By Dr. Arujuna Sivananthan
Hello Friends,
‘It’s the economy stupid’ was the popular phrase publicised widely by the Bill Clinton team during the Presidential elections campaign of 1992.
George Bush Sr running for a second term was seen as a sure winner then because of developments like the end of the cold war and the US gulf war victory. But the Clinton campaign focused on the recession and projected Clinton as a better choice because Bush had not adequately addressed economic issues.
Clinton won and “It’s the economy stupid” became famous forever!
Today there are many who feel that Sri Lanka too is undergoing an economic crisis of its own although Government propagandists do not seem to agree.Despite harsh economic realities the dominant rhetoric appears to be “It’s NOT the economy Stupid”.
Dr. Arujuna Sivananthan who now lives in Britain is of Sri Lankan origin. He was formerly a Director at Barclays Capital, the UKs largest investment bank and French bank Societe Generale. He has extensive experience trading corporate and sovereign bonds and credit derivatives. He also holds a PhD and Masters in economics from the University of Glasgow.
Sivananthan is also an executive member of the Conservative Way Forward, a Thatcherite organisation. He is also Deputy Chairman of my local branch and the British Tamil Conservatives.
Dr. Sivananthan has written a short but extremely pertinent article on the current economic situation in Sri Lanka which I am posting on my blog for the benefit of interested and concerned readers.
Here it is Friends-DBS Jeyaraj
Sri Lanka Heading Towards the Inevitable 20 Percent Depreciation in the Rupee
By Dr. Arujuna Sivananthan
Fast eroding foreign exchange (forex) reserves and a ballooning trade deficit has led to internecine warfare between Sri Lanka’s two economic policy setting organs; i.e. its Treasury and Central Bank (CB) such that the latter was kept in the dark when President Rajapakse announced the unanticipated 3 percent devaluation in the rupee-US dollar (USD) exchange rate to 113.89/90 during his budget speech.
Rupee trading had to be halted and several hastily arranged conference calls were held with foreign investors, who fund Sri Lanka’s rupee denominated debt, to assuage their concerns that further devaluations were not imminent.
The International Monetary Fund (IMF) believes that the rupee is not less than 20% over-valued. However the CB has resisted calls by the Treasury and IMF to freely float it. Such an action would result in Sri Lankan expatriates –a large source of forex- who park their money in high interest rate domestic deposit accounts suffering capital losses in excess of any income they generate through interest. Foreign investors who bought rupee bonds issued by the government would also suffer deterring further investment in rupee denominated assets. As a result the final two tranches of the USD 2.5 billion facility negotiated with the IMF have not been disbursed.
Sri Lanka’s trade deficit will top USD 10 billion in 2011 and will continue growing in 2012. The reason being while Sri Lanka’s largest export markets, the US and EU suffer from weak or no growth, its imports are inelastic; i.e. not sensitive to changes in price. Sri Lanka imports all its essential goods from food, e.g. wheat and sugar, to its energy needs. Even coal and oil needed to generate electricity are imported. Inputs into its largest export, textiles, are imported – it does not manufacture the yarn or the capital goods necessary to produce the finished good. Defending the rupee at its current level while its export competitors have devalued their currencies by as much as 40 percent makes its produce expensive.
High crude oil prices and the Sapugaskanda oil refinery’s absolute reliance on Iranian crude is another negative drag. Sanctions by the US, EU, and Australia on Iran will compel Sri Lanka to import oil from more expensive sources. With petroleum accounting for 25 percent of imports, its trade deficit will come under further strain.
Foreign Direct Investment (FDI), a source of forex will undershoot the forecast of USD 750 million for 2011. Sri Lanka changed its FDI accounting rules to include the sale of the site of its former Army Headquarters to the Shangri-La hotel group to inflate this number. A lack of transparency, poor governance, a highly unionised labour force, and, the recently passed expropriation law have been contributory factors.
Growth in tourist arrivals from Western Europe, 37 percent of arrivals, will slow due to its debt crisis. India and East Asia account for 20 and 11 percent of tourist arrivals respectively. The task facing Sri Lanka is to adequately substitute premium European arrivals with budget Asian arrivals. Generating over USD 1 billion in revenues for this sector will be challenging in 2012.
Ongoing turmoil in the Middle East will have long term implications for remittance inflows and Sri Lanka’s largest forex earner, approximately USD 5.2 billion. Migrant labour will struggle to access this market. Also, it will affect demand for Sri Lanka’s top agricultural export -tea exports to the Middle East and North Africa comprise 55 percent of Sri Lanka’s total tea exports.
Sri Lanka’s aggregate economic data is somewhat misleading. Despite a consensus projected economic growth rate of 7.5 percent for 2012, its South is expanding at a slower rate while the Northern and Eastern provinces are growing at double digits, albeit from a low base. Also, the veracity of its data is not beyond doubt.
All of this led Fitch, one of three leading rating agencies, to rank Sri Lanka among the highest-risk financial systems in the Asia-Pacific region in a special report published in December. In January, Moody’s, another of these agencies, cited Sri Lanka as being still vulnerable to external shocks given its lower than expected year-end foreign exchange reserves.
Fate of the Rupee in 2012
The CB spent over USD 2 billion defending the rupee between August and December 2011. Its forex reserves fell from a peak of USD 8.1 billon in July to 6 billion by year’s end. Confronting such headwinds with its lack of competitiveness, the only choice the CB has is when to devalue. No doubt it will try to kick the can down the road, but, for a country short on options that road is not long at all. Of course, it is making every effort to generate reserves. It has entered into a bilateral loan with Malaysia, and, its weakening economic metrics imply that it will increasingly have to rely on such debt as access to capital markets will become difficult. The result of such a shift will no doubt have second-order consequences for its foreign policy as the mix of its creditor nations change.
Inelastic import demand implies that devaluation will not result in a drop in the quantity of imports, just higher rupee prices. And, along with it come not just economic but social problems for which there is no short term fix. They include:
-a higher rate of inflation.
-Higher inflationary expectations among consumers which itself causes the inflation rate to rise.
-An erosion of real incomes and purchasing power.
-A necessary increase in interest rates and the tightening of credit to contain inflation.
-Lower economic growth.
-an increase in income inequality, and much more.
Suffice to say Sri Lanka’s government will be challenged by myriad problems.
Continued spikes in domestic overnight rates forcing the CB to pump liquidity into the banking system suggest forex demand continued unabated through January. The CB will do very well to keep reserves flat. However, with a balance of payments deficit of USD 450 million a month and nothing in sight to plug this gap, following its current policy trajectory will see reserves will drop to USD 5 billion by May 2012, i.e. less than 3.5 times average monthly imports – a level deemed to signal a balance of payment crisis. It is a situation which neither the CB nor its government will wish confront with limited options and an external debt servicing burden set to climb from August 2012.
Sri Lanka needs to pay its bills and hard choices have to be made to conserve its forex reserves. Top among this to allow a free float of the rupee which the IMF believes will lead to a 20 percent devaluation. There is another and it involves entering into a bilateral/multi-lateral debt obligation(s) with a ‘friendly’ country(s). However, with it will come compromises which are not economic but political and geopolitical in nature.
