By Austin Fernando
(Former Secretary to the President)
Twentieth Amendment (20A) is reviewed by commentators from political, legal, journalistic, and religious angles. Not belonging to any such group, I do not venture to cover the multitude of discussions on 20A. My focus is to view 20A to understand how it affects governance and causes political contradictions.
In democratic good governance, there are essential elements, such as the rule of law, transparency, responsiveness, consensual oriented action, equity and inclusivity, accountability, and participation. Irrespectively, it is surprising to observe public administrators/their associations (except Auditors) in stoic silence on the 20A, though they will implement and experience fallouts of the 20A.
Ministerial Review Committee
The 20A created contradictory opinions even among the government ranks. Prime Minister Mahinda Rajapaksa appointed a Committee of Ministers to review 20A. When this Committee Report was handed over, the public expected a review by the Cabinet. But it did not happen. Responsiveness, inclusivity, and participation have been lost even before 20A is passed, with a presidential directive to discuss the revisions of the Ministerial Committee at the Committee Stage. Such directives are common in Executive Presidency though one may question the applicability of Article 42(2) – “collective responsibility.” Anyway, the revisions will hence lack prior legal or public scrutiny.
Drafting crucial law
Probably, the Minister of Justice, who coordinated abolishing 19A, would have ordered the drafters to revert to 18A. Due to the critical nature, the Legal Draftsman would have officially conveyed the Cabinet of the implications of the amendments. It would have been opportune if that had happened, and their views shared, least as an Annex to the Cabinet Memorandum, especially for the Cabinet to observe the weaknesses/adversities of 20A, independently. Let me view 20A to observe the effects on good governance in this scenario.
Post-conflict issues and President’s duty
One sensitive amendment is the deletion of Article 33(1)(b) “Promote national reconciliation and integration.” It entered the 19A from post-conflict demands and tagged as a presidential ‘duty.’ Not much to exceptionally disturb the President through this ‘duty’ happened during the last five years. Hence, this deletion wrongly orchestrates negativism that he may be averse to ‘reconciliation and integration.’ It is unfair by him and hence deserves review.
Constitutional Council vs Parliamentary Council
Chapter VIIA – The Executive, matters to good governance. The first important issue is the erasure of the Constitutional Council (CC) and replacement by the Parliamentary Council (PC). The membership of the PC is political, and the proposed processes in application are subjected to presidential whim, especially by the power to supersede PC’s observations. These dilute PC’s independence and restricts inclusive participation.
Audit and Procurement Commissions
Under the 19A, nine Commissions were established out of which 20A has deleted the Audit Services Commission and National Procurement Commission (NPC). Erasing the Audit Services Commission does not reflect well for good governance.
Worst is to selectively leave-out audit of the Presidential Secretariat and the Prime Minister’s Office by constitutional fiat [Article 154(1)- 20A]. The primary objective of auditing is to examine the accuracy of accounts and express opinions on financial statements. The secondary objective is to detect and prevent frauds, misuses, misappropriations, etc.
Preventing auditing cheekily endorses the reluctance to be transparent and accountable; and could motivate officers to deliberately committing errors, frauds, and corruption. More important is the impact on parliamentary control of state finances (Article 148). The President, PM, and their officials, immune to parliamentary financial control, predict an accountability disaster. This also ridicules the government’s “One Country, One Law” rhetoric because other Ministers and officials have no such immunity.
In the private sector, the shareholders decide who the Auditors are, to audit the Board, Chief Executive (CEO), and all transactions. The 20A wants everyone to be audited, but not Sri Lanka’s CEO and his deputy. If 20A equivalent had happened in the private sector, shareholders would have revolted, but 20A is Amurtha (elixir) for government supporters.
Article 156C directs the National Procurement Commission (NPC) to formulate fair, transparent, competitive, and cost-effective procedures and guidelines for government procurements. These are extremely positive objectives. It is surprising for 20A to push them aside because we hear of wrongdoings, worth millions of rupees, happening even while the 19A is operative, as alleged by government spokespersons. What can we predict without an NPC? If the NPC is slow performing, corrections should be followed, rather than to abolish it.
According to the 19A, members of the Commissions were appointed by the President. (Article 41B and 41C). There had been very few disagreements on appointments between the CC and the Executive, which had been sorted out proving the ability to cohabit.
