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Way ahead for Lankan economy

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By DR. Garvin Karunaratne

Sri Lanka’s economy finds itself in a situation where one wonders whether the government has allowed it to drift. Perhaps, studying how countries have suffered and faced similar crises in the past may offer us some ideas. In 1997 the economies of Asian giants Malaysia, Indonesia, Thailand, South Korea crashed. In 1995, the World Bank said that Thailand was the world’s fastest growing economy.

Of Thailand, Phongpaichit and Baker says, “in 1996, export growth slumped from over 29% to zero. The stock market lost two thirds of its value. The country was battered by speculators into a sharp depreciation – the biggest finance company collapsed. Two thirds of all finance firms were suspended. The IMF was called in to arrange the largest ever bail out”. (Thailand’s Boom and Bust. [1998] Phongpaichit and Baker).

Of all countries whose economies crashed, Malaysia stands out as the one country that emerged victorious. Other countries had to beg for assistance from the World Bank and the IMF. Indonesia was bailed out with a loan of $ 43 billion, South Korea with a bail out of $ 56 billion, and Thailand with a loan package of $ 17 billion. They were all loans that enabled the countries to survive for the moment and pay later. As a result, their foreign debt increased exponentially.

The financial upheaval in Indonesia saw the fall of its leader Suharto. Nicholas Kristof, Jakarta correspondent for The New York Times, wrote of what happened to Suharto, the President of Indonesia: “What overthrew Suharto was not a guerrilla insurgency, but a conspiracy of far more subversives – capitalism, markets and globalisation; Suharto’s sleuths never figured how to handcuff them (Herald International Tribune).

It has to be understood that Sri Lanka today has been held hostage by international capitalism working through its agent, the International Monetary Fund. There was one country that did not go begging for aid—Malaysia. Mahatir Muhammed, the legendary Prime Minister, took charge of the economy, collected all the dollars from all banks. As I have said previously, “Mahatir Muhammed declared war with the IMF by doing the exact opposite of the IMF advice. He did not go on bended knees to the IMF. Instead he effectively controlled the economy of his own country. He imposed strict controls on the use of foreign exchange. He did not allow anyone to spend the money on the import of unnecessary goods. He clamped severe restrictions on the use of foreign exchange. This even went to the extreme of stopping foreign exchange for Malaysians studying abroad. There was mayhem in student circles in the UK. Some students took leave of study and went back. Others were compelled to work as waiters and kitchen hands and pay themselves” (How the IMF Ruined Sri Lanka & Alternative Programmes of Success [2006]. Pg 238).

In 1958 Mahatir even stopped foreign investors from taking away money.

In Mahatir Muhammed’s own opinion, “Any country at all which says it cannot control its banks and its banking system – they are not fit to be governments and they should either resign or be overthrown” (Daily News. February 1, 1999).

Malaysia was the one and only country to get out of the East Asian Foreign Currency Crisis. Even today the Sri Lankan Government does not collect the dollars that come in. The bulk of the dollars are collected by private and foreign banks and private money changers, who are allowed to fix their own buying and selling rates. The private dealers collect dollars or rupees within minutes, while it takes at least half an hour of form filling and passport checking at State banks. That is how the government went bankrupt. State banks collect only a fraction of the dollars that come into the country.

A funny thing happened on 2 January, 2001, two decades ago. Our two State banks, Bank of Ceylon and People’s Bank, did not have enough dollars to pay a large oil bill, and they went hat in hand to foreign banks in Colombo. Those that had collected dollars raised the price to Rs 106, when the rate had been Rs 85, and the two State Banks were forced to buy at the higher price. The rupee was devalued overnight.

The Central Bank, when questioned, said that it had control over only the domestic rupee (The Island of 17 February 2001).

In other words, the private banks collect dollars that come in, and sell them as they like, even today the banks and private dealers fix their own rates. What all this indicates is that even today our government does not control the foreign exchange that comes in. Naturally, today we are facing the music of not having dollars to pay for essential imports.

What can be done? The Governor of the Central Bank Ajith Nivard Cabraal has ruled out the possibility of going to the IMF. Because the IMF will insist on devaluing the rupee, increasing interest rates, privatising state commercial ventures, drawing further loans and living on them, like what we did in the past.

Our leaders are quick to declare that they will pay loan instalments due next year, amounting to four to five billion dollars. Do we need to service and pay any loan outstanding to the IMF and the World Bank, as we have done everything they have asked and we are now facing a crisis due to their wrong advice?