How this will sit other countries who believe they have interests in Sri Lanka is an altogether different question.
Erudite article, sums up the bleak economic situation precisely
Sri Lanka has recently made bilateral agreements with Qatar and oil may come via that route at a cheaper price.
The thing is it will come at a price too, where allegedly several land grabs were done to with the Emir of Qatar, primarily land in Kalpitiya.
This had to come by – sooner than later. If the writer’s fear – as spelt out, in the comment “compromises which are not economic but political and geo-political in nature” can trigger a struggle between two regional powers to dominate the Island’s
future – and that can turn ugly.
The Govt has successfully used its usual tactics to keep what is left of the free media not to expand on the non-receipt of the last two tranches of the $2.5 billion.
CGSL Governor Nivard Cabraal went ga-ga when the IMF granted this facilities (subject to increased good performance of the economomy and notably the rate of inflation)
but he is since on silent mode on the issue.
ISS
I dont think this prognosis is correct.
I hope the economic decline will trigger an anti-Mahinda “singala spring” in Lanka
.
The Lion may have killed the Tiger, but now being shallowed by the Dragon.
Looks like Tamil Diaspora is very happy about it. Any bad news for Sri Lanka is good news for the diaspora. What sort of ungrateful people are they ?.
marusira,
Why should the diaspora be grateful for Sri Lanka? For burning their houses and chasing them to other countries?
Bad news for SL is not good news for diaspora, but isn’t bad news for Tamils good news for Sinhalese?
Sri Lanka first needs to treat Thamils and other minorities with equality, only then can we work together for a better future. Unfortunately Rajapakses are only looking for their political survival that kind of narrowmindedness is not helpful for the country at large.
You guys can’t expect gratefulness when you want to kill and put down people. Those who expect such in such conditions, would be asking for a maru sira story.
aratai,
The Lion did not kill the Tiger. The Lion is a myth. It was the Tiger that took on the Tiger. There is a substantial segment of the sinhala population who are descendants of Dravidians.
I think you mean swallowed by the Dragon? Well, for a small country we have to bounce around the big players
Any schadenfreude is ill-founded as all people in SL will feel the pinch. And no, that is not a threat to anybody so please calm down!
I’d be interested in Dr. Sivananthan’s ideas on how all this can be fixed.
Marusira
Any bad news for Sri Lanka is good news for the diaspora- Not Agrred
end of the dayWe both community has to live with it !
Marusira
What’s wrong in that? Well back since independence, if the rule of law had been upheld and the minority had not been treated as second class citizens we wouldn’t had been in this appauling situation in the first place. Can a Tamil speaking citizen become President or Prime Minister in SL? The answer is: NO! Even Laxman Kadirgamar could not become even the Prime Minister.
Let Sinhalese govern the south and Tamil speaking people govern the north in a united country. If this reality is accepted by people like you, SL will become one of the richest nations in Asia in less than 10 yrs. Do you understand?
marusira – Why is who is involved in the graft? Stopping this alone can save Sri Lanka and help all the people.
Happy about what??? Ungrateful for what???
.
You called them losers and rump and expect them to be gratefull?
Dear marusira,
Tamil Diaspora are very sad about the impending collapse of the economy in sri lanka.Their kith & kin are still in sri lanka and they will have to face the increases in the Cost of Living.
Really?
I worry only about the mortgage interest rate and credit card rate in the country where I live.
I am an average middle class person.
I don’t understand what this doctor is talking about.
I am happy if my dollar get more rupees as I am sending money in or spending money on holiday.
If you want to call me unfaithful diaspora so be it.
Hope you understand me.
Another Zimbabwe is in the making? Even foolish voters of SL do not deserve this!
Sri Lanka may be the only country which imports an essential commodity – petroleum – at world market prices,and sells it to a ‘captive market’ – the srilankan citizenry – at a huge profit,BUT incurs a huge loss, each year.
The CPC is overstaffed – with unqualified managers – like all state enterprises & wastage and fraud are unchecked.
Even parliament – COPE – appears powerless to check fraud & wastage.
Unnecessary Mega Projects only to ‘boost’ the megalomania of political leaders are undertaken.
Thousands of women venture to the middle east, to slave under pitiless cruel empoloyers,knowing full well the risks, due to abject poverty.
Most sri lankans try to escape from sri lanka but are thwarted by the armed forces and police.
A lot of income is spent on the maintenance of armed forces, only to prevent an uprising by the people, like the Arab Spring of the middle east.The bloated cabinet & provincial polity absorb the rest.
It is senseless to relate current economic situation with diaspora. Managing economy is nothing to with race or religion. If the economy does well every one will feel proud regardless of whether he/she staying in Sri lanka or abroad.
The writer is not happy but he is alerting Sri Lankans to be vigilant, with valid reasons. Problem with Sri Lankans are that, whatever someone utters in a high pitch tone, they listen and also believe it !!!
Look at this from a different angle Marusira. You are the elder brother in the family, and you run the show. Your brother who lives with you feels that he is being sidelined, not taken care of, and the ancestral property is under your full control. In that situation what he will do? He will talk bad about you and it is natural. As an older brother of the family what you should have done? You should make him feel he is an integral part of the family, you should eliminate his feeling of insecurity, you should show him your sincerity by action of goodwill. Then your brother will understand you, and will start to love you in return. Because blood is thicker than water. Tamil Diaspora is not ungrateful, why should they, if it is one family. They are frustrated to see what happened to them and what is happening around them, their eardrums are broken by listening to broken promises time and again. They believe their older brother is going to swindle every thing for which they too have an inalienable right. They have no reason to be ungrateful Marusira, but of course, they are frustrated. What are you going to do?
Ungrateful to whom?
For what are Tamils to be grateful of Sri Lanka?
For killing more than one hundred thousand of them?
or forcing Sinhala laguage down their throat?
or for 1956, 1958,1977, 1983 so on and on?
or for grabbing their lands?
Tell your people of proper governance and rule of law. Then you do not need to worry of ungrateful Tamils.
Easwaran
“…….one of three leading rating agencies, to rank Sri Lanka among the highest-risk financial systems in the Asia-Pacific region in a special report published in December”
“The CB (Central Bank of Ceylon) spent over USD 2 billion defending the rupee between August and December 2011. Its forex reserves fell from a peak of USD 8.1 billon in July to 6 billion by year’s end.”
Well, Marusira!
Do you see where your beloved MR & Bros leading your country towards?
The Rajapakse dynasty has earned adequate wealth for generations to come and left poor working class civilians to pay for it. Corruption and failure of law and order at its peak in Srilanka.
You guys are balming LTTE until May 2009 and now blaming Thamil Diapsorsa for all your trouble. When you are all going to realize and correct your own mistakes?
Don’t wrap around your heads with sinhala buddhist hegemony. Come out of it and see the real world.
Thamils(diaspora) have been trying to educate your politicians. But they are adament not to listen. Now you are all going to learn it in a hard way. What thamils are asking from 1948 is to guarantee a way for their survival in that island by menas of peace, freedom and equal rights.
THATS ALL!