Special concerns on the CC are projected regarding higher judicial appointments. We sometimes hear the complaint of the President’s inability to get judges appointed at will. These are probably related to the CC’s unanimous rejections of two judicial appointment recommendations. Nevertheless, these decisions were made with the participation of the representatives of the then Opposition and civil society. Thus, 20A will ignore the latter arrangements negating an existing democratic process. Under 20A, a President’s recommendations, though wrong, may stay on, irrespective of negative observations of the PC. Article 41C blocked this happening, post-19A. Therefore, are the 20A provisions democratic and hail good governance?
Proposed Article 111D permits the President to appoint two members of his wish to the Judicial Services Commission. When such open-ended appointments are possible it gives hope to the judiciary that they could manipulate their personal gains.
Therefore, reviewing these appointments by the CC will do justice to the judiciary.
Though the incumbent President, with a strong Parliament, and personality, may not sometimes succumb to such influencing, but a weaker President certainly will, to sustain power. Constitutions must be drafted with appropriate controls applicable to any President, and not person-centric to the incumbent. This mistake has been repeated by us and should end.
Even the Public Service Commission (PSC) is appointed by the President after receiving PC observations. Again, overruling these observations, like in other instances, could make the PSC also toothless.
The effects will be observed in the short, medium, and long terms in recruitment, promotion, discipline, transfers, etc. The future of public administration may effectively face dismal problems.
We hear from the Minister of Justice of the constraints to appointment an IGP. He castigated the “purpose” or “use” of a National Police Commission (NPC) based on this. But such an appointment is prohibited by Article 155G. The increased numbers of criminal incidents were referred to prove the ineffectiveness of the NPoC. He ignored that the NPoC does not have the power to fight criminality. (Article 155G)
Removal of Officers (Procedure) Act No. 5 of 2002 clearly states that IGP’s removal is possible only under specified circumstances, such as insolvency, ill health, ceasing to be a citizen, etc. None of these sins were proved and the incumbent government retired him with all attached perks. Factually, there was no vacancy until he formally retired to appoint a new IGP. But when such irresponsible criticisms happen others hang on to such arguments. Therefore, they also pray for NPoC’s demise!
By deleting Article 91 (d) (xiii), 20A permits dual citizen’s appointment as parliamentarians. The need to use this amendment will be at the next general election, after five years. But the government is in a mighty hurry. Urgent implementation will be required if the National List is to be tampered for special political gain. Some ministers stated that 19A – 91(d)(xii) should be repealed because it was incorporated by person-centric lawmaking and thus wrong. The irony is that the 19A deletion also appears to accommodate person-centricity.
The keen advocates of this amendment are those who argued against Singapore-rooted Arjuna Mahendran. They forget that the difficulties with Mahendran would arise with dual citizen politicians sinning after 20A. Politicians sin whichever the party they belong!
When a clerk, a Grama Sevaka, IGP or a Secretary must be a citizen, but not parliamentarians, Ministers, PMs, or Presidents, it is a joke. Since the President has shown how to solve the dual citizenship problem, individually, why mess with the Constitution without following the Leader?
Another important reason is that this amendment will apply to any other dual citizens while being members of international terror groups (e.g. ISIS) or Tiger remnants. This situation is worsened by repealing the administering of the Official Oath (Article 53) in Schedule 7 of the Constitution. We are assured that the President will not do underhand deals with LTTE remnants or the Islamic terror groups. But this amendment affecting security governance could be used by another President or Minister, supported by extremists, by being inactive, permitting “support, espouse, promote, encourage or advocate the establishment of a separate state.”
This freedom to engage in separatist agendas may motivate helpful activities for separatism and it will be the base for another conflict that has to be fought. Such motivators are mentioned of previous regimes and cannot it repeat with the current and future regimes? This country has suffered enough and hence this amendment needs erasure or at least modifying.
Election promises and constitutional amendments
That the incumbent President received nearly seven million votes at the presidential election and a 2/3 majority at the general election is used to validate the 20A. But were the electors told that these questionable changes (e. g. abolition of dual citizenship, Audit and Procurement Commissions, Article 53, immunity, and castrating the independence of the CC/Commissions, etc.) would follow? No!
We must also remember that these amendments cannot be repealed conveniently. A President in power with a lean margin or performing with a weak parliamentary alliance can use these amendments to the detriment of democratic governance/country, even militarily. Canvassers may emerge inviting political leaders to be autocrats using some of these amended powers. In such circumstances, what is the guarantee that an Idi Amin or Robert Mugabe will not emerge from among our politicians?
