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Urgent need to raise foreign currency funding

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It was reported that the trade deficit, to end August 2020, was US $ 3.8 billion, compared with US$ 4.8 billion to end August 2019. There is no doubt that the current reforms will provide solutions to some of the structural issues in the economy; yet there is a need to address the country’s emerging macroeconomic vulnerabilities.

While improving trade balance with increased focus on exports, import substitution and restricting non-essential imports will help to resolve the debt service issue in the medium term, a failure to raise foreign currency funding, in the near future, may retard economic growth prospects. Even the Government’s medium-term development programme could get destabilized. The country would then be compelled to ask lending institutions to restructure its debt portfolio in order to avoid Sovereign default.

The recent Sovereign rating downgrade is one example of how perceived and potential macroeconomic vulnerabilities could provide opportunities for malicious forces to destabilize the country’s ongoing progress. Manufacturing and service sectors are badly affected and the agriculture sub-sector could only contribute 10% to the GDP, although such revenues are getting tricked-down to most vulnerable social groups in the bottom of the pyramid.

It is essential that all efforts are taken to ensure that ground level improvements are reflected in GDP estimates, on which other key ratios of the economy depend. GDP estimates of Sri Lanka have been constantly subject to criticism as being unable to capture new economic activities, such as the digital economy, home gardening and Port City related developments, etc.

Several indicators, such as the budget deficit and debt levels, are monitored by rating agencies and foreign investors as a ratio of GDP. While rectifying anomalies in GDP compilation is critical, there is an increasing need to address these factors with a medium-term fiscal consolidation programme, as envisaged in ‘Vistas of Prosperity’.

Economic indicators to enhance investor climate

The Department of Census and Statistics, which calculates the GDP numbers, would have to make an attempt to capture all value-added services during the partially closed down months. Nevertheless, it is expected that the 2nd quarter GDP growth rate is in negative and it could be a substantially higher negative growth, say in double digit. A large adverse GDP growth estimate in Q2 could result in a large negative growth during the year. It was reported recently, in the prestigious ‘Economist’ magazine, that except China, all other countries have recorded negative growth during the second quarter ’20. This would mean that all the socio-economic ratios, such as debt to GDP, government budget deficit, current account deficit, per capita income and GDP growth rate itself will record huge adverse variances. The level of gross official foreign reserves, coming down to below US$ 6 billion, by end December 20, will create issues as it could be equivalent to just four months of imports.

The presentation of the National Budget 2020 will provide the Sri Lankan Government the best opportunity to spell out its strategies to address these key macroeconomic vulnerabilities, allay the fears of investors and creditors, and decisively tackle adverse publicity spread.

Until international capital markets commence normal operations, it may not be that easy to raise international sovereign bonds. Therefore, continuous engagement with friendly countries, and multilateral agencies, of which we are members, is essential in order to raise required funding needed for debt servicing and continue development activities. Alternatively, it is important to explore possibilities of raising bi-lateral – government to government – loans. The writer is of the view that along with the fiscal consolidation, there is an urgent need to provide fiscal stimulus packages, which would require funds even to meet the upcoming significant foreign debt service repayments. In the circumstances, it is prudent to take immediate measures to obtain at least US $ 1 billion to enhance foreign currency reserves.

 

JAYAMPATHY MOLLIGODA

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Opinion

Duel with Dual Citizenship

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The 20A almost failed to get passed through because President Gotabaya wanted the ban on dual citizens holding the highest offices binned. A worry that was not there before the 19A has now become a passionate concern.

Interestingly, the very people who opposed the 20A (from the Government side) were the very ones who wanted Gotabaya Rajapaksa as Sri Lanka’s President. When he was persuaded to run for presidency he was a dual citizen. Throughout the presidential campaign he was a dual citizen. He only renounced his US citizenship just a few months before the elections.

Yet, his dual citizenship was not a concern to any who supported his ascent to presidency. His opposition – the Yahapalana Government, certainly tried their level best to use Gotabaya Rajapaksa’s dual citizenship against him. This was laughable and only served to discredit them further.