Dont worry marusira…according to another blog here Tamil Diaspora are busy financing young Tamil girls in Jaffana in to prostitutes and young Tamil boys in to alcoholics.
A good analysis. Many nations have currencies that are over or undervalued. SL economy being small, having a small population and a developing economy means that it suffers a poor currency status compared to similar small countries, hence the fall is likely. As long as MR does not give into temptation to print money the currency in the future should have forces to actually increase due to the long term expansion of the economy.
It’s time to start listening to the economic advice from the civil service and stop selling state land, particularly prime tourist land to foreigners unless that is long term direct economic investment.
I agree. In another blog here Tamil diaspora is blamed for all things negative in Jaffana. I am surprised that the diaspora is not blamed here for financial engineeirng of this devalaution.
May be because the author of this artilce is a highly educated and a well respected in the “city”
for the benefit of others The Financial Services Sector of England is heavily concentrated in Londond and is referred to as the “city”
all I heard was that Arujuna Sivananthan was A great Son of Mr Kathiravelu one of the FOUNDER members of the Federal Party
if it is true that he carries good DNA in his brain which can see things DECADES in advance.
If CB’s CEO turns to political or sports activities, it is difficult to prevent worst problems in economic sphere.
Marusira
You should watch out.!
No matter what you do to try talk peace with Younger Brother, he will blow you up and hack off the limbs of your wife and kids. Then he will complain to everyone that you are persecuting him since before he was born.. that you got teeth before he did and was potty-trained first…
He will run away and try to mess you up from his refuge
And if you try to defend yourself, you will be deemed to be in the wrong
Maru Sira might note any adverse affect to Sri Lanka harms the Tamils as well. There is no rationl reason for the Tamil diaspora to wish Sri Lankan economy ill in some seriousness. What many in the South fail to realize is it is this regime that is unable to manage the economy – even to average levels. They borrow giving wild assurances merely to serve that particular time. The US2.5 billion stand-by facility was obtained assuring the IMF – the last resort of bankrupt governments – gradually improving economic growth. This was then reported by many economists here as an irresponsible assurance that cannot be met. Since the economy stagflated in 2011 the last two tranches were refused.
Please don’t blame the Tamil diaspora for this. Fortunately, there are educated Lankans who know who is fooling whom. A leading ex-Central Bank official, in a much publicized speech, a few months ago entitled “Sanity, Reality or Vanity?” exposed the charlatans “leading” our economic battle. The lady – who knows our economy inside out since she was at the Central Bank for over 3 decades holding key positions there – hardly minced any words in stating the Captains of our economic ship are leading us into ruin. The subject of Dr Sivananthan’s article is the sum total of what she then predicted.. So, please spare the Tamil diaspora, the current favoured whipping boy, for being behind this as well.
ISS
What is the big deal about borrowing USD 10 Billion a year to give a life to 22 Million inhabitants who didn’t have one for 30 years.when the US Govt borrows 1.4 Trillion a year (1.6 Trillion soon,if the Prez gets his way)to keep up the life style of their inhabitants.
Even if the Govt borrows 10 USD Bil a year, for the next 10 years . it will be only 100 Billion and it will be no where near the USD 500 Billion that the 6 Million Greeks are about to default on.
And the whole of EU membership owing 100 % on average each,of their GDP as sovereign debt except Germany,100 Billion in 10 years pales into insignificance.in comparison.
And the corprate debt in these countries are not even counted..
Srilanka has an Economy which is growing at 8% plus.
That is around extran 4 Billion to the GDP each year, which is ample to service the debts as most of these will be in export and tourism sectors.
Plus the massive Prawn Farms in Batti, Rice out put from Maravil Aru and so many other staple food self sufficiency programs coming on stream , there will be ample scope to pay the debtors.
The Govt’s resistance to bow down to IMF demands is an indication of its confidence in Economic management.
In the worst case scenario, if the Ruppe is devalued by 20 cents, the Foreign bond holders only face a 20 % drop.
This is better than the 70 % haircut they are already facing with their Euro Bonds.
As for our Expats, they still have their Ruppee accounts intact, with the interest accumilated. and there won’t be any hair cuts as most won’t be converting back to Foreing currency.
And of course our best mate China will be the number Economic power in ten years with additional 14 Trillion USD in the kitty on top of the 10 Trillion the US a Treasury already owe them.
Would China which has stood shoulder to shoulder with Srilanka in recent tough times and has strong links with Lankan inhabitants going back to Buddha’s period allow Srilanka to go under for a matter of USD 100 Billion debt.?.
What have they got to be greatful for the singhalese for having killed their kith and Kin ? The land they escaped to gave them a life when they were kicked out of the country there were born in. Their loyalties should be to the country that is giving sanctuary. Your damn right the Diaspora is happy and this is the price a country pays for not pursuing reconciliation. I am dead against the LTTE & Tamil racism but so am I of the equal singhala racism.
Yeah go and give your blood to the chinese. They sure know how to suck you dry. If you dont know how they do it then ask the african countries they will tell you.
Spot on well said!!
LOL your right. These guys dig their graves and want us to shed tears for them when they jump in.
The moddaya (MR) killed the Madayan (VP)thank god for that but now the Moddaya still has not managed to buy a brain.
What more damage is possible after the 30 year demolition job financed fully by the Diaspora?.
Economic growth was 8%, Inflation under 6% and unemployment under 5% in 2011.
Mr Sengutuan must be a nominated for the Noble Prize Economics for his new definition of “Stagflation.”
Well said about the CEO of CB. Isn’t he the person who arranged the UK based PR firm at STGP 3.5 million (US$6 million) per year to promote and propaganda Sri Lanka in the western cities, and also US$8 million to advise on the failed bid of 2018 Commonwealth Games?
The time of reckoning is at hand. So says the oracle at Adam’s Peak and “so will be done” says Ramses 11.
“The nature of the universe is such that ends can never justify the means. On the contrary, the means always determine the end.”
(Aldous Huxley)
New year wishes from SL and not from me,
“May your happiness increase like the price of vegetables;
May your worries disappear like grease yakas;
May your enemies be punished like naughty Fonseka;
May you be protected like Duminda Silva;
May you be highly qualified in an instant like Namal;
May your wealth and property increase like the ‘Brothers’;
May your life be never ending like the current presidency;
May your always be victorious like the Rajapaksa Family!
And may the Rajabrothers law help you achieve all of these dreams!
Have a Happy New Year in Democratic Sri Lanka!”
The intent of this analysis was to solely focus on the balance of payments crisis that Sri Lanka is staring at. In doing so I have tried to be as conservative as possible in my estimates giving the benefit of the doubt to its policymakers.
Market forces know no prejudice and will harshly punish nations for their economic indiscipline. Sri Lanka still has time, albeit very little, and the policy tools –economic and foreign policy- to respond effectively. However, as I said in the article it involves “hard choices” – choices which may not be palatable to some of its stake holders. Also, making such choices requires compromise. I do not wish to prescribe a set of policy actions because it is up to its citizens to determine what compromises they choose to make but compromise the must!
