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we ARE on course to a dual currency regimen

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by Kumar David

Communist Cuba, even when Castro was at the peak of his powers, employed a dual currency system of the Cuban peso and the ‘dollar’ (by which I mean any hard currency). ‘Dollar-shops’ all over the country sold imported goods for hard currency. Import ‘dollar’ costs were recovered, but there was no obvious gain for the economy except commissions and taxes, and seemed a pointless exercise. It did provide consumer satisfaction by providing access to imported goods.

But there is another secret. Nearly 1.8 million Cubans live in Miami, other parts of Florida and in the U.S. southern states. They remit loads of money (about $2 billion a year) to their families (like our workers do) but not everybody rushes to dollar-shops with their treasure; they simply cash it (more so if attractive exchange rates are available). Hey bingo it now becomes a net foreign currency earner as in Lanka. Yes, it creates its problems; some families with overseas earners are well-off and social stratification grows especially in village society. And there are other problems in Lanka like booze loving males shipping off family females to work overseas. There is a need to balance between these considerations but it can be a big foreign currency earner. We are familiar with the game except that we don’t have dollar-shops and don’t offer a higher exchange rate to enhance remittance inflows.

A more serious situation is when a national currency collapses as in Zimbabwe etc where inflation rose to hundreds of percent. The local currency was abolished (except for wrapping a loaf of bread). For years the economy functioned on dollars and all payments were made in that medium. Lanka now seems to be heading for something in-between. Production companies are being asked to pay for their fuel in dollars. Also the Public Utilities Commission has formulated an experimental scheme where foreign currency earning exporters will he asked to pay for electricity in dollars so that a part of their foreign earnings is shared with the exchequer and the community. Central Bank (CB) regulations will have to be changed but that’s a detail if the concept itself is deemed good. The tricky point is what higher exchange rate to offer for remittances and how to manage the game. I can think of half a dozen complications, CB bureaucrats will therefore come up with two dozen.

My discourse today is ‘where is the rupee headed?’ The Ranil Wickremesinghe (RW) government is hopelessly out of depth in addressing the fuel emergency. Petrol and diesel queues are a visible slap in RW’s face but everything – production, exports, public transport, goods in shops – is fuel dependent. Fuel is king of any modern economy as even mighty Germany is learning to its cost as Russian gas supplies are curtailed. I steadfastly maintained that RW should not be dumped while negotiations with the IMF were in progress. The IMF team will report to its bosses and it remains to be seen what the terms of the eventual protocol are. Whatever, the need for an unelected RW administration to continue in office has now passed and it’s time to call elections. But 22A does not permit early dissolution of Parliament, that is not before two and a half years of its election without the consent of a majority of the 225 MPs. Thereafter the President can dissolve at will. I would like to see them all thrown out pronto, but we must not undermine formal legitimacy in these dangerous times.

RW and his team of goats including deceitful Power & Energy con-artist Kanchana do not see the loathing that they evoke on the streets and in petrol queues. The job of the police and army now is to shield reviled political bigwigs from the anger of the masses. The language in the queues is atrocious, even parents are not spared. Admittedly it’s irrational, the damage was done by the Rajapaksa gangsters before RW et al took office, but people are so incensed there is no reasoning with them. Two weeks more without petrol/diesel/gas and with power-cuts lengthening is maybe the most this government can survive. Then what? Will an alternative lot do any better? Whistling in the dark! Or will it be anarchy?

The government has failed to bring fuel and slept on the job for six weeks; it has shown itself to be incapable of understanding the critical importance of fuel for the survival of a modern economy and society. At the early stages of his administration RW was winning additional power and outmanoeuvring Gota. Now that very fact has turned him into the centre of attention and expectation. If RW’s team fails to surmount the fuel crisis they had better start packing their bags. Their implicit argument “We can’t do it, but nobody else can do it either, so let us cling on to power” is plain greed. That cock won’t fight.

What does this mean for the subject of my essay, a dual currency regimen? It will bring the event closer as breakdown of social order will further undermine the LKR, now about 365 to a US dollar. If petrol price in the black-market is an indicator of where we are heading bear this is mind. In late June the black-market price of petrol was Rs 800 a litre. On first July it had risen to Rs1,500, and is now unavailable at any price. A collapse of LKR will add pressure for a dual exchange rate (like FEECS) scheme or an explicit dual currency regimen. The other option is to transfer (sell) national assets, say the Trinco fuel storage facility to India in exchange for fuel, food and medicines but I have not yet examined the cost-benefit ratios closely. We have ultra-nationalists who will shriek and die proudly proclaiming “Hela jathika abimane!” rather than suffer the shame of mortgaging the metaphorical family silver. Count me out, I’m not one of them goofy nationalists; I’d rather sell the silver and live.