President must be the Minister of Defence
The 20A corrects a prohibition in the 19A. The incumbent President, while possessing the power to declare war and peace and appoint the three Services Chiefs, is disabled to be the Minister of Defence because he is not a parliamentarian. I reason to differ from 19A, without being person-centric on the incumbent President’s professional suitability to be the Minister of Defence.
To wit, Article 4 (b) of our Constitution stipulates that the “executive power of the people, including the defence of Sri Lanka,” must be exercised by the President. Only “defence” is specially chosen here, not Agriculture, industry, etc. Under Article 33A, (which will be deleted by 20A, included in Article 42), the President is accountable for “his powers” to the Parliament on laws applicable to public security. Public security always combines with defence.
At present, there is no Minister of Defence and there is a Secretary Defence. According to Article 52(1): “There shall be a Secretary for every Ministry of a Minister of the Cabinet of Ministers.” By Article 52(2) the Secretary shall act “subject to the directions and control of his Minister…’’ It is the Cabinet Minister of Defence and not the State Minister. This status is thus challengeable legally.
When these situations are bagged together, the Ministry of Defence/relevant institutions should come under the President. However, 20A permits him to hold even any other Ministry [reintroduced Article 44(2)] and sadly this “residual power” deviates from democratic governance elements.
The 20A has revisited the issue. Taking into consideration the above-mentioned reasons only the Ministry of Defence should be handled by the President.
President the Messiah
There is a school of thought that considers the incumbent President as the Messiah who has proven prowess to accelerate action and therefore wants to “strengthen his hands,” to bring in political stability and economic revival. The successful manner the President managed the COVID-19 issues showed that for him the 19A was not a hindrance to perform efficiently and effectively.
However, considering the challenges ahead, the President requiring concentrated power is not surprising. Evening TV news everyday shows that he is attempting it. Concurrently, it is a fact that pre-2015 when Presidents had these executive powers there was an ongoing 25-year conflict. Equal development outputs were not observed during the tenures of some Presidents. Exceptional performances were based on individualistic strengths. Hence, to tag the Executive Presidency as a panacea for stability and development is a misnomer.
Emerging political contradictions
There seem to be six major political contradictions that affect political governance.
One is how the incumbent PM would bear the amendments reducing his powers substantially. Tisaranee Gunasekara has explained this, as quoted below. Agreement or not is your choice.
“Rendering the post of PM powerless is a measure of protection, in case the family is compelled by circumstances to bestow the premiership on an outsider, as a stop-gap measure. If the 20th Amendment becomes law, such a premier will be a mere cipher and will not have the power or the authority to challenge Rajapaksa primacy in any serious sense. His role will be to warm that seat until the next Rajapaksa is ready to step in.”
If true, brilliant manoeuvrering!
The second contradiction is the stance of the United National Party and break away Samagi Janabalavegaya. For them to oppose the 20A is a cautious ride. It is because the 20A basics evolved from their original Jayewardene Constitution, tinkered with by others later.
The third political contradiction is from the politicians who now venerate 20A – the by-product of the Jayewardene Constitution – the “Bahubootha vyavasthaava” (Mayhem Constitution)
The fourth extremely embarrassing political contradiction is for President Sirisena to vote for 20A, having praised 19A as the apex of democratic governance. He was the major force behind its approval in 2015. He may vote for the 20A, but his conscience will bleed until his last breath.
The fifth contradiction will arise from the expectations of the Tamil political parties who will see 20A to be the majoritarian political steamroller.
The last contradiction emerges with the speculation that the Sri Lankan Muslim Congress may support the 20A, as they did in 2010, and the sufferings Muslims experienced. Maybe, for the SLMC governance is reborn!
A historical opportunity has been given to consider solutions for the contradictions through constitutional amendments with a 2/3 majority in the Parliament. The country wishes the government will give priority to the country’s needs over personal or political group needs. It is a difficult proposition, but the government was given the unusual power to face and overcome even worse difficulties.
A short article cannot discuss the vast array of issues arising out of the abolition of the 19A. Hence, issues such as the presidential immunity, appointment and removal of Ministers and the PM, dissolution of parliament, etc., are not dealt with here though those issues certainly affect good democratic governance extensively.
