By Garvin Karunaratne former GA Matara

The twitter statement made by Kristilina Georgina, the Managing Director of the IMF, quoted by Adaderana on 22/6 is to be admired. She said that I warmly welcomed the strong ownership by the Sri Lankan government to address current economic challenges. We are committed to support Sri Lanka’s economic reforms to improve living standards for its people,” (Lanka Web23/06/23) She has to be warmly congratulated for thinking of the living standards of our people.

Do any of the current plans of our leaders aim at improving the living standards of the people in Sri Lanka?

The improvement of the living standards of the people of is crucial importance today. The World Food Programme of the United Nations has said that 6.3 million are Food Insecure and that 5.3 million are skipping meals.(Daily Mirror: 21/6/23) It is reported that prices of food are beyond the majority of the people. Starvation is inevitably written into this situation.

It is even reported that the country has no buffer stocks of rice or paddy and that that Paddy Marketing Board has been refused Rs 6 billion that they have requested to purchase rice(Sunday Times,25/6/23). We are yet suffering from President Gotabhaya’s ill advised venture of forbidding inorganic fertilizer. The lack of a buffer stock signifies a total calamity. It is hoped that remedial action is taken immediately. As a Deputy Food Controller in Districts where I worked, maintaining buffer stocks of rice or paddy was our duty and we would have been sacked if we had failed.

This situation comes while banks that take in foreign funds freely finance people- the rich for holidays abroad. The rich are having a heyday of foreign travel all on foreign funds that come into the country, while the masses have to live hand to mouth and forego meals.

Meanwhile the Government goes on talking of restructuring the debt, both foreign and domestic. It is also , liberalizing the economy, attract more foreign investments” and states that the only viable solution in the long run is a programme driven by the private sector” and talks of a market oriented credit integrated growth strategy- the only available option”(Ceylon Today: 23/6/23)

In my opinion, the economy is already libearalized. Foreign investments are hard to come by to a country in chaos, where people are starving. The private sector has closed down due to increased interest rates. They have parked funds in banks and enjoy the high interest.

Meanwhile the citizens are leaving in droves.

It is a sad situation that requires immediate action by the Government. It is true that we are an indebted country, saddled with repayments- We have to repay $ 2.6 billion in the first six months of 2023”.

We are talking about restructuring debt payments. Debts have to be paid in dollars and as long as the bulk of the dollar intake of the banks are issued to the people(the rich) for foreign use, naturally there are no dollars collected to repay our foreign debts.

There are plans to raise funds through privatization of assets. Has the sale of assets ever worked in the interests of any country. It is well known that once the State of California privatized the electricity transmission system. Later the Governor of California found that the companies that had bought the transmission system were making California rolling in blackouts. It all ended with California buying back what they had privatized. This is true of the privatization of railways in the UK. The private companies pay fat dividends and fantastic salaries but neglect the service. Safety features in French Railways are not found in the UK because the company cannot afford!.( Ref pages 106.. of my 2006 book)

We always stand to face a loss on the privatization of assets. It is rife in the Air that out foolish leaders are about to privatize Sri Lanka Telecom. It is the country that will lose its sovereignty. Telecommunication signifies the sovereignty of a country and should always be the guarded sacred property of the Country. In the hands of an outsider Sri Lanka stands to face DEATH. I hope our present leaders do stand to reason.

Let us look at what happened to our tyre factory. According to the Chief Chemist the later Hector Perera who was trained in Russia to fix the tyre factory, it had the capacity to make all our tyres. It was a factory given totally free by Russia and we sold it for a song and it ended in the hands of CEAT a multinational. Yet we import our tyres and CEAT makes tyres and enjoys profits. We fools produce rubber- the best in the world but we do not make our tyres.

It is time that we rethink our strategies.