A collapse of LKR due to inherent causes such as a continuing disaster in foreign debts, collapse of local economic activity or social turmoil is intrinsically bad. We must do all we can to prevent it. However, this has to be seen as a separate matter from renting out local facilities in exchange for profit whether to India or anybody else. If it’s a win-win deal why not? India, it is believed, would like to lease out the Trinco oil farm, it is said the Advani Group via PM Modi and President Gota has applied pressure to be allowed to build a wind-farm in Mannar and a solar plant in the NCP in exchange for fuel, food and other forms of economic assistance.

I am not knowledgeable of nitty gritty details of the shenanigans but the concept in general terms per se is fine with me. If a win-win deal can be struck what’s the problem? Take Hambantota Harbour, the trouble is that it was an eye-wash prestige stunt to perpetuate Mahinda’s name and for the Clan to collect bounties and commissions. The damage was done then and we were unable to pay back our dues. After that had happened leasing the harbour to anyone is in principle fine. We lease out a property or a facility, collect rent, use a portion for maintenance of the property and the other potion is available for consumption. In principle what’s the problem? Why else does anyone rent out property? Each case has to be judged on its financial merits.

The advantages of a more flexible currency regime, even short of a dual currency system can be debated. Say LKR totters but survives, however the country’s foreign debt and balance of payments woes will not go way for a long time, maybe a decade. From pragmatic considerations there is a case to be made for exchange rate flexibility. The DFCC Bank is offering inward remitters 2% higher interest rates if they hold the funds in a 12-month deposit with the bank; as I mentioned the Public Utilities Commission has proposed that a portion of dollars received by foreign currency earning companies be exchanged with the state; the hotel sector has asked that it be allowed to retain a part of its income in foreign reserves; and expatriate Sri Lankans are holding back in anticipation of better exchange rates for inward remittances. To an extent a dual currency regimen has already commenced.

The IMF team has worked on a medium-term stabilisation and debt restructuring package – the fuel crisis per se is not within its remit. The protocol will stipulate higher taxes and interest rates, pruning of budget deficits (less spending on social welfare, higher fuel and electricity prices) reducing the Foreign Debt-GDP ratio, now about 130% to below 80% (a measure which will require painful belt-tightening), and a de facto dual currency system. The IMF’s dictates will be a medium to long-term programme and run for long after RW and his team are gone, perhaps dead and buried. The opposition will cry blue murder but has nothing concrete to offer instead. An election run by a caretaker government is timely to release pent up pressure if nothing else. The opposition parties need now to announce their programmes, maybe just for the record! Let’s take it from there.



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The challenge of being positive about SAARC

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The RCSS forum addressed by SAARC Secretary General Ambassador Md. Golam Sarwar in progress. (Pic courtesy RCSS)

It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.

Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.

However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?

There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.

The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.

Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.

Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.

The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.

On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.

In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.

Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.

Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.

The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.

These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.

Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.

There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.

However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.

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OPA seminar examines Sri Lanka’s economic recovery, resilience and growth pathways

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(L to R) Dr Achinthya Koswatte, Anushan Kapilan, Dr Harsha Aturupane, Bhanu Wijeyaratne, Vice President, OPA and moderator of the discussion, and Eng Chamil Edirimuny, General Secretary, OPA, at the head table.

A seminar, “Sri Lanka’s Economic Crossroads: Navigating Recovery, Resilience and Growth” was recently held by the Organisation of Professional Associations of Sri Lanka (OPA) at the OPA Auditorium, bringing together economists, OPA members, and professionals from diverse fields for an insightful discussion on Sri Lanka’s economic recovery and future growth prospects.

The event was held under the patronage of Jayantha Gallehewa, President of the OPA, and was jointly organised by the National Issues Committee (NIC) and the Seminars, Workshops and Programmes Committee of the OPA. The event reaffirmed the organisation’s commitment to advancing professional excellence, fostering insightful intellectual engagement, facilitating interdisciplinary knowledge exchange and creating a constructive platform for informed dialogue on issues of national importance.

The panel of speakers comprised Dr. Harsha Aturupane, Lead Economist and Programme Leader for Human Development at the World Bank for Sri Lanka and the Maldives; Dr. Achinthya Koswatta, Senior Lecturer in Economics at the Open University of Sri Lanka, and Anushan Kapilan, Lead Economist at Verité Research.