There are deep ramifications of issues arising from the proposed constitutional amendments. The President must first protect himself, politically. As a democratically elected person he need not camouflage himself with an anti-democratic cloak because he has a massive vantage value unlike anyone else in his government, to take correct steps. Hence, his actions need not be at the expense of democratic governance. Regrettably, the published amendments do not show such. The sacred principles of good governance will safeguard him, us and the country.
ROYAL COLLEGE CADET PLATOON 1980
An extract from the book
“G R A T I T U D E”
By Admiral Ravindra C Wijegunaratne
(Retired from Sri Lanka Navy) Former Chief of Defence Staff
The School Cadet Organization of Sri Lanka (formerly known as Ceylon) was established in 1881 by Mr. John B Cull, the Principal of Royal College, Colombo 7. The idea of introducing Cadetting to Royal was to train the students on drill to make them disciplined and responsible. Mr. Cull believed that well trained and disciplined youth at school will later become more responsible citizens with leadership skills and eventually will be better prepared for success in life.
History says that about 320 Ceylon school cadets at the ages of 16 to 20 years had volunteered to fight alongside the Allied Forces in the Great War from 1914 to 1918. Royal, St Thomes, Trinity and Kingswood sent their cadets to war. The contingent was consist of Royalists – 88, Thomians – 86, Trinitians – 74 and Kingswoodians – 72.
Even though very limited records on Royal College Cadets available on participation in Great War, first Ceylonese Cadet to paid supreme sacrifice was young Royalist W E Speldewinde who was drowned when troop ship “Villa Dela Ciotat” was torpedoed by Germans and sank in Mediterranean Sea.
First Ceylonese cadet to win a military decoration for bravery and valour was Captain O J Robertson, who was awarded with Military Cross. Other Royalist recipients of Military Cross in World War I were Second Lt H E Speldewinde de Boer, Lt C W Nicholas and Second Lt J Robertson.
Almost 30 per cent of them had paid the supreme sacrifice for the British Crown and many had been severely wounded in action. In 1917, a District Judge in Badulla, Mr. Herman Loos had presented a Challenge trophy to be awarded to the best school cadet platoon in the Island. This was the beginning of the Herman Loos trophy competition for Cadetting in Sri Lanka, and it was first won by the Kingswood College, Kandy.
When we joined the Royal College Cadetting in the late 1970s, the Cadetting legacy of Royal College was reaching its 100th anniversary. I was a member of the 1980 Royal College Cadet platoon. Our Sergeant was Naeem Mahamoor. Lance Sergeant of our Platoon was Arosha Jayawickrama who was an outstanding cadet and the best Commander of junior Cadetting. Supun Hennayaka, C K Rajapaksa and I were the three senior Corporals. Later in our lives, Naeem went on to Airline Management and held high positions in Saudi Arabia and Dubai. Arosha migrated to the USA soon after leaving the College. Supun became a well-known specialist medical Doctor in the country. CK and I joined the Armed Forces.
We were very fortunate that Lieutenant (NCC) H M Dharmaratne, came to Royal College in 1979 on a transfer from the Ananda Shastralaya, Kotte. He was a young and energetic Cadet Master who had brought several cadetting achievements to Ananda Shastralaya. Royal College finally had a very good Cadet Master. We began planning for our “Operation Herman Loos” at our Cadet room known as the ‘Armoury.’ Our ultimate goal was to win the prestigious Herman Loos trophy for the Best Cadet Platoon in Sri Lanka. We had our plan carefully reviewed and crafted by our Sergeant and Master in Charge. We knew that both the Commandant’s Test (which tested the First Aid knowledge and the Field craft & Map-reading test) offered 300 marks. All the other competitions namely ‘Hut Inspections’, ‘Squad Drill’, ‘Physical Training (PT)’, ‘Athletics’, and ‘Drama’ offered either 100 or 50 marks each. We also knew with past experiences that most of the other schools concentrate and spend much time in practicing and training of the Squad Drill and PT.
Instead of focusing a lot on training for the squad drill and PT, we spent more time in learning first aid, fieldcraft theories, and map reading. I, being a President’s Scout at the time was tasked with teaching first aid to the platoon.
