A modern city vision, Tourism and cultural city development, Clean and green city initiatives, Religious and ethical city concepts, Garden city aesthetics, Public safety and beautification, Textile and creative industries as the economic core

Together, these elements form a five-year transformation agenda, capable of elevating Maharagama into a model municipal economy and a 24-hour urban hub within the Colombo Metropolitan Region

Why Maharagama, Why Now?

Maharagama’s transformation is not an abstract ambition—it is a logical evolution. Strategically located and commercially vibrant, the city already attracts thousands of shoppers daily. With structured investment, branding, and infrastructure support, Maharagama can evolve into a sleepless commercial destination, a cultural and tourism node, and a magnet for both local and international consumers.

Such a transformation aligns seamlessly with modern urban development models promoted by international development agencies—models that prioritise productivity, employment creation, poverty reduction, and improved quality of life.

Rationale for Transformation

Maharagama has long held a strategic advantage as one of Sri Lanka’s textile and retail centers. With proper planning and investment, this identity can be leveraged to convert the city into a branded urban destination, a sleepless commercial hub, a tourism and cultural attraction, and a vibrant economic engine within the Colombo Metropolitan Region. Such transformation is consistent with modern city development models promoted by international funding agencies that seek to raise local productivity, employment, quality of life, alleviation of urban poverty, attraction and retaining a huge customer base both local and international to the city)

Current Opportunity

The convergence of the following factors make this moment and climate especially critical. Among them the new political leadership with strong public support, availability of a professionally developed concept paper, growing public demand for modernisation, interest among public, private, business community and civil society leaders to contribute, possibility of leveraging traditional strengths (textile industry and commercial vibrancy are notable strengths.

The Silk City initiative therefore represents a timely and strategic window for Maharagama to secure national attention, donor interest and investor confidence.

A Window That Must Not Be Missed

Several factors make this moment decisive: Strong new political leadership with public mandate, Availability of a professionally developed concept, Rising citizen demand for modernization, Willingness of professionals, businesses, and civil society to contribute. The city’s established textile and commercial base

Taken together, these conditions create a strategic window to attract national attention, donor interest, and investor confidence.

But windows close.

Hard Truths: Challenges That Must Be Addressed

Ambition alone will not deliver transformation. The Silk City Initiative demands honest recognition of institutional constraints. MMC currently faces: Limited technical and project management capacity, rigid public-sector regulatory frameworks that slow procurement and partnerships, severe financial limitations, with internal revenues insufficient even for routine operations, the absence of a fully formalised, high-caliber Steering Committee.

Moreover, this is a mega urban project, requiring feasibility studies, impact assessments, bankable proposals, international partnerships, and sustained political and community backing.

A Strategic Roadmap for Leadership

For Mayor Saman Samarakoon, this represents a once-in-a-generation leadership moment. Key strategic actions are essential: 1.Immediate establishment of a credible Steering Committee, drawing expertise from government, private sector, academia, and civil society. 2. Creation of a dedicated Project Management Unit (PMU) with professional specialists. 3. Aggressive mobilisation of external funding, including central government support, international donors, bilateral partners, development banks, and corporate CSR initiatives. 4. Strategic political engagement to secure legitimacy and national backing. 5. Quick-win projects to build public confidence and momentum. 6. A structured communications strategy to brand and promote Silk City nationally and internationally. Firm positioning of textiles and creative industries as the heart of Maharagama’s economic identity

If successfully implemented, Silk City will not only redefine Maharagama’s future but also ensure that the names of those who led this transformation are etched permanently in the civic history of the city.

Voluntary Gift of National Value

Maharagama is intrinsically intertwined with the textile industry. Small scale and domestic textile industry play a pivotal role. Textile industry generates a couple of billion of rupees to the Maharagama City per annum. It is the one and only city that has a sleepless night and this textile hub provides ready-made garments to the entire country. Prices are comparatively cheaper. If this textile industry can be vertically and horizontally developed, a substantial income can be generated thus providing employment to vulnerable segments of employees who are mostly women. Paucity of textile technology and capital investment impede the growth of the industry. If Maharagama can collaborate with the Bombay of India textile industry, there would be an unbelievable transition. How Sri Lanka could pursue this goal. A blueprint for the development of the textile industry for the Maharagama City will be dealt with in a separate article due to time space.

It is achievable if the right structures, leadership commitments and partnerships are put in place without delay.

No municipal council in recent memory has been presented with such a pragmatic, forward-thinking and well-timed proposal. Likewise, few Mayors will ever be positioned as you are today — with the ability to initiate a transformation that will redefine the future of Maharagama for generations. It will not be a difficult task for Saman Samarakoon, Mayor of the MMC to accomplish the onerous tasks contained in the projects, with the acumen and experience he gained from his illustrious as a Commander of the SL Navy with the support of the councilors, Municipal staff and the members of the Parliamentarians and the committed team of the Silk-City Project.