In living memory, before 1977- the date we followed the IMF neoliberal concept and started living on loans, we did manage our finances. There were no private money changers. An important point is what happens to the dollars collected by money changers today? They collect far more than all the banks. Before 1977 every dollar that came into the country was collected and first priority was given to import essentials and thereafter small allocations were allowed for the import of cars etc. . In 1957 I had to wait two months to buy a new peugeot. In 1953 only a few Austin cars were imported and a person well known to me had to buy a new car from another who had paid up and had a car reserved. No funds were allowed for any foreign travel unless such travel was required for the country. It may sound really odd for such restrictions today but the only remedy available is for the collection of every dollar that comes in and some restrictions in use.

Reading through what proposals the Government has- restructuing debts both foreign and domestic….a market oriented integrated strategy,” Restructuring debts can be planned, privatization of assets is forbidding and not in the national interest, foreign investment can be courted and anyone with any thinking capacity will agree that no investors are coming. Thus all our plans will amount to mere exercises on paper.

I may please suggest for kind consideration that what is missing, and very feasible is a programme for creating production within the country, bringing employment and incomes to people and also reducing the import bill.

It is important to note that for this programme we need very little foreign funds, as it is done locally with Rupees. I speak from sheer experience. Before 1977 we ran everything in the country with local Rupees. All our colonies were established with local rupees. All major tanks- reservoirs were repaired and and built with local rupees. All government departments were run with local rupees. I may mention that there were severe restrictions in printing money.

In the days before 1977, the Government had major development programmes that were aimed at producing what we needed.

We were self sufficient in all textiles- we had handlooms that made bespoke textiles. No Colombo 7 ladies ever went abroad for elegant sarees. They instead went to a handloom textile demonstrator and had an exquisite bespoke pattern done. Our powerlooms were manned by local staff and the Hakmana Powerloom made suiting that was in high demand even in London. We abandoned our powerlooms and sold off textile factories all done on the IMF advice to make us poor. Since 1977 all our leaders were fooled by the IMF.

I may mention a few details of the last producing cum employment creation programme we had- the Divisional Development Councils Programme of 1970-1977 to convince anyone that such a programme is the only way ahead for the present Government to follow. This programme recruited unemployed youths, paid them a stipend and trained them on small farms and they produced vegetables and all crops. They became scientifically trained farmers in the process. In industry there were many small industries like making sago out of manioc, making farm implements etc. The Divisional Secretary at Kotmale established a paper making small factory using waste paper. Do we have any government programme making paper other than Valacheni paper mill. The answer is no. In he meantime farmers even burn the straw, which can be used to make paper.

In the Matara District, where I was in charge as the Government Agent, in addition to small farms and small industrial projects we established a mechansied motor boat industry making seafaring fishing boats. This was a great success. I also established a Crayon Factory. The art of making crayons was found by my Planning Officer locked up in the science lab of Rahula College every night from six to mid night for three long months, doing a myriad experiments. He succeeded and a Cooperative Crayon Factory was established at Morawaka, executed by Sumanapala Dahanayake, the member of parliament who happened to be the president of the cooperative union. It was a handmade crayon equal in every respect to the Crayola crayons imported by us from the USA. It is easily equal except for the elegant paper covering. This DDCP created 33,300 jobs and most of the youths ended as trained farmers and entrepreneurs- a great achievement. The Crayon Factory needed dyes imported and the Ministry of Industries refused as it was a cooperative. Days later, I came to know that the Import Controller was about to approve the import of crayons and moved in. I concinced him that our Crayon Factory could make all the crayons we needed if only a small allocation of foreign exchange is allowed to import dyes. The Controller agreed but required the approval of the Minister Mr Illangaratne. I approached the Minister and explained. The Minister looked at our crayons, scribbled it on paper, approved an allocation of foreign exchange to import dyes and shouted in glee that all imports of crayons should be stopped. He also ordered me to establish a crayon factory in his electorate at Kolonnawa.

Such a production oriented, employment and income creation programme is the only opition available and it is high time that our President and Prime Minister considered such a programme. It can commence within days and can be worked to be a great success within a year.

It would behove our leaders to immediately direct that such a production and employment creation programme be established immediately. That is the only way ahead.

Garvin Karunaratne, former GA Matara

29/06/2023