Captain (then) Parakrama Pannipitiya, a distinguished old Royalist (who later rose to the rank of Major General) from Sri Lanka Army’s Sinha Regiment agreed to teach us field craft and map-reading during evenings and weekends. He was working at the Army Headquarters at the time. With these arrangements, we knew our knowledge on first aid, and field craft & map reading subjects would be much superior to other cadet platoons.
We boarded the train from Colombo Fort Railway station to travel to the Army camp at Boosa for our annual cadet camp and Herman Loos competition. Under the able leadership of our Sergeant Naeem Mahamoor, we were determined and confident that we could change cadetting at Royal that year. In the 99-year history of Herman Loos trophy, Royal College had won it just twice. That was in 1963 under Sergeant Weerakumar, and later in 1970 under Sergeant MR Moosa.
As expected, we won the Commandant’s test with a very high margin. Sri Lanka Army examiners were surprised by our performance and were very happy with our excellent knowledge. We also won the Hut Inspection and became second in place in the PT test. Those accomplishments helped us win the coveted Herman Loos trophy for the best Cadet Platoon in the country. Royal College won it after ten years and for the third time in 99 years.
The rest was history. Royal won the Herman Loos trophy again in 1981 under Sergeant Pradeep Edirisinghe (that was the centenary year of Cadetting at Royal), and again in 1982 under Sergeant H D Jayasinghe. Present Navy Commander Vice Admiral Nishantha Ulugetenna was Member of College 1981 and 1982 Herman Loos Trophy winning platoons. Later he rose to the rank of regimental quartermaster Sergeant – (RQMS) of 3rd Battalion of NCC.
Mr. Dharmaratne was the Royal College Cadet Platoon Master in charge for all three years. Later he was promoted to the rank of Captain in the National Cadet Corps (NCC). Thank you, Sir, for your guidance and advice as the Master in Charge of Royal College Cadetting for a very long time.
When we look back and see what we achieved 40 years ago with a clear plan and well-executed strategy, and have a sense of pride and accomplishment. What Mr. Cull, the Principal of Royal College wanted to achieve by introducing Cadetting to Royal in 1881 has materialized.
“Long live Cadetting at Royal College!”
Budget 2021 likely to worsen macroeconomic instability amidst COVID-19 pandemic
By Prof. Sirimevan Colombage
The Budget Speech 2021 was presented at a time when the country is being severely hit by the COVID-19 pandemic. GDP growth is projected to be down to negative 2 percent this year. Despite this economic setback, the government envisages to maintain an inclusive GDP growth rate of 6 percent per annum over the medium-term while containing inflation to around 5 percent, according to its macroeconomic programme, ‘Vistas of Prosperity and Splendour’.
Less emphasis on COVID-19
Given such optimistic targets, it is somewhat puzzling that the Budget Speech does not pay much attention to Covid-19 pandemic which has paralyzed virtually all economic activities by now. Reflecting mixed-up priorities, the Budget has given undue resource allocations at this difficult juncture to some arbitrarily selected projects such as urban townships, sports, road construction and walking paths, which have no direct relevance to revive the pandemic-hit economy, though they may have their own merits during normal times.
A coherent economic recovery strategy, apart from the fiscal and monetary stimulus already granted, is the need of the hour to revive the economy from the fallout. The pandemic has severe consequences on the Sri Lankan economy, which had already encountered multiple economic setbacks including low economic growth, fiscal disarrays, balance of payments deficits and foreign debt burden even prior to the health crisis. The pandemic has adversely affected the export sector, domestic production, inward remittances and distribution network. Poor households who are mostly working in the informal sector with irregular income sources have become extremely vulnerable in the present crisis situation.
Escalating fiscal imbalance
The budget deficit is projected to rise by 24 percent from Rs. 1,266 bn. (7.9 percent of GDP) in 2020 to Rs. 1,565 bn. (8.9 percent of GDP) in 2021, reflecting a severe deterioration of the fiscal position (Figure 1). It is expected that the total revenue would rise by 28 percent in 2021 as against 26 percent increase in total expenditure. Such exorbitant revenue growth cannot be expected for a single year even during normal times. The projected increase in revenue is said to be based on the assumption of 5 percent growth in GDP in 2021. This assumption seems to be over-optimistic considering the negative impact of COVID-19 in years to come, and the country’s limited growth potential experienced even before the outbreak of the pandemic. Slower GDP growth in 2021 means low level of government revenue, and consequent expansion of the budget deficit much higher than what is expected. Thus, the budget deficit is likely to be 10 percent of GDP or more in 2021.