What I can say with absolute certainty is that inertia in responding to such a situation simply increases the magnitude of the problem and will be to the detriment of everyone.
I didn’t mean to offend you Marusira. In how many families in Sri Lanka it happened and happening. Son Killed father, brother kills brother, all for the ancestral home or land. For Sri Lankans this is not new. It’s in their DNA you can’t blame them. Anyway I am not going to wish you what you wish for others (blowing up, hack off the limbs etc. ) I understand you. You said it loud and clear. “If you are my brother, don’t claim ownership of our ancestral home that belongs to me, and me alone, If you claim ownership, or just mention about it, the distance between us becomes far and very wide. Look at Colombo Tamils, Up country Tamils and Muslims, we treat them nice because they don’t talk rubbish like you, but you ( North & East & Diaspora Tamils) talk about ownership. You think we will bow in, no way, you are not my brother go to any court of law, we care two hoots. You can be here as our guests enjoy everything but shush don’t talk crap,” Your message is loud and clear my brother. We can’t live in the same house.
Billions of rupees worth of fuel is being pilfered in broad day-light and delivered to official destinations (sheds) by bowsers on regular basis by manipulationg the Corporation computer dta-base according to a recent news report. We know too well that only rare and few such exposures are made and they are only tips of the icebergs. Absense of any action to investigate and bring cuprits before the law (what law?)is another clear indication that they are committed with the connivance and/or the blessings of the authorities. What could poor Daneils and Kandas of this world of ‘ascharya’ do other than alughing them off!
Yes, good article but the fact is that Sri Lanka’s imports are not completely inelastic.
Huge amounts have been spent on luxury imported cars for the politicians and their drag racing brats and other Govt. extravaganzes such as the Commonwealth Games and over seas trips of MR. This spending on conspicuous consumption probably accounts for a few percentage points of GDP growth! Also the excessive spending on infrastructure in Hambantota which does not have the labour and demographic profile to support it.
Sri Lanka is taking huge loans from China, like Ireland took from German Banks during its spending spree and before the economy crahsed. Ireland is today the most indebted country in the world after the IMF restructured its debt and Sri Lanka is headed that way.
The figures that the GoSL puts out as pointed out here are manipulated and analysts at Fitch and Moodys know this, hence the downgrades. From the poverty figures, to the rate of spoilage of farm produce during transport which was the Govt. spin for introducing plastic crates to vegetable transport, to FDI figures as pointed out here are fixed.
The so-called central bank governor Nivard Cabral should be held accountable for waste of public funds and misrepresentation of the facts over the Commonwelath Games fiasco. He has committed economic crimes, put out fictitious numbers and should be taken to court for economic crimes and someone should file a public interest court case against this fool who keep company with the political brat Namal Rajapakse. Now they are planning to bid for the UN Youth Conference in 2014 in Hambantota. This should be stopped!
Yes, good article but the fact is that Sri Lanka’s imports are not completely inelastic.
Huge amounts have been spent on luxury imported cars for the politicians and their drag racing brats and other Govt. extravaganzes such as the Commonwealth Games and over seas trips of MR. This spending on conspicuous consumption probably accounts for a few percentage points of GDP growth! Also the excessive spending on infrastructure in Hambantota which does not have the labour and demographic profile to support it.
Sri Lanka is taking huge loans from China, like Ireland took from German Banks during its spending spree and before the economy crahsed. Ireland is today the most indebted country in the world after the IMF restructured its debt and Sri Lanka is headed that way. In Ireland critics of the Govt.s’ economic policies were told to shut up and stop talking the economy down. They were accused of being unpatriotic for being realistic about the economy. Same thing in Lanka at this time!
The figures that the GoSL puts out as pointed out here are manipulated and analysts at Fitch and Moodys know this, hence the downgrades. From the poverty figures, to the rate of spoilage of farm produce during transport which was the Govt. spin for introducing plastic crates to vegetable transport, to FDI figures as pointed out here are fixed.
The so-called central bank governor Nivard Cabral should be held accountable for waste of public funds and misrepresentation of the facts over the Commonwelath Games fiasco. He has committed economic crimes, put out fictitious numbers and should be taken to court for economic crimes and someone should file a public interest court case against this fool who keep company with the political brat Namal Rajapakse. Now they are planning to bid for the UN Youth Conference in 2014 in Hambantota. This should be stopped!
Dr. Sivananthan should become a regular commentator on the SL economy since there is very little sensible analysis of economic policy or the economic development model. Dinouk is right that those who take a realistic view of the Rajapakse regime’s extravagance and policy blunders are accused of being “anti-national” and unpatriotic. If Cabraal remains CB governor Lanka will certainly default and Sri Lankans will be in debt for generations – as are the Irish as!
The people in charge of the economy in Lanka at this time are all un or undereducated and a bunch of rent-seekers, who are making money – like Basil Rajapakse who knows nothing about economics or development, ditto for Namal who is talking up Hambantota and has shares in sopme Citrus Hotel band and Nivard Cabraal.
The so-called tourism boom is also hype. All sorts of non-tourists are counted as tourists, and very few new hotels have actually been built. Rather, there is a lot of re-branding of Hotels going on.
Nivard Cabraal was boasting that Audi would set up a plant in Hambantota – actually Audi has been busy selling luxury cars! Cabraal likes name brands and spin. He has been talking up the Oil wells in the Mannar basin each time he borrows on internatinoal money markets! He is also encouraging local banks to borrow indiscriminately and of course HSBC is only too happy to lend at exorbitant rates – and who cares that this is all to fund the myth of Lanka’s economic boom and the Rajapakse’s pocket books!
Marusira!
Bad news for Srilankan started when your politicians are cleverly formulated and implemented discriminative policies against thamils immediately after British left in 1948 and continuing to this day. Such policies are lead to the threat of thamils’ survival in that country.
Eventually it creates a brain drain mainly thamils leaving Srilanka to settle elsewhere. Thamils are doing extremely well wherever they settled and at one point Srilankan Government to beg for thamil Diaspora to invest in their country. Western immigration policies are well written by visionary leaders of those countries to attract and retain talents from all over the world beyond ethnic, religious and linguistic barriers to build their own countries. As a result of implementing such policies for several decades, western countries are reaping the benefit of it. Metropolitan Toronto is the role model for rest of the world how people with different believes and ideologies can live peacefully site by site. Crime rate in Toronto went down to historical law level in the city.
On the other hand Sinhala polity is uprooted their very own talented human resources. As a result the Srilankan state is on the receiving end to listen to very costly advice on how to govern the country from its very own people. Is it pity?
Every Srilankan ruler has made enough wealth for generations by ethnically polarizing the people and ruling the country. Who are the loosers? The people of Srilanka.
BRILLIANT!
You alway have the habit of comparaing your pathetic state of affairs to the Land of hope for every one. It is like the tamil saying: trying to put a knot between bald head and the knee.Hope GR and Co would have credited their commissions, thuddu, profit, etc. in the USA before this 20% depreciation comes to effect, such is the patriotism.
No big deal, you borrow $10bn, and pawn the ones to be born to China. A suggestion is to implement four language policy now onwards proactivily, which would bring a greater benefit rather than starting belatedly, once the damage is done. Maybe add another half Bn for this- proven to be a good investment.
