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Way ahead for Lankan economy



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.


UK support for govt.’s pragmatic reconciliation process



Lord Ahmad with GL

By Jehan Perera

The government would be relieved by the non-critical assessment by visiting UK Minister for South Asia, United Nations and the Commonwealth, Lord Tariq Ahmad of his visit to Sri Lanka. He has commended the progress Sri Lanka had made in human rights and in other areas as well, such as environmental protection. He has pledged UK support to the country. According to the President’s Media Division “Lord Tariq Ahmad further stated that Sri Lanka will be able to resolve all issues pertaining to human rights by moving forward with a pragmatic approach.” The Minister, who had visited the north and east of the country and met with war-affected persons tweeted that he “emphasised the need for GoSL to make progress on human rights, reconciliation, and justice and accountability.”

Prior to the Minister’s visit, President Gotabaya Rajapaksa had announced in Parliament that his government had not violated nor would support “any form of human rights violations.” This was clearly an aspirational statement as the evidence on the ground belies the words. Significantly he also added that “We reject racism. The present government wants to safeguard the dignity and rights of every citizen in this country in a uniform manner. Therefore I urge those politicians who continue to incite people against each other for narrow political gains to stop doing so.” This would be welcome given the past history especially at election time.

The timing of Lord Ahmad’s visit and the statements made regarding human rights suggest that the forthcoming session of the UN Human Rights Council in Geneva, commencing on February 28, loomed large in the background. The UN High Commissioner for Human Rights will be presenting a written report on that occasion. A plethora of issues will up for review, including progress on accountability for crimes, missing persons, bringing the Prevention of Terrorism Act in line with international standards, protecting civil society space and treating all people and religions without discrimination.

The UK government has consistently taken a strong position on human rights issues especially in relation to the ethnic conflict and the war which led to large scale human rights violations. The UK has a large Tamil Diaspora who are active in lobbying politicians in that country. As a result some of the UK parliamentarians have taken very critical positions on Sri Lanka. Lord Ahmad’s approach, however, appears to be more on the lines of supporting the government to do the needful with regard to human rights, rather than to condemn it. This would be gratifying to the architects of the government’s international relations and reconciliation process, led by Foreign Minister Prof G L Peiris.


In the coming week the government will be launching a series of events in the North of the country with a plethora of institutions that broadly correspond to the plethora of issues that the UNHRC resolution has identified. War victims and those adversely affected by the post war conditions in the North and livelihood issues that arise from the under-developed conditions in those areas will be provided with an opportunity to access government services through on-the-spot services through mobile clinics. The programme coordinated by the Ministry of Justice called “Adhikaranabhimani” is meant to provide “ameliorated access to justice for people of the Northern Province.”

Beginning with Kilinochchi and Jaffna there will be two-day mobile clinics in which the participating government institutions will be the Legal Aid Commission, Office for National Unity and Reconciliation, Office for Reparations, Office on Missing Persons, Department of Debt Conciliation Board and the Vocational Training Authority to mention some of them. Whether it is by revising 60 laws simultaneously and setting up participatory committees of lawyers and state officials or in now launching the “Adhikaranabhimani” Justice Minister Ali Sabry has shown skill at large scale mobilisation that needs to be sustained. It is to be hoped that rather than treating them as passive recipients, the governmental service providers will make efforts to fulfill their need for justice, which means that the needs of victims and their expectations are heard and acknowledged.

It will also be important for the government to ensure that these activities continue in the longer term. They need to take place not only before the Geneva sessions in March but also continue after them. The conducting of two-day mobile clinics, although it will send a message of responsiveness, will only be able to reach a few of the needy population. The need is for infusing an ethic of responsiveness into the entirety of the government’s administrative machinery in dealing with those problems that reaches all levels, encompassing villages, divisions, districts and provinces, not to mention the heart of government at the central level.

The government’s activities now planned at the local level will draw on civil society and NGO participation which is already happening. Government officials are permitting their subordinate officials to participate in inter-ethnic and inter religious initiatives. It is in their interest to do so as they would not wish to have inter-community conflicts escalate in their areas which, in the past, have led to destruction of property and life. They also have an interest in strengthening their own capacities to understand the underlying issues and developing the capacity to handle tensions that may arise through non-coercive methods.


Many of the institutions that the government has on display and which are going to the North to provide mobile services were established during the period of the previous government. However, they were not operationalized in the manner envisaged due to political opposition. Given the potency of nationalism in the country, especially where it concerns the ethnic conflict, it will be necessary for the government to seek to develop a wide consensus on the reconciliation process. The new constitution that is being developed may deal with these issues and heed the aspirations of the minorities, but till that time the provincial council system needs to be reactivated through elections.