Are we yet collecting all the dollars that come in? No. We allow private and foreign banks, and private dealers to collect, fix rates and sell as they like. This, they have done for decades from November 1977, and at least now we have to collect all dollars that come in like what was done before we embraced neoliberalism in 1977. Are we yet being fooled by foreign investors who trade in the local rupee, calculate profits in rupees, but take away profits in US dollars?

Are we not yet being fooled by foreign travel agencies that book hotel stay, get the hotel to collect in local rupees, but get paid by invoices in dollars going out of our reserves? Hotel bookings by foreigners have to be made in dollars.

Before President Jayewardene foolishly submitted to neoliberalism and started living on loans, we had a closed economy. Then, we had two budgets: a local rupee budget that attended to all development work. We had a separate foreign budget with the dollars we collected from imports. Then we spent the dollars we had, first on essentials, and if we had anything left, we gave small allocations to import cars and electrical items. We never dispensed funds for foreign travel unless it was necessary for our country. Nor did we allocate any foreign funds for students to study abroad. Should we not revert to that system?

How we managed our finances from Independence till President Jayewardene started licking the boots of the IMF is of import. The fundamental fact is that at the end of 1977 Sri Lanka did not have foreign debt.

As much as we have had to restrict imports, let us have a programme to produce locally all what we import. Not long ago we had the Divisional Development Councils Programme (DDCP) of 1970-1977, when we made seafaring fishing boats (at Matara), Crayons equal to the Crayola of today (at Matara), paper made out of waste Paper (at Nuwara-Eliya – Kotmale), agricultural farms (in every District) and many more, all done with local rupees, all carried out by local staff. We can easily do it again in months. That will also provide incomes and employment to the unemployed.

Perhaps, a rethinking of priorities and a firm resolve to go ahead is what is required today.



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Ranking public services with AI — A roadmap to reviving institutions like SriLankan Airlines

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Efficacy measures an organisation’s capacity to achieve its mission and intended outcomes under planned or optimal conditions. It differs from efficiency, which focuses on achieving objectives with minimal resources, and effectiveness, which evaluates results in real-world conditions. Today, modern AI tools, using publicly available data, enable objective assessment of the efficacy of Sri Lanka’s government institutions.

Among key public bodies, the Supreme Court of Sri Lanka emerges as the most efficacious, outperforming the Department of Inland Revenue, Sri Lanka Customs, the Election Commission, and Parliament. In the financial and regulatory sector, the Central Bank of Sri Lanka (CBSL) ranks highest, ahead of the Securities and Exchange Commission, the Public Utilities Commission, the Telecommunications Regulatory Commission, the Insurance Regulatory Commission, and the Sri Lanka Standards Institution.

Among state-owned enterprises, the Sri Lanka Ports Authority (SLPA) leads in efficacy, followed by Bank of Ceylon and People’s Bank. Other institutions assessed included the State Pharmaceuticals Corporation, the National Water Supply and Drainage Board, the Ceylon Electricity Board, the Ceylon Petroleum Corporation, and the Sri Lanka Transport Board. At the lower end of the spectrum were Lanka Sathosa and Sri Lankan Airlines, highlighting a critical challenge for the national economy.

Sri Lankan Airlines, consistently ranked at the bottom, has long been a financial drain. Despite successive governments’ reform attempts, sustainable solutions remain elusive.

Globally, the most profitable airlines operate as highly integrated, technology-enabled ecosystems rather than as fragmented departments. Operations, finance, fleet management, route planning, engineering, marketing, and customer service are closely coordinated, sharing real-time data to maximise efficiency, safety, and profitability.

The challenge for Sri Lankan Airlines is structural. Its operations are fragmented, overly hierarchical, and poorly aligned. Simply replacing the CEO or senior leadership will not address these deep-seated weaknesses. What the airline needs is a cohesive, integrated organisational ecosystem that leverages technology for cross-functional planning and real-time decision-making.

The government must urgently consider restructuring Sri Lankan Airlines to encourage:

=Joint planning across operational divisions

=Data-driven, evidence-based decision-making

=Continuous cross-functional consultation

=Collaborative strategic decisions on route rationalisation, fleet renewal, partnerships, and cost management, rather than exclusive top-down mandates

Sustainable reform requires systemic change. Without modernised organisational structures, stronger accountability, and aligned incentives across divisions, financial recovery will remain out of reach. An integrated, performance-oriented model offers the most realistic path to operational efficiency and long-term viability.

Reforming loss-making institutions like Sri Lankan Airlines is not merely a matter of leadership change — it is a structural overhaul essential to ensuring these entities contribute productively to the national economy rather than remain perpetual burdens.

By Chula Goonasekera – Citizen Analyst

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Why Pi Day?