“The diaspora” have to take pleasure in what little they can find. It’s not like there’s much going for them apart from these constant ‘predictions’ of doom and gloom. It must be quite a shock for some people to see SL still going along- I mean episodes lke the “LTTE counter attack”, followed by “The Hague”, “GSP+”, “Hambanthota” etc etc should have finished the country off a long time ago.
Didn’t it already collapse when *gasp* the GSP+ was taken away? Well maybe this then. Or until the next prediction comes along. Yawn.
Simply amazing!.
myil selvan
There is a substantial segment of the sinhala population who are descendants of Dravidians
————————
Sinhalees were not orginated from DRAVIDIANS.
THE SYMBLE OF LION IS THEIR HERRITAGE. AND TIGET NEVER CAPABLE TO DEFEAT LION
saarasekara
Marusira
You can match your wits against the author’s brilliance by challenging the thrust of the article or the veracity of the conclusions. Instead, you chose to asperse his community. Inadequacy is not a fault. Display is.
Under current FP settings, Srilankans have achieved a remarkable growth rate of over 8% for two consecutive years.
It is going to be even better in the coming year.
Per Capital has reached over 2500 USD.
This is despite the withdrawal of trade concessions to rural poor in the BOI by our English Speaking White allies in the West.
If the same People were successful in their attempts for more punitive measures of trade and other sanctions ,Srilankan inhabitants would have been facing more serious issues than the depreciation of the Ruppee.
Fortunately ,our steadfast friends and allies in the Greater Asia not only saved us but also gave a turbo boost to the Economy to get where the inhabitants are today.
And there was no change in the FP sttings.
Most Srilankans would love to hear suggesstions to improve these performances to better levels.
If you can offer specific suggesstions as to where FP changes should be made and provide evidence of projected results by suitable modelling. the great majority will not only listen but they will certainly do what ever they can to influence the thinking of their political representatives..
All Sri Lankans living overses should be grateful to SL for getting free education, free medical facilities etc.
Well if one ethnic community take up arms and start blowing up people including their own community, what do you expect the Govt. to do ? Stand by and let it continue ?.
Those people living in overseas try to take up arms and blow up people and ask for a separate state, and you will get the same medicine. Already some people are in jail for breaking the laws in these countries, and do you blame SL Govt for that too. I know SL and SL Govt is not perfect. It never was, but what do you expet after a 30 year bloody war ?. One must give credit to SL for achieving even some success in economy after the 30 year war. The Govt. is trying to solve the ethnic issue too.
Things are improving and just come over to SL and have look for yourself people. As the lady Professor from Kerala mentioned in an earlier blog, Sri Lanka is a paradise when you compare with India, and by the way DBSJ was one person who said that he was delighted when he read that artcile. See guys, DBSJ who had his fair share of problems in SL still happy to see Sri Lanka prosper. That shows not every Diaspora hates Sri Lanka. I have so many Tamil friends who visit SL and mention that they are so relieved to see the end of the war and LTTE is no more.
God bless you all.
Kalu Albert (27/1) At least for once try to be truthful at least to yourself. Why were not the 2 last tranches not given is something you must address. While the regime is aware, they are absolutely unpopular even with those in the masses who voted them in, to increase the price of Lentils (Parippu) Sugar and Garlic – items the housewife needs daily – is a statement they are more than desperate. Our rates of lowering Inflation and high growth claimed by the Central Bank is questioned from all sides. Power cuts and increasing cost of Elecricity will enrage the population. They can be kept under leash by the army and private shock-troops of the underworld– the former financed heavily by a Defence Budget that has no rationale percentage-wise in any country not saddled by war – but for how long. We probably can produce a better health and education service if the Defence Budget is cut to serve an army that should not be any more than the size what a country in peace is entitled to. Many wonder if the Army here has now become as uncontrollable as that one that has destroyed Pakistan.
There is much speculation why our Foreign Minister Prof GLP is doing in Delhi now only a few days after his Indian counterpart left our shores. This is unprecedented in the diplomatic history of any country. Is it to continue to give bogus assurances on 13th A++
and seek India’s support to get the TNA to agree to serve in the PSDC – so that the heat in Geneve late February can be handled.
Here’s something for your reading pleasure ““Aything the present Govt touches turns into an unholy mess in next to no time” This is not by bad-me or the “ungrateful” Tamil diaspora. It is from the Editor of a leading English daily (18/01/2012) said to be friendly to the regime and owned by a senior Govt man. At least – for once, that Editor is seeing which side of the bread the butter is on.
ISS
Kalu Albert sounds like Daily news and ITN. Completely blind. According to him all is well and will be well. This is typical of inner circles of our leaders who dragged our country drown the drain in history.
This the best balanced article about our economy I have recently read.
If these predictions will come true, I would only be happy, if Srilanka is a Sinhala only country by now and still fighting our separate Eelam bordering it. But,this is one economist’s view. He based his assessments, depending on certain hypothesis. But, we cannot be sure all his hypothesis will come true. For example, Iranian crude sanctions, Arab spring revolutions will cut down on Srilanakan Forex earnings, and so on. China, India and Russia had already said that they are not going to abide by the Western request to cut down on Iranian crude import. Again, these so-called economists world over have shown us time and again, that they can very badly go wrong. My father was an educated man who was very fond of reading English and Tamil dailies. I re-call him saying to me in 1991, quoting the economists in the dailies, that Srilanka’s economy was going bust and can’t sustain its war with us(Tamils). And, when I went back there again in 2001, he was still saying the same thing. I pitied him then, the way pity the writer now.
Dear Maru Sira (28/1/12)
“If one ethnic community take up arms and start blowing up people including their own community, what do you expect the Govt. to do” By this innocous staterment, forgive me, you show the issue is well beyond your depth – a difficult subject doubtlessly.
The answer lies in that belief one should not allow a common cold to become pneumonia and worse. The sentence I have chosen from your comments is a complete over-simplification of the genuine complaints of a wronged people – that was handled badly between 1956-1965 and thereafter exacerbated both by the SLFP, UNP, PA coalitions. The Language Parity rights – the original cause of the problem – waa yielded in 1987 after much disunity, bloodshed, loss of life and property after an unncessary delay of 30 years. That visionary Dr NM Perera(the breed has gone into extinction in our Parliament) was right when he noted in matters of this nature the passage of time brings in further complications. Look at the situation today. The National Problem began between the Sinhalese and Tamils. In recent times you have a further claimant???
Now the obstacale is the 13th Amendment – that is already in the Statute anyway. It is the non-implementation of this in its entirety that is the problem. The JVP, the Sinhala supremacist with Mahinda Rajapakse playing visible and leading role created havoc and caused losses to the nation’s assets by several billions in 1987-89. Is it not the same Mahinda Rajapakse – now firmly in the throne – who has offered the
Indians much more – 13A++??? So, my friend, it is the Sinhala people who must get together, form a consensus and save the nation.