In his welcome address, the President of the OPA emphasised that Sri Lanka was at a critical juncture in its economic recovery journey where sustained reforms, effective implementation, and collective national commitment are essential to achieving long-term stability, resilience and inclusive growth. He noted that the country had experienced one of the most severe economic crises in its history with the economy contracting by 7.8 percent in 2022 and a further 11.5 percent in 2023, resulting in significant economic and social challenges.

Delivering his introductory remarks Bhanu Wijeyaratne, Vice President of the OPA and Chairman of the National Issues Committee, underscored the need to move beyond short-term economic stabilisation towards a comprehensive agenda of structural transformation. He observed that the economic crisis had revealed deep-rooted weaknesses within the economy, including persistent fiscal pressures, rising public debt, foreign exchange limitations, and insufficient diversification of the export base. He stressed that addressing these challenges through strategic reforms, institutional strengthening and long-term economic planning would be essential to establishing a more resilient and competitive economy.

While acknowledging recent positive developments, including improved inflation management, tourism recovery and signs of economic stabilisation, Wijeyaratne stressed the need to advance reforms aimed at strengthening fiscal discipline, enhancing productivity, improving competitiveness, developing human capital and reinforcing governance and institutional effectiveness.

He further highlighted the important role of professionals, businesses, academia and other stakeholders in contributing to evidence-based dialogue and supporting Sri Lanka’s journey towards a resilient, inclusive and sustainable economic future.

Delivering the keynote presentation, Dr. Harsha Aturupane provided a comprehensive assessment of Sri Lanka’s economic prospects within the broader context of global economic transformation. He argued that Sri Lanka functioned as a small open economy whose performance is significantly influenced by developments in the global marketplace. External factors could not be controlled, and the country must strengthen its domestic capacity and resilience to respond effectively to international economic shifts, he noted.

Tracing the evolution of global economic systems, Dr. Aturupane highlighted the transition from ideological divisions between state-controlled and market-oriented economies towards increasingly pragmatic approaches focused on growth, competitiveness and development. He noted that Sri Lanka’s own economic journey reflects a similar evolution, with contemporary policy debates now centred on practical solutions for sustainable economic progress.

The presentation also examined the transformative impact of globalisation. Dr. Aturupane observed that global economic integration had enabled several East Asian economies, including South Korea, Singapore, Taiwan and Hong Kong, to achieve remarkable economic advancement through export-led growth strategies. Sri Lanka similarly benefited from this process through the expansion of its apparel industry and increased integration into global value chains.

Turning to Sri Lanka’s recovery programme, Dr. Aturupane emphasised that the ongoing stabilisation process should be viewed as a national programme supported by the International Monetary Fund rather than solely as an IMF initiative. He observed that strong worker remittances, improved tourism earnings, enhanced government revenue mobilisation and prudent import management have contributed significantly to economic stabilisation.

Despite this progress, he cautioned that rebuilding foreign exchange reserves and meeting future debt obligations remain major challenges. He underscored the need to strengthen export performance, attract investment and generate sustainable foreign exchange earnings to ensure long-term economic resilience.

The discussion also focused on monetary stability, inflation management and exchange-rate policy. Dr. Aturupane stressed that maintaining price stability was fundamental to sustainable growth and household welfare, while sound monetary policy remains essential for preserving economic confidence.

Looking beyond stabilisation, he argued that Sri Lanka must transition towards a broader economic transformation agenda. Sustainable growth, he noted, will depend on expanding productive capacity through investment, technological advancement, innovation, skills development and structural reforms.

Among the key constraints identified was the high cost of energy, which continues to affect competitiveness and investment attractiveness. Dr. Aturupane emphasised the importance of improving efficiency and affordability within the energy sector to enhance Sri Lanka’s business environment.

He further highlighted the social dimensions of the crisis, noting the rise in poverty and economic vulnerability among households. Strengthening social protection systems and ensuring inclusive growth, he argued, must remain central components of the national development agenda.

Another critical challenge identified was Sri Lanka’s demographic transition. With an ageing population, outward migration and evolving labour market dynamics, the country is increasingly confronting labour shortages in several sectors. Dr. Aturupane suggested that greater automation, increased labour-force participation and strategic workforce planning would be necessary to address these emerging realities.