Monetary implications of fiscal imbalance
With the rise in the budget deficit, the government is compelled to rely increasingly on the banking system to finance the deficit. Net bank credit to the government rose by 46 percent from Rs. 2,732 bn. in September 2019 to Rs.3.980 bn. in September 2020. The Central Bank has accommodated government finance requirements by directly purchasing Treasury Bills at primary auctions. The Central Bank’s net credit to the government rose by 50.8 percent from Rs. 383.2 bn. in September 2019 to Rs. 577.7 bn. in September 2020.
The monetary easing policy adopted by the Central Bank to relieve the households and businesses adversely affected by Covid-19 too accelerated the annual money growth from 7.4 percent in September 2019 to 19.2 percent in September 2020 (Figure 2). The monetary easing measures included sequential reductions of the policy interest rates and Statutory Reserve Ratio (SRR), which led to inject substantial liquidity into the market, and to reduce borrowing costs significantly. Concessional credit schemes were also introduced to facilitate the activities of Small and Medium-scale Enterprises (SMEs), alongside debt moratoria granted for businesses and individuals distressed by the pandemic.
Nevertheless, the annual growth of commercial bank credit to the private sector has remained stagnant around 5 percent reflecting the slow pick up of economic activities. In contrast, net commercial bank credit to the government rose by 44.9 percent in the 12-month period ending September 2020. In this background, the excessive money supply growth is bound to create demand pressures augmenting inflation and imports in the coming months.
Inflation-targeting monetary policy missing
Surprisingly, the Budget Speech does not make any reference to monetary policy which is vital in achieving macroeconomic stability, and sustaining economic growth. The Central Bank made concerted efforts about two years ago to launch the inflation-targeting monetary policy framework with the expectation of close coordination with fiscal authorities while regaining its independence. I categorically warned in these columns that such efforts would be suicidal for the Central Bank, unless the fiscal sector is aligned with such process committing to low budget deficits.
It is evident by now that inflation-targeting monetary policy is a remote possibility, as such policy is completely neglected not only by the fiscal authorities in the latest Budget Speech, but also by its architect, the Central Bank. Inflation-targeting monetary policy framework is not focused in the Central Bank’s publication, ‘Recent Economic Developments – Highlights of 2020 and Prospects for 2021’.
Understandably, it is not feasible to implement such rule-based policy amidst the current economic crisis, but the Central Bank should have displayed its long-term commitment to run the inflation-targeting monetary policy framework, which was declared with much grandeur not so long ago. That would strengthen the Central Bank’s independence, which is vital to operate monetary policy without undue political interference.
Demand pressures mounting
The easy monetary policy implemented by the Central Bank under the Presidential directive following the pandemic is unlikely to boost production activities significantly as expected, given the inherent weaknesses of enterprises, uncertain macroeconomic environment and imperative health-related precautionary measures imposed by the government including curfews, lockdowns and travel restrictions.
The global economic downturn resulting from the pandemic has dampening effects on the export sector. Further, business decisions in the private sector are mostly based on comparisons of the expected rate of return on investment vis-à-vis opportunity cost of investment. Interest rates represent the opportunity cost while expectations are influenced by many factors including macroeconomic economic environment, technological changes, exchange rate volatility, capacity utilization, export competitiveness, aggregate demand, fiscal stability, inflation, political stability, business confidence, and cost of production.
The present low interest rate environment encourages consumption, as savings yield low returns. Thus, low interest rates have negative effects on domestic savings. This is reflected in the downfall of domestic savings rate from 24.8 percent of GDP in the first half of 2019 to 20.8 percent in the corresponding period of 2020. Meanwhile, private consumption rose from 66.7 percent of GDP in the first half on 2019 to 70.5 percent in the same period of 2020. Given the low returns on savings, the surplus-fund holders tend to move to alternative assets such as commodities, real estate and risky financial instruments. Such fund diversions lead to distort investment decisions, and to create asset bubbles harming financial stability.