As to “blowing up people” this is now a tool politicians use. Did you read of “explosives” in a Colombo bound bus from Jaffna where this was “found’ by the army. We saw such “findings” in many part of Colombo a few years ago in somewhat boring regularity. Gen. Sarath Fonseka is reported to have said a present serving high SLA official was in the monthly pay from the then LTTE Colomnbo chief. So this has been a game, a political opportunity, a business and a way of life for different people at different times. For you and me, it is the present and future of the country, the very unity of the people with whom we must live and work.
The Rajapakses have earned a place in history, rightly so, for despatching one major scourge that harmed all the people. They now have a greater opportunity of surpassing their earlier feat in ushering in permanent peace. This ccan be easily done in allowing the Tamils their inalienable right to run their affairs – WITHIN AN UNDIVIDED LAND. Fooling around and procrastination won’t do good.
I hope the Rajapakses – some close friends of mine – rise to the occasion.
Such an opportunity may not come again in our lifetime.
ISS
Kalu Albert
……And of course our best mate China will be the number Economic power in ten years with additional 14 Trillion USD in the kitty on top of the 10 Trillion the US a Treasury already owe them……
Here is something for your reading pleasure. I am sure you will not acknowledge your mistake. Perhaps you are incapable of recognizing your mistake in the first place.
http://globalpublicsquare.blogs.cnn.com/2011/07/21/who-owns-america-hint-its-not-china/
We heard that academics in SL universities just received much needed salary increase to make them happy. It seems they are back in the musical chairs.
There are huge demands for cheap technical workers with good high school qualifications. SL never develops good policies to use these highly qualified talents like some other countries, Singapore and Taiwan in the East and Rumania, Poland and Hungary in the West.
jey thank you very much for a very erudite article by an economist who happens to be of tamil origin.that has provided some people with ammunition to attack diaspora and other countries for the present state of affairs in srilanka.any comment has to be relevant in this case most of comments seems to be way off the mark.rather than discussing economic issues plaguing srilanka blog seems to have become a battleground for diaspora and sinhalese supremacist to trade charges.acrimonies apart arjuna sivananthan has done a very good job of analysing present state of srilankan economy in an objective manner despite his background of being a srilankan of tamil origin.here i need to confess one thing as much as i am a student of srilankan tamil issue i continue to be a student of economics as well.i am quite perplexed by the rosy picture being painted by central bank authorities.world over every country has been facing some economic crisis or other let it be america,europe or china and india.america faces a crisis which is result of the unbriddled financing of housing bubble from which it has not come out of it.even though america continuesa to grow what it is witnessing is a jobless growth and according to estimates american companies are sitting on $3 trillion which shows that there is no econonomic demand as a result money is not being invested for producing more goods.it will be apt if commentators read last weeks nytimes article on iphone though it has made apple company richest by market cap it has not made any significant contribution to american jobs.this only illustrates the fact that american dominance is not over but inequality has increased enormously.as far as europe is concerned it is grappling with crisis in greece and italy with portugal and ireland in b.contribution of europe to world economic growth will significantly come down.as far as china is concerned it is growing but growth has slowed down.inflation is creeping up and housing bubble is seen in major cities as a result chinese central bank is deploying monetary as well as other unconventional measures to curb the inflation.japan has for the first time seen trade deficit in thirty years though it can be good news because yen can depreciate against dollar which can provide a boost to its exports.india is witnessing slowing of growth and inflation though food inflation has come down manufacturing inflation continues to be high and central has cut crr rather than interst thus signalling its intent to cut interest rates in future.rupee has bounced back from 52 to 49.5 thus signalling the confidence coming back on indian economy.in this world scenario where does srilanka figure.its foreign reserve is on a precarious state as stated by arjun sivananthan which will be sufficient for just three months whereas international norms say a country should have ten months imports as foreign currency reserve.what srilanka has to do now is leaving aside the ethnic problem it needs to concentrate more on attracting foreign direct investments which are long term in nature and which provides employment in large numbers.it can strengthen its infrastructure so that foreign companies when they come need not spend additionally on infrastructure thus keeping the cost down.srilanka is in an advantageous position it can encourage indian industries to set up manufacturing plants in northern srilanka where manufacturing goods is much more cheaper than doing so in india.companies which set up the plants there can cater to the markets of south india due to geographical proximity.srilanka can encourage marine processing industries since it has plenty of marine resources and slowly srilankan educational system can be fine tuned to produce more graduates and engineers who form the bedrock of software industries.if the talent is found and infrastructure is available companies like infosys,wipro ,cognizant will not hesitate to set up their software development centre in the island nation.it is pertinent here to point out one fact though it may be irrelevant first chairman of cognizant technology solution was a sinhalese by the name kumar mahadeva.
as far as macro economic issues are concerned inflation can be curbed by importing certain essentiels whenever those essentiels prices go up.as some one pointed out srilankan government should desist from bidding for big international events which are not going to bring any commensurate economic benefit.srilankan government can encourage foreign direct investment in retail industry which can go a long way in addressing the problems of farmers and common man.companies like wal mart,carre four bring their logistical expertise and they are pioneers in supply chain management which can absorb the gyrations of farm produce.i hope that srilankan policy makers concentrate on economic issues objectively and bring prosperity to their countrymen.
marusira wrote
“Well if one ethnic community take up arms and start blowing up people including their own community, what do you expect the Govt. to do ? Stand by and let it continue ?.”
Sadly many Sinhalese believe this revisionist view of history, as if the violence stated with the LTTE. The violence was one-sided from the 1950s onwards until the 70s, Sri Lankan state and other Sinhalese against non-violent Tamils. Groups like the LTTE arose to counter these violence, thats not an excuse or justification but a fact. Violence begets violence.
Samarasekera wrote:
“Sinhalees were not orginated from DRAVIDIANS.”
Can you please explain why the Sinhala script resembles the Dravidian languages of Telugu and Kannadam.
As for Dr. Sivanathan’s analysis, sadly his excellent analysis and informed advise will be lost on the thugs and crooks and their supporters running the country.
Mr Sengutuan, If you want to contradicg Srilankan Reserve Bank Economic Indicators you shuold read reports of S&P, NY Times Financial section, Standard Chartered reviews, and also the lateset,Fitch release on Lankan Banks,and not some English Daily Editors take on the Economy.
Mr Sengutuan in his response to MS, claims that he is a close friend of the Rajapaksas.
It is obvious that he weilds power not only among the Diasporians but seems to have a lot of clout among the Elite in Colombo as well.
Therefore it is worth digressing a bit on his statements.to justify his claim for Homeland for the TNA.
He says Mr Rajapksa has offered the Indians 13 A ++++ and the Sinhalese must get together and form a concensus and save the Nation.
Now the question these Sinhalese are bound to ask is, save the Nation from whom????
Specially, how the Nation was nearly dismembered and how much it cost in life and property are still fresh in their minds, they will be itching to find out where this predicted new threat is coming from?,
And is it worse than what they have been through?
The second important statement says, allow the Tamils their unalianable right to run their affars.
Of course the great majority of the inhabitants wouldn’t have any sweat allowing the Tamil people to run their affairs.
But there are certain areas that the majority would be anxous to get a clarification.