Sooner rather than later, the government needs to deal with the core issue of inter-ethnic power sharing. The war arose because Sinhalese politicians and administrators took decisions that led to disadvantaging of minorities on the ground. There will be no getting away from the need to reestablish the elected provincial council system in which the elected representatives of the people in each province are provided with the necessary powers to take decisions regarding the province. In particular, the provincial administrations of the Northern and Eastern provinces, where the ethnic and religious minorities form provincial majorities, need to be reflective of those populations.

At the present time, the elected provincial councils are not operational and so the provincial administration is headed by central appointees who are less likely to be representative of the sentiments and priorities of the people of those provinces. In the east for instance, when Sinhalese encroach on state land the authorities show a blind eye, but when Tamils or Muslims do it they are arrested or evicted from the land. This has caused a lot of bitterness in the east, which appears to have evaded the attention of the visiting UK minister as he made no mention of such causes for concern in his public utterances. His emphasis on pragmatism may stem from the observation that words need to be converted to deeds.

A video put out by the UK Foreign, Commonwealth and Development Office confirms a positive approach with regard to engaging with the Sri Lankan government. In it Lord Ahmad says “the last three days illustrated to me that we can come together and we can build a constructive relationship beyond what are today with Sri Lanka. We can discuss the issues of difference and challenge in a candid but constructive fashion.” Lord Ahmad’s aspiration for UK-Sri Lankan relations needs to be replicated nationally in government-opposition relations, including the minority parties, which is the missing dimension at the present time.

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Yohani…teaming up with Rajiv and The Clan



I know many of you, on reading this headline, would say ‘What?’

Relax. Yohani, of ‘Manike Mage Hithe’ fame, is very much a part of the group Lunu.

But…in February, she will be doing things, differently, and that is where Rajiv and the Clan come into the scene.

Rajiv and his band will be embarking on a foreign assignment that will take them to Dubai and Oman, and Yohani, as well as Falan, will be a part of the setup – as guest artistes.

The Dubai scene is not new to Yohani – she has performed twice before, in that part of the world, with her band Lunu – but this would be her first trip, to Oman, as a performer.

However, it will be the very first time that Yohani will be doing her thing with Rajiv and The Clan – live on stage.

In the not too distant past, Rajiv worked on a track for Yohani that also became a big hit. Remember ‘Haal Massa?’

“She has never been a part of our scene, performing as a guest artiste, so we are all looking forward to doing, it in a special way, during our three-gig, two-country tour,” says Rajiv.

Their first stop will be Dubai, on February 5th, for a private party, open-air gig, followed by another two open-air, private party gigs, in Oman – on February 10th and 11th.

Another attraction, I’m told, will be Satheeshan, the original rapper of ‘Manike Mage Hithe.’

He will also be a part of this tour (his first overseas outing) and that certainly would create a lot of excitement, and add that extra sparkle, especially when he comes into the scene for ‘Manike Mage Hithe.’

Yohani and her band, Lunu, last performed in Dubai, a couple of months back, and Satheeshan, they say, was the missing link when she did her mega internet hit song – live, on stage.

There was a crowd to catch her in action but it wasn’t a mind-blowing experience – according to reports coming our way.

A live performance, on stage, is a totally different setup to what one sees on social media, YouTube, etc.

I guess music lovers, here, would also welcome a truly live performance by Yohani de Silva.

In the meanwhile, I’m also told that Rajiv Sebastian plans to release some songs of the late Desmond de Silva which he and Desmond have worked on, over the years.

According to Rajiv, at this point in time, there is material for four albums!

He also mentioned that he and his band have quite a few interesting overseas assignments, lined up, over the next few months, but they have got to keep their fingers crossed…hoping that the Omicron virus wouldn’t spike further.

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Multi-talented, indeed…



Thamesha Herath (back row – centre) and her disciples (students)

We all know Trishelle as the female vocalist of Sohan & The X-Periments, so, obviously it came to me as a surprise when it was mentioned that she is a highly qualified Bharatanatyam dancer, as well.

What’s more, she has been learning the skills of Bharatanatyam, since her kid days!

And, to prove that she is no novice, where this highly technical dance form is concerned, Trishelle, and the disciples (students) of State Dance Award winning Bhartanatyam Guru, Nritya Visharad Bhashini, Thamesha Herath, will be seen in action, on January 29th, at 4.00 pm, at the Ave Maria Auditorium, Negombo.

Said to be the biggest event in Bharatanatyam, this Arangethram Kalaeli concert will bring into the spotlight Avindu, Sithija, Mishaami, Nakshani, Venushi, Veenadi, Amanda, Sakuni, Kawisha, Tishaani, Thrishala (Trishelle), Sarithya, Hewani, Senuri, Deanne and Wasana.

In addition to her singing, and dancing skills, Trishelle has two other qualifications – Bachelor in Biomedical Science, and Master in Counselling Psychology.

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