Hypocrisy and Vindictive Politics

After all, having appointed a foreigner as the Central Bank Governor, their worry over a dual citizen cannot be taken seriously. The Yahapalana Government on blind faith co-sponsored the UNHRC Resolution against Sri Lanka. After thus caving into US pressure so treacherously, to anticipate such a move from Gotabaya Rajapaksa was hypocritical. The Mahinda Rajapaksa Administration risked antagonizing our neighbour by politely sitting on the ECTA. The Yahapalana Government, on the other hand, signed with flourish an FTA with Singapore that spelt doom for our trade, industries and manpower.

Clearly, the Yahapalana Government’s concerns over dual citizenship were not genuine. The sole objective was to prevent two of the Rajapaksa brothers from contesting at the presidential elections. This is the point that President Gotabaya directed the attention of his MPs and clergy. He noted that the clause on dual citizenship stemmed from vindictiveness. Therefore, the principle on which this is based on is unacceptable and on that basis the clause needs to be rejected.

However, he assured, at the ongoing exercise of making the new constitution, genuine concerns over dual citizenship can be revisited and the ban can be re-imposed. Clearly, no one in the Government could reject this irrefutable logic and so supported the 20A.

Now that the Government MPs have supported the 20A with the intention of repelling this clause from the new constitution, they have an important task ahead of them. That is, to genuinely analyze the real reason to oppose dual citizens in high offices. The clause was removed because the principle in which it was introduced was corrupt. Then, they cannot re-introduce it on a corrupt principle of their own. That is, their decision cannot be influenced by the effect this would have on Basil Rajapaksa.

Pros and Cons of Dual Citizens

Many unfairly equate dual citizens to the Tamil Diaspora. While some of the Tamil Diaspora may be dual citizens, not all dual citizens are part of the Tamil Diaspora. Therefore, to take a decision on a whole group based on the reservations against some in that group is wrong.

On the whole, one million Sri Lankan expatriates (in which group a subset are dual citizens) remit USD 7 billion annually. As was pointed out by an FB post, when we travel overseas, Sri Lankan expatriates (who may hold dual citizenship) host and save us from food and lodging expenses. Sometimes they even chauffeur us around, saving us from our transport expenses. They send us fancy goods or essential items not available in Sri Lanka. They also fight in our stead with their host governments.

Furthermore, the Yahapalana era attests to the frightening aspect that the physical presence of the Tamil Diaspora is not needed to carry out its separatist agenda in Sri Lanka. Therefore, simply banning dual citizens from becoming leaders or decision-makers alone is not enough. We need to include the matter of foreign funding and influence into this debate.

In the US, it is not enough to be a citizen to hold a high office like the presidency. One must be born in that country as well. However, our best brains are draining out of SL to end up in the US. So, naturally the US can be picky where as it is not clear if SL can afford the same luxury.

Gotabaya Rajapaksa is a case in point. Certainly he became the Defense Secretary because his big brother was the then President. However, nepotism may secure the job but keeping the job is up to the individual. Gotabaya Rajapaksa not only justified the appointment by defeating the LTTE, but also proved himself as an administrator with a vision with his urban development projects. Today he is the President of SL all on his own merit.

The bottom line is, as a Colonel Gotabaya Rajapaksa outperformed the Generals in the same Army he served. The Generals before Mahinda Rajapaksa’s Administration too received political support to defeat the LTTE. Gotabaya Rajapaksa as Defense Secretary managed to convince President Mahinda that Sri Lanka was on the winning path. Had he failed, then the political will of that administration too would have waned.

In the 10 years in the US, Gotabaya Rajapaksa was in an environment where he met intellectuals and academics from different cultural and ethnic backgrounds on a daily basis. Coupled with the Sri Lankan Army’s “nothing is impossible” motto, he had developed an attitude to think “outside the box” (a phrase he uses frequently).

It is clear that an outstanding officer had returned home as an exceptional human being. He is however not an isolated case. Many Sri Lankans returning home have undergone this transformation.

At the same time, we cannot ignore the fact that as dual citizens these individuals have pledged their allegiance to another country. Interestingly, as natives we have never pledged a similar allegiance to our own country. This natural bond one forms with his birth country that defines him and his loyalty to his adopted country that caters to his comforts would be a very difficult one to gauge.

Loyalty is one that can only be proven with action and time and can be fickle at the most unexpected moment. This makes the question of loyalty so serious and significant that it pales all pros of a dual citizen. Decisions of leaders affect the whole nation. Therefore, we must be without a reasonable doubt on the integrity of prospective candidates – whether they be dual citizens or not. In the question of dual citizenship, however, it is important that our leaders and decision makers should not have an escape route from the effects of their own decisions.