Concluding his presentation, he emphasised the need to improve governance, strengthen institutions, enhance competitiveness and create an enabling environment for private sector investment. Sri Lanka’s future success, he noted, will depend on its ability to move decisively beyond crisis management towards a development model founded on resilience, innovation, productivity and inclusive growth.

Dr. Achinthya Koswatta reiterated the importance of policy consistency and predictability in fostering investment and industrial development. She observed that frequent policy changes create uncertainty and discourage long-term investment decisions, whereas stable and coherent policy frameworks build confidence and support sustainable economic transformation.

Meanwhile, Anushan Kapilan highlighted the substantial progress achieved in restoring macroeconomic stability following the recent crisis. He noted significant improvements in fiscal performance, including increased government revenue, reduced reliance on debt financing and a historically low fiscal deficit.

He further observed that public debt levels are declining faster than anticipated, economic growth has exceeded expectations and inflation has been brought under control more rapidly than forecast. Nevertheless, he cautioned that the recovery remains uneven, particularly within the industrial sector and that many households have yet to experience a meaningful improvement in living standards.

The seminar was expertly coordinated by Eng. Chamil Edirimuni, Vice President of the OPA and Chairman of the Seminars, Workshops and Programmes Committee, while the technical moderation and interactive discussion session were facilitated by Bhanu Wijeyaratne, Vice President of the OPA and Chairman of the National Issues Committee.

The event was attended by Tisara De Silva, President-Elect of the OPA, Eng. Ravi Rupasinghe, General Secretary, Past Presidents, members of the Executive Council, representatives of the General Forum and professionals representing a wide range of disciplines.

The seminar concluded with a vibrant exchange of ideas and perspectives, reaffirming the importance of evidence-based policy dialogue, institutional collaboration and collective national commitment in advancing Sri Lanka’s economic recovery, resilience and sustainable growth.

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Her roots run deep in Sri Lanka

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Samantha Kay: Now based in the UK Samantha’s biggest passion is helping people, especially women, build confidence and believe in themselves Today, her focus is on radio, podcasting and coaching women Whenever she visits Sri Lanka, she says she loves spending time on the beautiful south coast, especially Hikkaduwa and Mirissa She released a song with 90s music icon Angie Brown, which reached No. 9 in the UK Club Charts

Yes, for UK-based presenter and artiste Samantha Kay, home is where the heart – and the roots – are. And her roots run deep in Sri Lanka.

In an exclusive interview with The Island, Samantha says “I’m proud to be Sri Lankan. My mum is from Kandy and my dad is from Colombo, so Sri Lanka has always held a very special place in my heart.

“Whenever I visit Sri Lanka, I love spending time on the beautiful south coast, especially Hikkaduwa and Mirissa. It’s somewhere I always feel connected to my roots and completely at peace.”

Now living in Bournemouth, on the south coast of England, where, she says, she is lucky to be close to some of the UK’s most beautiful beaches, including the iconic Sandbanks, Samantha has built a career that refuses to fit into one box.

She is a radio presenter, podcast host, singer-songwriter, personal trainer and life coach.

“I genuinely love the variety because every role allows me to connect with people and, hopefully, make a positive difference in someone’s day.”

Of course, music has taken her far.

One of her proudest achievements, she says, was releasing a song with 90s music icon Angie Brown, which reached No. 9 in the UK Club Charts.

She also reached the final stages of The X Factor and performed at Wembley Stadium in front of thousands.

Beyond music, Samantha competed in bikini bodybuilding across the UK, winning several titles. “It taught me discipline, resilience and self-belief,” she recalls.

Today, her focus is on radio, podcasting and coaching women. Her podcast encourages people to live life on their own terms rather than feeling pressured to follow society’s expectations.

Says Samantha: “Whether someone is single, changing careers, travelling solo or simply trying to find their purpose, I want them to know that it’s never too late to create a life that feels authentic. If you’ve ever felt like you don’t fit into the box, maybe you were never meant to.”

Samantha Kay also spent a year in Dubai, performing at five-star hotels, including FIVE, and coaching at the iconic outdoor gym on Palm Jumeirah.

“I taught strength and conditioning classes, and hosted wellness retreats, combining my passion for music, health and inspiring others.”

However, with family matters calling her back to the UK, she made the choice to return. “Family comes first,” she says.

Looking ahead, Samantha plans to grow her radio and podcast work, release more music, and expand her wellness retreats.

“My biggest passion is helping people, especially women, build confidence and believe in themselves,” she says.

“Wherever my career takes me, I hope to continue inspiring others to live with courage, kindness and authenticity, while never forgetting my Sri Lankan roots.”

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