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International Day of Mathematics falls tomorrow

The approximate value of Pi (π) is 3.14 in mathematics. Therefore, the day 14 March is celebrated as the Pi Day. In 2019, UNESCO proclaimed 14 March as the International Day of Mathematics.

Ancient Babylonians and Egyptians figured out that the circumference of a circle is slightly more than three times its diameter. But they could not come up with an exact value for this ratio although they knew that it is a constant. This constant was later named as π which is a letter in the Greek alphabet.

Archimedes

It was the Greek mathematician Archimedes (250 BC) who was able to find an upper bound and a lower bound for this constant. He drew a circle of diameter one unit and drew hexagons inside and outside the circle such that the sides of each hexagon touch the sides of the circle. In mathematics the circle passing through all vertices of a polygon is called a ‘circumcircle’ and the largest circle that fits inside a polygon tangent to all its sides is called an ‘incircle’. The total length of the smaller hexagon then becomes the lower bound of π and the length of the hexagon outside the circle is the upper bound. He realised that by increasing the number of sides of the polygon can make the bounds get closer to the value of Pi and increased the number of sides to 12,24,48 and 60. He argued that by increasing the number of sides will ultimately result in obtaining the original circle, thereby laying the foundation for the theory of limits. He ended up with the lower bound as 22/7 and the upper bound 223/71. He could not continue his research as his hometown Syracuse was invaded by Romans and was killed by one of the soldiers. His last words were ‘do not disturb my circles’, perhaps a reference to his continuing efforts to find the value of π to a greater accuracy.

Archimedes can be considered as the father of geometry. His contributions revolutionised geometry and his methods anticipated integral calculus. He invented the pulley and the hydraulic screw for drawing water from a well. He also discovered the law of hydrostatics. He formulated the law of levers which states that a smaller weight placed farther from a pivot can balance a much heavier weight closer to it. He famously said “Give me a lever long enough and a place to stand and I will move the earth”.

Mathematicians have found many expressions for π as a sum of infinite series that converge to its value. One such famous series is the Leibniz Series found in 1674 by the German mathematician Gottfried Leibniz, which is given below.

π = 4 ( 1 – 1/3 + 1/5 – 1/7 + 1/9 – ………….)

The Indian mathematical genius Ramanujan came up with a magnificent formula in 1910. The short form of the formula is as follows.

π = 9801/(1103 √8)

For practical applications an approximation is sufficient. Even NASA uses only the approximation 3.141592653589793 for its interplanetary navigation calculations.

It is not just an interesting and curious number. It is used for calculations in navigation, encryption, space exploration, video game development and even in medicine. As π is fundamental to spherical geometry, it is at the heart of positioning systems in GPS navigations. It also contributes significantly to cybersecurity. As it is an irrational number it is an excellent foundation for generating randomness required in encryption and securing communications. In the medical field, it helps to calculate blood flow rates and pressure differentials. In diagnostic tools such as CT scans and MRI, pi is an important component in mathematical algorithms and signal processing techniques.

This elegant, never-ending number demonstrates how mathematics transforms into practical applications that shape our world. The possibilities of what it can do are infinite as the number itself. It has become a symbol of beauty and complexity in mathematics. “It matters little who first arrives at an idea, rather what is significant is how far that idea can go.” said Sophie Germain.

Mathematics fans are intrigued by this irrational number and attempt to calculate it as far as they can. In March 2022, Emma Haruka Iwao of Japan calculated it to 100 trillion decimal places in Google Cloud. It had taken 157 days. The Guinness World Record for reciting the number from memory is held by Rajveer Meena of India for 70000 decimal places over 10 hours.

Happy Pi Day!

The author is a senior examiner of the International Baccalaureate in the UK and an educational consultant at the Overseas School of Colombo.

by R N A de Silva

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Sheer rise of Realpolitik making the world see the brink

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A combined US-Israel attack on Iran.(BBC)

The recent humanly costly torpedoing of an Iranian naval vessel in Sri Lanka’s Exclusive Economic Zone by a US submarine has raised a number of issues of great importance to international political discourse and law that call for elucidation. It is best that enlightened commentary is brought to bear in such discussions because at present misleading and uninformed speculation on questions arising from the incident are being aired by particularly jingoistic politicians of Sri Lanka’s South which could prove deleterious.

As matters stand, there seems to be no credible evidence that the Indian state was aware of the impending torpedoing of the Iranian vessel but these acerbic-tongued politicians of Sri Lanka’s South would have the local public believe that the tragedy was triggered with India’s connivance. Likewise, India is accused of ‘embroiling’ Sri Lanka in the incident on account of seemingly having prior knowledge of it and not warning Sri Lanka about the impending disaster.