It is thus hoped that our own lawmakers, intellectuals, academics and other analysts and opinion-makers would initiate this debate in earnest. It would of course help the country that if this debate was engaged with an open mind. If the participants enter the debate with a preconceived opinion, and interpret facts from that perspective then this would become a lost cause.

SHIVANTHI RANASINGHE

 

 

 

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Opinion

Croc skins for Prado

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Soon after the Cabinet decided to ban cow slaughter, Minister Dallas Alahapperuma, announced, at a meeting in Galle, the idea of a crocodile farm. Its purpose will be to breed crocodiles to be slaughtered, for their exotic hides to be exported to upmarket European stores, as Prado and Gucci, to manufacture footwear and handbags.

I am sure that croc meat will be  popular among East Asian gourmets, both here and further east.

If and when this farm is established, we can cease calling ourselves a Buddhist country.

 TD

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Opinion

Dear Pompeo… don’t bully a small nation

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Welcome to Sri Lanka. Sri Lanka welcomes you with its warm smiles and hearts, the hallmark of our people. The respect, welcome and hospitality Sri Lanka has shown to all nations for 1000s of years is extended to you, too. It is the same open and generous welcome that legends from distant history, like Fa Hein, Marco Polo, Ibn Battuta, enjoyed and gushed about on this island of plenty.

We hope and pray your visit will be one of genuine efforts by the US to normalize and strengthen relations with a strong, democratically elected government, and a President with an unprecedented mandate. You are truly dealing with the most powerful government Sri Lanka has ever seen. It’s no secret that our relations had been soured by lies, mistrust, accusations, deceptions and perjury by parties hostile to Sri Lanka. These interested parties have sullied Sri Lanka’s name, muddied the waters, and our relations have suffered. We have enjoyed friendly, cordial relations with mutual respect for years, before the mischief-makers have almost broken it down. We fervently hope your visit is a sign of the strengths of our relationship surfacing again, against the forces that try to divide us; and with your visit, we will be able to reset our relations once again to what it was, and what it should be.

The goverment is the representative of the people, and as such please deal with the government accordingly. With respect and honesty. With no preconceived biases. Do not be distracted by the side actors, like NGOs, LTTE reps, Media, etc. Even some official organizations, like the UN, CNN, BBC and some US organization/foreign offices, have been infiltrated by LTTE supporters who are detrimental to Sri Lanka and its sovereignty. They have become their mouthpieces, churning out untruth after untruth. They are loud and noisy on the world stage. But they are small and insignificant, and have NO representation here. Though their malicious campaign has sullied our name, we stand strong and tall as a people of a peace loving and democratic nation. That is our history and heritage, long before these lofty words were coined. Please do not hold over Sri Lanka, these unsubstantiated malicious blatant lies to man-handle or force us.

It is said you are coming here to force us to choose between you and another country. Please don’t give us choices. Choices we don’t want, nor have we to make. All countries are important to us. The quarrels and feuds between other countries are not our concern. We wish to stay as far away from them as possible. As such, please do not force them on us. Respect our desire to remain neutral and friends with both the US and China. These feuds are short-lived and transient in global politics. Soviet leaning India, which fiercely opposed our close friendship with America in the seventies and eighties, is your best mate now. But back then, India went to the extent of making and supporting the world’s most ruthless terror group, LTTE, to browbeat and decimate Sri Lanka, because they did not condone our capitalist path different to theirs! But today India has come full circle to join us.

Today, Sri Lanka recognizes its regional importance. New geopolitical forces are active in the region. New economic trends are blowing. We will manage and navigate these. With no harm to any, and benevolence to all. The true Hela, or Sri Lankan way. The 2500 years or more of history will tell you, that’s how we have been in the past, and we will continue to be so.

You come as a representative of the American people. Who they are represented by, Trump or Biden, we do not care. Either will have our support, because they represent the people of America. I’m sure theirs is not the wish to bully a small nation to their own selfish benefit. Hope your people’s lofty ideals of freedom, democracy and fair play will transcend beyond their shores with your visit.

CITIZEN S

 

 

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