The rising consumption demand has spill-over effects on domestic production and imports exerting pressures on inflation and balance of payments deficits. Inflation, in addition to cheap credit, makes imports attractive and exports unprofitable, causing further deterioration of the trade balance. Unless the exchange rate is allowed to depreciate freely to achieve external equilibrium, import restrictions become imperative to avoid deterioration of the trade deficit. This type of inward-looking foreign trade policy seems to be the government’s policy choice at present, as can be evident from several import controls imposed in recent times. Although such measures are inevitable amidst the pandemic, it must be noted that they have adverse consequences on competitiveness, productivity and export-led growth in the long run. Hence, it is important to phase out import restrictions and to allow free trade.
Given Sri Lanka’s long track record of low economic growth and macroeconomic imbalances, it is a major policy challenge to mitigate the economic fallout from COVID-19. Budget 2021 does not contain any coherent policy strategy to overcome the crisis. The budget deficit in 2021 is likely to be much higher than what is given in the official projections due to inevitable revenue shortfalls and expenditure overruns amidst the pandemic. In financing the widening budget deficit, increased reliance on bank borrowings results in liquidity injections, and consequent pressures on the money supply, inflation and balance of payments. The import restrictions imposed recently to arrest the balance of payments deficit might give wrong signals to the market depressing outward-oriented growth. Meanwhile, recourse to foreign borrowings escalates the already heavy external debt burden.
The response of the private sector to monetary easing seems rather weak due to structural factors while cheap credit has tended to encourage extravagant consumption, speculative asset holdings and risky financial dealings. The neglect of inflation-targeting monetary policy launched by the Central Bank about two years ago is a matter of concern from the viewpoint of optimal monetary-fiscal policy mix. A systematic growth strategy, backed by a realistic macroeconomic framework, is essential to recover the economy.
(The author is Emeritus Professor in Economics at the Open University of Sri Lanka)
Good news about vaccine
Cassandra, like so many others of her ilk, has locked herself down and voluntarily shut herself in the confines of her home. Being of mature age, she does not fret at self-imposed stay-at-home-ness and actually finds plenty to do to occupy the alone-hours. Such persons also know they are abiding faithfully by medical guidelines. Most sally forth on walks, masked and all, and keep in contact with friends and relatives via electronic wonders and that old faithful – the telephone. It needs effort to stave off fears and bouts of sinking spirits, and at night a further boost is needed. But being essentially optimistic, such persons give praise to the Task Force that is battling COVID-19 night and day. Also greatly appreciated are many helpers who are available to shop and run errands for them. Those who had no time to chant pirit or be prayerful do so now, with benefit, for it sure ensures a nightmare free night’s sleep.
We refrain from political talk as we have heard it is dangerous. Hence too Cass’s disinfected Friday articles. We spoke free and criticized where criticism was due during the yahapalanaya regime. The then Prime Minister, Ranil W, took criticism, even barbs and insults in his stride so we felt free to write about government and matters thereof. But no longer.
Return of the respected and trusted voice, though no longer heard
One radiant shaft of sunlight however, shone through recently. Newspapers announced Dr Anil Jasinha was back in the COVID-19 Presidential Task Force, at meetings at least, though sadly not visible on TV. We do miss him as when he spoke to the public we listened with full confidence in him, and were inspired. This is not meant to insult or demean others who took his place, and advise us on TV, all dedicated medical men, but personality and that earnest sincerity that came through when Dr J spoke was missing. It is not only what is said, but how it is said and received that make for effective communication. We were very suspicious of the ‘kick up’ he was given to move from the Health Ministry to Environment. Welcome back, respected Dr Jasinha and we hope we will see you again making announcements over TV. You called a spade a spade and that we appreciate. We are sick of being fed euphemistic news; good tidings all round and reams about the good our government is doing for the ordinary men and women of this fair isle. Spoons of salt are inbibed! Enough of treating us like fools! That really is how many politicians treat us, while in most cases, the boot is on the other foot.
We who have family overseas have resigned ourselves to leaving this life without seeing them. Terribly tragic but true and realistic. We are thus doubly interested in the manufacture of vaccines – for their sakes more than ours; those vaccines that have been tested and proved effective. Not those released before full testing is completed. Skyping a person in the US, I commented the Pfizer vaccine would cost much. He said the government over there has promised free distribution. Sure that’s a promise of Biden and not the barnacle clinging onto his residence in the White House and swinging more and more his golf club. He should swing himself out; that way of exit of orangutans seems suitable.
