President Ranil Wickremesinghe tabled the IMF staff level agreement on the Extended Fund Facility (EFF) arrangement for Sri Lanka in Parliament, a short while ago.
President Wickremesinghe is currently in Parliament attending today’s parliamentary proceedings and is delivering a special statement on the IMF Extended Fund Facility.
He said that at a time when the country was in chaos in July last year, no one was willing to accept responsibility and that he was requested to take over.
I had no power in Parliament, and no MPs from my Party to call my own.” However, the President said his strength was his conviction that he was capable of rebuilding the country.
He said that the IMF credit facility amounts to USD 3 billion over a period of 4 years, with the first tranche of USD 333 million already being received.
Additionally, the country is expecting about USD 7 billion dollars more in rapid credit support from other parties, he said.
He said the IMF facility is a step towards building a better future for the youth and uplifting the country.
The President said the IMF Extended Fund Facility will restore Sri Lanka’s international recognition, ensure the country is not bankrupt and help banks regain international recognition.
This will create opportunities for low interest credit, restore foreign investors’ confidence and lay the foundation for a strong new economy, he emphasized.
The President says that the government plans to reduce existing tax exemptions on Value Added Tax (VAT) by 2024, remove the simplified VAT system, and expedite its reimbursement.
He added that Estate Duty will be introduced as a property tax by 2025.
He also said that the government aims to reduce the primary deficit to 2.3% of the GDP by 2025 and to increase revenue to 14% of GDP by 2026.
He said the standard corporate income tax rate has been raised to 30%, and that sectoral tax holidays have been eliminated.
The PAYE tax rate has been raised from 12% to 15%, while the tax exemption limit has been reduced from Rs. 300 million to Rs. 80 million.
President Wickremeisnghe stated that fuel prices will be decided only by the 2018 Fuel Price Formula and that the electricity tariff will be adjusted every 06 months.
He urged the Members of the Parliament to approve the agreement reached with the IMF. Only then can I start the second round of discussions,” he said, addressing the House.
This is not the end of the journey. This is the beginning of a longer journey.”
The President said that amidst numerous hardships, bearing all kinds of pressure and undergoing suffering with equanimity, the people of this country remained calm and patient.
He said their commitment was a great strength in achieving the IMF Facility and therefore, he extended his gratitude to the people of the country.
The Executive Board of the IMF approved the Extended Fund Facility (EFF) to Sri Lanka at its board meeting held on Monday (20 March).
The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.
Meanwhile, 48-month extended arrangement with an amount of SDR 2.286 billion (395 percent of quota or about USD 3 billion) was also approved under the EFF, with the aim of restoring Sri Lanka’s macroeconomic stability and debt sustainability, mitigating the economic impact on the poor and vulnerable, safeguarding financial sector stability, and strengthening governance and growth potential, the IMF said.
President Ranil Wickremesinghe has stated that the salaries and pensions of public servants will be revised in the future, in line with the inflation rates.
Speaking on the measure currently underway to manage government expenditure while addressing the Parliament this morning (22 March), Wickremesinghe stated that steps are currently being taken to increase the funds allocated for public expenditure and that pensions and salaries earned by government employees too will be revised in line with the inflation rates.
He noted, however, that such revisions will be made within the primary balance of the Budget.
Moreover, the Head of State noted that henceforth, fuel prices will be decided only by the 2018 fuel price formula, without the intervention of any political authorities.
Electricity tariffs too adjusted accordingly every six months, the President stated, adding that the balance sheets of organizations currently running at large losses will be remade.
The Road Development Authority (RDA), SriLankan Airlines, the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC) were amongst these companies.
During his speech in Parliament this morning (22 March), after tabling the International Monetary Fund (IMF) agreement, President Ranil Wickremesinghe stated that the programme will be reviewed every six months.
He made these remarks in view of the hardships currently faced by society owing to the recent increase in tax rates, electricity tariffs and other unpopular decisions that were taken in order to fulfill the prerequisites of the IMF programme.
We are currently going through a difficult period. We are well aware that a certain section of the society is facing immense hardships due to the tax burden. We also know the entire society is suffering due to inflation. However, we cannot distance ourselves from the policies that have been implemented at this crucial juncture”, he said in this regard.
The Head of State noted, however, that both the Government and the IMF will review the programme every six months, with the first review scheduled to take place in June this year.
We have already focused our attention on amending the existing tax mechanism. The Treasury is already in the process of preparing amended proposals. Further, intellectuals and economic experts have already submitted their views in this regard, which we hope to discuss, and reach an agreement”, the President assured.
He further noted that despite the efforts of certain individuals to portray ideals that these prevalent issues can be solved through beliefs and confrontations, they can only be solved through ‘caution, care and wisdom’.
Below is the full speech made by the President:
I wish to officially inform this august Assembly that we have been able to secure the Extended Fund Facility (EFF) of the International Monetary Fund (IMF). Full control over public finance has been vested in Parliament through the Constitution. Therefore, while tabling the IMF Agreement today, I wish to make my first official statement before Parliament regarding the EFF Sri Lanka has received.
On the 9th of July last year, I took over a country that was on fire. A country that was in chaos. A country that seemed to be without an iota of hope for the future. A country that had officially declared itself bankrupt. A country where inflation had risen to 73.7%. A country where people suffered for days in queues for fuel and gas. A country with schools closed. A country where ten or twelve hour power cuts were imposed. A country without fertilizer hampering cultivation by farmers. A country where anarchy prevailed in place of law and order. A country where outsiders had forcefully entered public buildings and were in occupation. A country where mob attacks were widespread. A country where homes of opponents were set ablaze. A country where people were assassinated on roads in broad daylight.