For example who will guard the new International Airport in Pallai and protect it from any undesirables?.
Can the Govt allocate the land to construct the Airport, without running it past the TNA CM?.
Would the TNA CM need to run it past the TNA Boss and his backers overseas before ticking off?.
These are only a few among many important issues that the great majority will be pondering ,before they can form a concensus.
Last but not least, are the other Tamil people, who are the majority who live in regions other than the North will be happy to have their affairs run by non Tamil people?.
.
Samarasekera wrote:
“Sinhalees were not orginated from DRAVIDIANS.”
Can you please explain why the Sinhala script resembles the Dravidian languages of Telugu and Kannadam.
—————
Dear friend
SINHALA LANGUAGE IS JUST LIKE AS AN OCCEN. It has capacity to absorb suitable words from other languageS. Apart from PALI and SANCRIT Portugees,Douch and English words too practising in Sinhala language.
Nevertheless Sinhala language has its own vocubelary. BUDURUGALA, GALEN BINDUNU WEWA,ASU PINI ELLA wirds are stands fir this.
Significant point is Significant point is Sinhala language has the letters “H” and “G” that so called dravadian language don’t exist.
samarasekara
Dr,Sivanthan’s asnlysis was based upon bias concept. The powerful evidence stands to say this analys is not adequate.
YESTERDAY CENTRAL BANK DECEIDE NOT TO APPLY FOR THE LAST LOAN PORTION THAT WILL GIVEN BY IMF.
Reasion is higher interest rate. If the CB believe that there will be economis groth rate decrease in tear 2012, they must take precaution action as being applying the last loan portion which sheddule to be release in IMF.
samarasekara
Dr.Easwaran and others.
I am grateful to Banada and his family for bring TAMIL as school language and built hundreds of schools in rural tamil areaeas.
I was bas born and bred in Vanni and know the bebefits wery well.
Srimavo is still my AMMA in this case.
Being in and around the biggest finacial cheaters to the world I would like if Dr. Arujuna Sivananthan
concetrate more of his energy to unfold startlingly abject finanical control mechanisms of western nations.
Biggest cheaters to the whole world is Western Countries, Countries in Asia will eventually suffer the consuequnces of the lies…
There are enough people in Sri Lanka who has the capability to comprehend what’s happening in the world..
Our friend Kalu Albert continues to raise stranges questions – regardless; in his passion to be identified with the sycophantic brigade of the beleagured regime.
Fitch did made favourable comments but that was on our banks. Most private banks are run professionally, well and profitably. Even both State Banks are not doing badly but the haemorrhaging of their fund base by bad political loans and financing bankrupt State enterprises prevents them showing a much better Balance Sheet. It takes one to be a reckless liar and ignoramus to say the rest of the economy is doing well. I wonder if you know nearly two billion dollars have been thrown away in recent months merely to defend he Rupee from its actual levels – an area in which the government has no business to be in unless in exceptional circumstances. There is a raging battle going on between the Finance Ministry and the CBSL each blaming the other for the fastly declining economy – and here yoju are with your own inerpretation. This two billion dollars could have been spent on a higher health bill that could have saved, inter alia, hundreds perishing by dengue that marches poorly managed by a buffoon claiming to be the best Health Minister in the world.; a better and harmonious education system that will go out to please millions of parents and even produce useful students; infra-structure development in the Tamil North-East to assure the people there they are now part of the country and matter very much to the Centre. But what do we really have? An economic battle captained by a 2nd level accountant – whereas we should have the finest economists in the country leading the challenge. Dr PBJ’s questionable limits are well known to bring us much joy. Not that we do not have the right economic wealth in the country to overcome the impasse – but their talents remain untapped. More than anything else, they are not subservient Yes men.
Yes – I happen to know a few people in the forefront both in our governance and the opposition for a long time. Not the Rajapakses , my man, but THE Rajapakse. The others were invisible when he and I were close for many years. They certainly emerged from the woordworks when he made it – and now we are all at sea. As to my “wielding power in the diaspora” please note for the last time, I am not in or close to the Diaspora leadership then and now. The main actors in the TNA know me – Yes but by no means a close relationship. This may have something to do with the fact I was throughout Colombo-based.
As to your comments questioning the regime assuring India and the world a solution via the 13th Amendment ++ To me you appear to me to be reasonably well informed of political matters not to know this. Why, my friend, it is all over the media this week. Shri SM Krishna came, in my estimate, also to expose the Rajapakses who thought they were taking India for a ride on this – which is why he unprecedentedly held a Press Conference in our soil – and told the world of the Rajapakse con. Now it has to be given and defended. The question is will the Rajapakses have the honour to carry out their pledges or still fear the likes of Champika R, Booruwansa, Gomin Dayasiri, SLG, Nalin de Silva/Gunadasa Amarasekera, the JHU mullahs and that sundry lot? If they fail the Indians it will be loss of face that will have severe longtime consequences and if they do the Sinhala supremacist cabal will be on them. De Javu 1958???
To make matters worse Guess who’s coming to Dinner – that Yankee Ambassador Stephen Rapp to do some knuckle-rapping. It is said he is here in the unpleasant task to work out the finer details of the War Crimes Tribunal??? And then in a few weeks that messy
Geneve meetings. Tch.Tch. Our stars sure not in the right placements.
ISS
It’s unfortunate that the comments section of this article has gotten so adversely polluted by completely non sequitur ramblings of the patriots, the non-patriots as well as the expatriates.
If the pressure on the peg continues at this level for a prolonged time we will definitely see a balance of payments problem. I fear the reason for this to some degree is the CBSL trying to be a little bit more than a monetary authority. At the same time I can understand the justification of the peg. Private sector infrastructure development is taking off rapidly this year and in order to maintain this rate imports need to be attractively priced. Of course the real question is whether we are paying too much of a price to maintain this.
Sanctions against Iran are not going to work. As of today both India & China have both said they will not abide by them. BP has been exempted from the Iran ban. and IMF is saying the brent will hit 140 if the santions are imposed. Iran will simply sell oil India & China at discounted rate, europe will get screwed over all the while making russia richer. In light of all of this I hope that sanity will prevail.
Ineresting reading from Mr Dantanarayana. I am afraid there is little alternative in the hands of Cabraal & Co but to defend the Rupee in order the imp-export market does not collapse. With economic physicians of the last resort like that placed loans borrowed in the Income part of the Balance Sheet, anything is possible. When the IMF let their displeasure on this calumny be known via the press they used the extra-ordinary expression “non-borrowed income” be used to separate returnable loans.
ISS
Mr Sengutuan reckons the USD 2 Billion of Reserve Funds could have been better spent to give more infrastructure and services to the North and the East.
Wonder whether this is going to be a new addition to the monetary policies of the Srilankan Central bank that the TNA would want to introduce , if Mr Premachandran fails to get his new demand for Financial autonomy added to the 13A +++?.