It is plain that a process is once again afoot to raise anti-India hysteria in Sri Lanka. An obligation is cast on the Sri Lankan government to ensure that incendiary speculation of the above kind is defeated and India-Sri Lanka relations are prevented from being in any way harmed. Proactive measures are needed by the Sri Lankan government and well meaning quarters to ensure that public discourse in such matters have a factual and rational basis. ‘Knowledge gaps’ could prove hazardous.

Meanwhile, there could be no doubt that Sri Lanka’s sovereignty was violated by the US because the sinking of the Iranian vessel took place in Sri Lanka’s Exclusive Economic Zone. While there is no international decrying of the incident, and this is to be regretted, Sri Lanka’s helplessness and small player status would enable the US to ‘get away with it’.

Could anything be done by the international community to hold the US to account over the act of lawlessness in question? None is the answer at present. This is because in the current ‘Global Disorder’ major powers could commit the gravest international irregularities with impunity. As the threadbare cliché declares, ‘Might is Right’….. or so it seems.

Unfortunately, the UN could only merely verbally denounce any violations of International Law by the world’s foremost powers. It cannot use countervailing force against violators of the law, for example, on account of the divided nature of the UN Security Council, whose permanent members have shown incapability of seeing eye-to-eye on grave matters relating to International Law and order over the decades.

The foregoing considerations could force the conclusion on uncritical sections that Political Realism or Realpolitik has won out in the end. A basic premise of the school of thought known as Political Realism is that power or force wielded by states and international actors determine the shape, direction and substance of international relations. This school stands in marked contrast to political idealists who essentially proclaim that moral norms and values determine the nature of local and international politics.

While, British political scientist Thomas Hobbes, for instance, was a proponent of Political Realism, political idealism has its roots in the teachings of Socrates, Plato and latterly Friedrich Hegel of Germany, to name just few such notables.

On the face of it, therefore, there is no getting way from the conclusion that coercive force is the deciding factor in international politics. If this were not so, US President Donald Trump in collaboration with Israeli Rightist Premier Benjamin Natanyahu could not have wielded the ‘big stick’, so to speak, on Iran, killed its Supreme Head of State, terrorized the Iranian public and gone ‘scot-free’. That is, currently, the US’ impunity seems to be limitless.

Moreover, the evidence is that the Western bloc is reuniting in the face of Iran’s threats to stymie the flow of oil from West Asia to the rest of the world. The recent G7 summit witnessed a coming together of the foremost powers of the global North to ensure that the West does not suffer grave negative consequences from any future blocking of western oil supplies.

Meanwhile, Israel is having a ‘free run’ of the Middle East, so to speak, picking out perceived adversarial powers, such as Lebanon, and militarily neutralizing them; once again with impunity. On the other hand, Iran has been bringing under assault, with no questions asked, Gulf states that are seen as allying with the US and Israel. West Asia is facing a compounded crisis and International Law seems to be helplessly silent.

Wittingly or unwittingly, matters at the heart of International Law and peace are being obfuscated by some pro-Trump administration commentators meanwhile. For example, retired US Navy Captain Brent Sadler has cited Article 51 of the UN Charter, which provides for the right to self or collective self-defence of UN member states in the face of armed attacks, as justifying the US sinking of the Iranian vessel (See page 2 of The Island of March 10, 2026). But the Article makes it clear that such measures could be resorted to by UN members only ‘ if an armed attack occurs’ against them and under no other circumstances. But no such thing happened in the incident in question and the US acted under a sheer threat perception.

Clearly, the US has violated the Article through its action and has once again demonstrated its tendency to arbitrarily use military might. The general drift of Sadler’s thinking is that in the face of pressing national priorities, obligations of a state under International Law could be side-stepped. This is a sure recipe for international anarchy because in such a policy environment states could pursue their national interests, irrespective of their merits, disregarding in the process their obligations towards the international community.

Moreover, Article 51 repeatedly reiterates the authority of the UN Security Council and the obligation of those states that act in self-defence to report to the Council and be guided by it. Sadler, therefore, could be said to have cited the Article very selectively, whereas, right along member states’ commitments to the UNSC are stressed.

However, it is beyond doubt that international anarchy has strengthened its grip over the world. While the US set destabilizing precedents after the crumbling of the Cold War that paved the way for the current anarchic situation, Russia further aggravated these degenerative trends through its invasion of Ukraine. Stepping back from anarchy has thus emerged as the prime challenge for the world community.

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