Voluntary Gift of National Value

Maharagama is intrinsically intertwined with the textile industry. The textile industries play a pivotal role. This textile hub provides ready-made garments to the entire country. Prices are comparatively cheaper. If this textile industry can be vertically and horizontally developed, a substantial income can be generated thus providing employment to vulnerable segments of employees who are mostly women.

Paucity of textile technology and capital investment impede the growth of the industry. If Maharagama can collaborate with the Bombay of India textile industry, there would be an unbelievable transition. A blueprint for the development of the textile industry for the Maharagama City will be dealt with in a separate article.

J.A.A.S Ranasinghe
Productivity Specialist and Management Consultant
(The writer can becontacted via Email:rathula49@gmail.com)

Features

Reading our unfinished economic story through Bandula Gunawardena’s ‘IMF Prakeerna Visadum’

Published

15 hours ago

2026/01/15

Sahan Weerasooriya

Book Review

Why Sri Lanka’s Return to the IMF Demands Deeper Reflection

By mid-2022, the term “economic crisis” ceased to be an abstract concept for most Sri Lankans. It was no longer confined to academic papers, policy briefings, or statistical tables. Instead, it became a lived and deeply personal experience. Fuel queues stretched for kilometres under the burning sun. Cooking gas vanished from household shelves. Essential medicines became difficult—sometimes impossible—to find. Food prices rose relentlessly, pushing basic nutrition beyond the reach of many families, while real incomes steadily eroded.

What had long existed as graphs, ratios, and warning signals in economic reports suddenly entered daily life with unforgiving force. The crisis was no longer something discussed on television panels or debated in Parliament; it was something felt at the kitchen table, at the bus stop, and in hospital corridors.

Amid this social and economic turmoil came another announcement—less dramatic in appearance, but far more consequential in its implications. Sri Lanka would once again seek assistance from the International Monetary Fund (IMF).

The announcement immediately divided public opinion. For some, the IMF represented an unavoidable lifeline—a last resort to stabilise a collapsing economy. For others, it symbolised a loss of economic sovereignty and a painful surrender to external control. Emotions ran high. Debates became polarised. Public discourse quickly hardened into slogans, accusations, and ideological posturing.

Yet beneath the noise, anger, and fear lay a more fundamental question—one that demanded calm reflection rather than emotional reaction:

Why did Sri Lanka have to return to the IMF at all?

This question does not lend itself to simple or comforting answers. It cannot be explained by a single policy mistake, a single government, or a single external shock. Instead, it requires an honest examination of decades of economic decision-making, institutional weaknesses, policy inconsistency, and political avoidance. It requires looking beyond the immediate crisis and asking how Sri Lanka repeatedly reached a point where IMF assistance became the only viable option.

Few recent works attempt this difficult task as seriously and thoughtfully as Dr. Bandula Gunawardena’s IMF Prakeerna Visadum. Rather than offering slogans or seeking easy culprits, the book situates Sri Lanka’s IMF engagement within a broader historical and structural narrative. In doing so, it shifts the debate away from blame and toward understanding—a necessary first step if the country is to ensure that this crisis does not become yet another chapter in a familiar and painful cycle.

Returning to the IMF: Accident or Inevitability?

The central argument of IMF Prakeerna Visadum is at once simple and deeply unsettling. It challenges a comforting narrative that has gained popularity in times of crisis and replaces it with a far more demanding truth:

Sri Lanka’s economic crisis was not created by the IMF.
IMF intervention became inevitable because Sri Lanka avoided structural reform for far too long.

This framing fundamentally alters the terms of the national debate. It shifts attention away from external blame and towards internal responsibility. Instead of asking whether the IMF is good or bad, Dr. Gunawardena asks a more difficult and more important question: what kind of economy repeatedly drives itself to a point where IMF assistance becomes unavoidable?

The book refuses the two easy positions that dominate public discussion. It neither defends the IMF uncritically as a benevolent saviour nor demonises it as the architect of Sri Lanka’s suffering. Instead, IMF intervention is placed within a broader historical and structural context—one shaped primarily by domestic policy choices, institutional weaknesses, and political avoidance.

Public discourse often portrays IMF programmes as the starting point of economic hardship. Dr. Gunawardena corrects this misconception by restoring the correct chronology—an essential step for any honest assessment of the crisis.

The IMF did not arrive at the beginning of Sri Lanka’s collapse.

It arrived after the collapse had already begun.

By the time negotiations commenced, Sri Lanka had exhausted its foreign exchange reserves, lost access to international capital markets, officially defaulted on its external debt, and entered a phase of runaway inflation and acute shortages.

Fuel queues, shortages of essential medicines, and scarcities of basic food items were not the product of IMF conditionality. They were the direct outcome of prolonged foreign-exchange depletion combined with years of policy mismanagement. Import restrictions were imposed not because the IMF demanded them, but because the country simply could not pay its bills.