The Oxford vaccine
I had intended writing about half Sri Lankan, half Indian Dr. Maheshi Ramasamy who, having started her education in Sri Lanka, completed her medical degrees in the United Kingdom, and is now world-renowned as a member of the pioneering team of the most widely accepted vaccine against the global outbreak of Covid-19: the Oxford University vaccine. However, we have read about her great contribution in local newspapers this last Sunday, so I mean to quote from an article in the UK Guardian sent me, about the leaders of that team.
“At the heart of Oxford’s effort to produce a Covid vaccine are half a dozen scientists who between them brought decades of experience to the challenge of designing, developing, manufacturing and trialling a safe vaccine at breakneck speed.
“Prof Sarah Gilbert, the Kettering-born (in Northamptonshire, England) project leader, arrived at Oxford in 1994 to work with Prof Adrian Hill, a senior member of the team, on the malaria parasite, plasmodium. She soon fell into work on experimental vaccines, starting with one that roused white blood cells to fight malaria, followed by a ‘universal’ flu vaccine. As a researcher at Oxford, she gained a no-nonsense reputation, which some attribute in part to her raising triplets, though her husband gave up work to parent them.
“Hill, an Irish vaccinologist described by the Lancet as having ‘silent steeliness’, was first into clinical trials with an Ebola vaccine based on the chimp virus during the 2014 outbreak in West Africa. He and Gilbert patented the technology and in 2016 co-founded Vaccitech, an Oxford spin-off, to capitalise on the research.
“Oxford’s coronavirus work is built on research pioneered by Hill and Gilbert on vaccines based on a virus that causes common colds in chimpanzees. The adenovirus could be rendered harmless and then modified to smuggle genetic material into human cells. The trick was to make that material the gene for a protein on the surface of a nasty virus, one the immune system could lock on to.” The operative word here is ‘raced’ since these admirable pioneers have produced a vaccine and tested it to 70% effectiveness, to undergo one other test ensuring 90%, within a year, while the development of vaccines and full testing usually takes over at least two years. Work on the Oxford vaccine started as early as February this year. So even we oldies of Free Sri Lanka have hopes of being vaccinated as the Oxford vaccine is so much cheaper and can be transported easily. Praise be and grateful thanks to pioneers who sure would have worked against the clock.
Interesting to know about these pioneers. Adrian Vivian Sinton Hill, Irish vaccinologist, aged 62, studied in Trinity College Dublin and then at Oxford, He is director of the Jenner Institute, Professor of Human Genetics at the University of Oxford, Consultant Physician and Fellow of Magdalen College, Oxford. More interestingly: married to Dr Sunetra Gupta.
And thus, thanks to these selfless pioneers, even we Third Worlders may have a vaccine against Covid 19 fairly soon. WHO will assist of course, as Bill Gates is doing in African States.
Slowly giving way but as yet mulish
Yes, that is the defeated Prez of the US, still ensconced in the White House while whiling his time on golf links and sacking VIPs of his government and insulting his successor. Trump has directed that the hand-over of the presidency be facilitated but keeps reiterating that he has not been defeated and will not concede defeat. Absolutely unbelievably, masses are still behind him, flag waving and vociferous with a few Republicans on his side, while many have agreed it is time he goes. I suppose he depended on the ‘Bad Boys’ or whoever who banded themselves just prior to the 2016 presidential election. They seem to have had their fangs shortened,
We are far removed from the US but it was heartening to watch as Biden named his team, most having served under President Obama, with a number of women included. Quite a few are second generation immigrants with one having a step father killed during the Hotocuast. One contrast between his team and Trumps, the latter disintegrating, is that all Biden’s team are slim and trim while Trump had many fat cats behind him. Appearances are also very important.
Mum’s the word with sealed lips on matters Sri Lankan, if they are political! One comment, however, has to be made. We saw on TV Arjuna Ranatunge and some other UNPers wanting Ranil W as the sole nominated UNP member in Parliament. Well and good, since Ranil W is an experienced, highly knowledgeable, cleverly debating, able Parliamentarian. What Cass wishes to comment on is how ole John Amaratunge presented himself to the TV camera on Monday 23, claiming he should be the nominated MP. He is an octogenarian – just made it being born in 1940 – but seems advanced in his three score and ten plus plus. He must be having a vitamin he takes for eternal springy (imagined/induced) vitality and verve! Never say die seems to be his motto after being once accused of sitting on the fence – UNPer given gift trip to the Vatican by the then SLFP government, accompanying Prez Mahinda R, no less!
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