Mr.Dantanarayana,let sanity prevail as you wish. Wondering what impact 140 Brent will have on Sri Lankan economy ? Just curious.
sukumar, I’m not sure how bad it will be for the rest of the country. My guesstimation is that we’ll probably slow down by somewhere around .5%, but that’s pure speculation. I think the pres & cabraal are meeting the americans later this month about the whole thing. The ideal situation would be us getting 1-2 year grace period to gradually phase off our reliance on Iranian oil. The positive side will be the price of rubber in the global markets. Generally the price of rubber follows gains in the price of oil so if crude oil goes up 30% the price of rubber will also go up by 30%.
cabraal is adamant that we’re going to $ 25bn inflows this year. if this is correct, then we would have been worrying about nothing. Although cabraal also said credit growth would moderate in december, but the complete opposite happened.
Good curiosity Sukumar.
Iranian crude will be cheap as chips when Srilanka piggy backs on India’
So piggy-back rides on India’s back is good when it comes to a crunch with Sapugaskande Refinery that has to use Iranian Crude. But, pal, don’t think the injuns are suckers. They know how to squeeze double-crossers who connive with others to harm them. As many of us also believed and counselled, first let us sort out who our immediate friends are; create the necessary trust in them and then they may play ball.
At this point of time, we are practising deception on the 13th ++ somnething they right along knew.
ISS
Dear Mr Sengutuan,
Srilankan inhabitants may have called our Indian cousins Kallathonies.But never used that racial slur, ever.
Because, besides our ancestral links with the North , Indians in general have always been good to Lankans except that one botch by a petty politician who felt inadequate in front of one of the Lankan Leaders.
The friendship of Indians with Lankan inhabitants are going on an exponential curve , since the defeat of the Monster, that Indian leader created.
Ever increasing numbers of Indians visiting Lanka, and ever increasing investments by the Indian Private Sector and of course the mega bucks that Dr Singh is channelling to bring our rail and roads upto scrath are clear evidence that India is there for the long haul.
So a little piggy back ride can be put down to paternal love!
Incidentally , didn’t Mr Krismna say that he is happy that the Presdent agreed to pursue the 13 A?.
Dear Kalu:
Where did the reference to Kallathonis come from?
“Your ancestral links with the North????” Phew! Colvin R de S, the historian,
found in his research that was by far more with the nearby TN and AP. Sudarshan S
and Shirna Deraniyagala – highly respected/recognised anthropologists – agree.
As to the 13th ++ Boss has saved his skin fronm the S/Supremacists by ditching this
publicly. So some temporary respite.
Some good news. Geneve may not be the disaster that was to be.
ISS
Current strains on the srilankan rupee are a wake up call for srilanka.When i look at the global current account balances, srilanka is 162nd out of about 200 countries.It is high time we raised the import duties.It will be also a source of revenue also for the government.There is no doupht in my mind that the current account deficit has to be cut down.It can be done in the following ways
1.Reduce the imports with tariffs.
2.Increase the exports and reduce imports with a devaluation of the currency.
3.Try to encourage import substitution with local production.
4.Try to increase exports by looking into the problems faced by exporters.Also help them to enter new markets.
5.Push back government expenditure on imports until such time as the current account is having a healthy surplus.
If all these 5 are done concurrently i think the current account problem will be solved.
The economy is like rubber mat.When you press at a point,something will pop at at some other point.When you fix the current account,you might get landed with high inflation.Then you have to tackle the inflation with deflationary policies such as balanced budgets etc,which will result is reduced economic growth.Then you have to tackle the growth,and it goes on like that.
However the key to this is to get your priorities right.You have to tackle the most serious economic problem first.The current account is serious alright if we are 162nd in the world.
Doing a further analysis i find that srilanka is 89th when it comes to exports,but ranked 79th for imports.The gap is 10 spots,confirming my view that there is a imbalance between our exports and imports and definitely the imports must be reduced and the exports increased and both would probably balance out around something like the 85th spot.
Our exports are the same as when i was a kid.The traditional ones of tea,rubber and coconut and gems. Garments which came in later and now fish.Doesn’t seem to much diversification at all and fish being exported is not fair by the people when they hardly have enough to eat at fair prices.One day when i visited srilanka,i dropped in at a hotel in colombo and ordered a lunch and the size of the piece of fish which was ‘balaya’ stunned me.I could not believe a country sorrounded by the seas was giving people fish to eat that is the size of my little finger,and now here we are exporting it,it seems.
Now how about diversifying into agricultural products such as bananas,pineaple and palm oil,fruits and vegetables and horticulture.Also sugar and shrimp and other foodstuffs.
Then industrial products such as chemicals,transport equipment(equipment used to move material from one location to another e.g conveyors,cranes and industrial trucks),machinery and automobiles.
It is dissapointing to see srilanka still exporting the same old stuff that i knew when i was a kid.No wonder our exports have stagnated because there is a limit to increasing it with the same old products.
As for imports oil is a big problem and nothing we can do about that except maybe try our best to go green as much as possible.Also the fabric for our garment exports have to come from abroad,and nothing can be done about that too,but textiles that are coming in not for reexport should be taxed heavily. Machinery and transportation equipment and automobiles also should be taxed heavily so that local industries can start to manufacture these.Srilankans have the brains to do these but if imports come and wipe out the local industries,hen they can’t and entreprenuers will not risk their capital.Building materials and foodstuffs too should incur high tariffs.We can easily do those here.
Shankar,
You have forgotten an important and successful/lucrative export by SL to the West in the last quarter century – Tamil refugees. Naturalised Tamil refugees are the backbone of the current SL economy.
It is hard to believe that if these Naturalised Tamil refugees stop sending money to SL and/or visit SL, SL will be another Somalia in NO time.
“Patriots” like Kalu Albert who swallowed the regular cons passed on by Cabraal & Co
that the economy is in a sound way, may not have much to say now with inhuman increase of price of Kerosene, used by the poor, Petrol at Rs.149 that costs Rs.70 and the inevitable price of Gas, CEB bills etc., The Rupee has hit rock bottom reaching Rs.120 to the dollar.
The reckless profligacy of the regime and its inner circle – that clearly made billions in US$ on land deals, foreign Contracts etc – had to be met. And now the poor in the country are footing the bill.
What fummbling fools we have around in the country. There is no way for the hungry, desparing people/workers to take to the streets. The 200,000 man army, the 100,000 man Police and thousands of criminals from the drug-underworld who are partners-in-crime with the rulers. They are there not to fight an LTTE that is long gone but are kept to crack their heads and keep them in their place. Fascims and the Police State is already here.
ISS
concerned says
You have forgotten an important and successful/lucrative export by SL to the West in the last quarter century – Tamil refugees.
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Dear concerned,i have not forgotten,it is just that i was referring to merchandise,but indeed i had forgotten one and remembered it when i saw it on a shelf.That is the spices which we are famous for.
As for your contention that the tamil refugees are the backbone of the economy,that might be the reason that mahinda wanted all the 293000 in the camps after the war, to be taken by canada.He made the offer but canada did not take it and lost a great opportunity to get a fantastic human resource,because some of the selfish tamils in canada spoilt it all by blocking the traffic etc.
I think backbone of the economy is the people of srilanka,ably led by mahinda,gota,chamal,namal,chamal’s son the chief minister of uva province,basil,nirupama etc,etc.