From this perspective, the IMF programme did not introduce austerity into a functioning economy. It formalised an adjustment that had already become unavoidable. The economy was already contracting, consumption was already constrained, and living standards were already falling. The IMF framework sought to impose order, sequencing, and credibility on a collapse that was already under way.

Seen through this lens, the return to the IMF was not a freely chosen policy option, but the end result of years of postponed decisions and missed opportunities.

A Long IMF Relationship, Short National Memory

Sri Lanka’s engagement with the IMF is neither new nor exceptional. For decades, governments of all political persuasions have turned to the Fund whenever balance-of-payments pressures became acute. Each engagement was presented as a temporary rescue—an extraordinary response to an unusual storm.

Yet, as Dr. Gunawardena meticulously documents, the storms were not unusual. What was striking was not the frequency of crises, but the remarkable consistency of their underlying causes.

Fiscal indiscipline persisted even during periods of growth. Government revenue remained structurally weak. Public debt expanded rapidly, often financing recurrent expenditure rather than productive investment. Meanwhile, the external sector failed to generate sufficient foreign exchange to sustain a consumption-led growth model.

IMF programmes brought temporary stability. Inflation eased. Reserves stabilised. Growth resumed. But once external pressure diminished, reform momentum faded. Political priorities shifted. Structural weaknesses quietly re-emerged.

This recurring pattern—crisis, adjustment, partial compliance, and relapse—became a defining feature of Sri Lanka’s economic management. The most recent crisis differed only in scale. This time, there was no room left to postpone adjustment.

Fiscal Fragility: The Core of the Crisis

A central focus of IMF Prakeerna Visadum is Sri Lanka’s chronically weak fiscal structure. Despite relatively strong social indicators and a capable administrative state, government revenue as a share of GDP remained exceptionally low.

Frequent tax changes, politically motivated exemptions, and weak enforcement steadily eroded the tax base. Instead of building a stable revenue system, governments relied increasingly on borrowing—both domestic and external.

Much of this borrowing financed subsidies, transfers, and public sector wages rather than productivity-enhancing investment. Over time, debt servicing crowded out development spending, shrinking fiscal space.

Fiscal reform failed not because it was technically impossible, Dr. Gunawardena argues, but because it was politically inconvenient. The costs were immediate and visible; the benefits long-term and diffuse. The eventual debt default was therefore not a surprise, but a delayed consequence.

The External Sector Trap

Sri Lanka’s narrow export base—apparel, tea, tourism, and remittances—generated foreign exchange but masked deeper weaknesses. Export diversification stagnated. Industrial upgrading lagged. Integration into global value chains remained limited.

Meanwhile, import-intensive consumption expanded. When external shocks arrived—global crises, pandemics, commodity price spikes—the economy had little resilience.

Exchange-rate flexibility alone cannot generate exports. Trade liberalisation without an industrial strategy redistributes pain rather than creates growth.

Monetary Policy and the Cost of Lost Credibility

Prolonged monetary accommodation, often driven by political pressure, fuelled inflation, depleted reserves, and eroded confidence. Once credibility was lost, restoring it required painful adjustment.

Macroeconomic credibility, Dr. Gunawardena reminds us, is a national asset. Once squandered, it is extraordinarily expensive to rebuild.

IMF Conditionality: Stabilisation Without Development?

IMF programmes stabilise economies, but they do not automatically deliver inclusive growth. In Sri Lanka, adjustment raised living costs and reduced real incomes. Social safety nets expanded, but gaps persisted.

This raises a critical question: can stabilisation succeed politically if it fails socially?

Political Economy: The Missing Middle

Reforms collided repeatedly with electoral incentives and patronage networks. IMF programmes exposed contradictions but could not resolve them. Without domestic ownership, reform risks becoming compliance rather than transformation.

Beyond Blame: A Diagnostic Moment

The book’s greatest strength lies in its refusal to engage in blame politics. IMF intervention is treated as a diagnostic signal, not a cause—a warning light illuminating unresolved structural failures.

The real challenge is not exiting an IMF programme, but exiting the cycle that makes IMF programmes inevitable.

A Strong Public Appeal: Why This Book Must Be Read

This is not an anti-IMF book.
It is not a pro-IMF book.
It is a pro-Sri Lanka book.

Published by Sarasaviya Publishers, IMF Prakeerna Visadum equips readers not with anger, but with clarity—offering history, evidence, and honest reflection when the country needs them most.

Conclusion: Will We Learn This Time?

The IMF can stabilise an economy.
It cannot build institutions.
It cannot create competitiveness.
It cannot deliver inclusive development.

Those responsibilities remain domestic.

The question before Sri Lanka is simple but profound:
Will we repeat the cycle, or finally learn the lesson?

The answer does not lie in Washington.
It lies with us.

By Professor Ranjith Bandara
Emeritus Professor, University of Colombo