No one was willing to accept responsibilities in such an environment. Some were reluctant. Some asked for time to check their horoscopes. Some sneaked away. Some panicked. I was requested to take over the country at a time when nobody came forward to shoulder that responsibility.
I unconditionally accepted the challenge. I had no power in Parliament. I had no Members of Parliament from my Party to call my own. Even though I had none of these, I had just one strength. This was only my own conviction that I am capable of rebuilding my country. I had numerous experiences to support this conviction of mine.
In 2001 the economy of the country experienced a minus growth rate. However, I was able to shift the economy of the country to the right track, within a period of less than two years from the time I took over governance. At that juncture, I was able to secure aid worth 4 billion US$ through the Tokyo aid summit.
Unfortunately, that aid was not properly utilized by those who took over governance subsequently. In the same manner, when I took over the economy in 2015, it was in a weak state. But we were able to achieve a surplus in the budget primary balance by 2018. We also took action to increase salaries by approximately 106% while extending various other relief measures.
I only had the confidence gained from previous experiences when I accepted this serious challenge. I accepted the challenge with the conviction that even if I failed, the country would not.
Honuorable Speaker,
With the receipt of the IMF Facility, it has paved the way for us to build the future of our youth. We have the opportunity to uplift our motherland again.
Under this credit facility, we will receive approximately three billion US Dollars within a period of 4 years. We have now received its first tranche of 333 million US Dollars. We expect about 7 billion dollars more of rapid credit support from the World Bank, ADB and other parties that extend credit facilities.
There are people who interpret the EFF of the IMF as simply another loan. There are also those who clamor saying that the total debt of the country cannot be paid off with this amount we are to receive. Such statements show either their ignorance, or that they are ready to betray even the country to earn political mileage.
With the grant of the EFF from the IMF, we regain recognition in the international arena. We get an assurance that Sri Lanka would no longer be a bankrupt country. Our banks will return to the status with international recognition. International financial institutions will respect our bank’s letters of credit. The basis for obtaining credit from other international financial institutions at low interest rates will be created. Foreign investors’ confidence in Sri Lanka will be regained. Numerous comprehensive opportunities in the international arena will come available. The foundation to build a strong new economy will be laid.
Further, because of this Agreement, financial discipline in our country will become legislated. Stringent new laws for the prevention of corruption will be introduced. A new financial culture and environment that had not prevailed previously in Sri Lanka will be created through this Facility.
Honuorable Speaker,
Some tried to make the country totally disfunctional before the IMF took the decision regarding our country. There were plans to create a continuous wave of strikes, to destroy the economy and create anarchy in the country. They expected to prevent the receipt of IMF assistance through such sabotage. Certain political parties, some trade unions and some media labored to cause disruption. They claimed that we will not receive IMF support because the country was unstable.
They said IMF support will not be forthcoming because local government elections were not being held. They tried their best to make the people of the country to take to the streets with various false propaganda of this nature.
But the majority of the public did not support such acts of subversion. The majority of the public were not willing to disrupt the progress of the country for misplaced initiatives of various power hungry political parties. The people acted with sheer responsibility for the country.
Amidst numerous hardships, bearing all kinds of pressure, and undergoing suffering with equanimity, the people of this country remained calm and patient. Their commitment was a great strength in achieving the IMF Facility. Therefore, I firstly wish to extend my gratitude to my people of this country.
In this effort, our officials labored day and night. The Ministers worked with unstinted commitment. Most of the Members of this august Assembly extended their support. Some in public. Some in private. I am extremely thankful to all of them for their support.
Concomitantly, our key creditors from foreign countries and international organizations championed obtaining of this EFF. I extend the appreciation of Sri Lanka to them all.
Honuorable Speaker,
We are now starting a new journey. We have to introduce many economic reforms throughout the process. The foundation for our success will be through this path. Some of these reforms have already been proposed and implemented through the interim budget of 2022 and the budget for 2023. We will introduce numerous other reforms. I wish to emphasize some important related matters, including the reforms process that we are implementing and plan to do so in the future.
Increasing Public Revenue
• We hope to reduce the primary deficit to 2.3% of the GDP by 2025. • The Sri Lankan government’s revenue is currently 8.3% of the GDP, making it the country with the lowest revenue collection compared to other countries in the world.
We expect to increase the government’s revenue up to 15% of the GDP by 2026 through our measures.
• We have now raised the standard corporate income tax rate to 30% without sectoral tax holidays. • The PAYE tax rate was increased from 8% to 15%. • The measures required to reduce the existing tax exemptions on Value Added Tax (VAT) will come into effect by 2025. Further, necessary measures will be taken to remove the simplified VAT system and expedite its reimbursement. • Steps have also been taken to introduce tax on awards / substitutes and to introduce Estate Duty as a property tax by 2025, while providing an appropriate tax exemption allowance at a minimum.
Managing Expenditure
• We hope to increase the allocations provided to cover the expenses through proper management of expenditure. • It would also pave the way for adjustments in certain salary scales and pension schemes as part of the impact of inflation within the primary deficit targets.
State Enterprises and Energy Cost
• Fuel prices will be determined based on the 2018 Price Formula. The adjustment will take place once a month to cover the cost. Therefore, determination of fuel prices will be bereft of politicization. • Measures will also be taken to adjust the tariff on electricity every six months to cover the cost after considering the estimated future cost. • Key loss making state ventures of the balance sheet namely the Road Development Authority, Sri Lankan Airlines, Ceylon Petroleum Corporation and Ceylon Electricty Board will be restructured. Measures will also be taken to exchange the foreign loans obtained on overdue sovereign guarantees mentioned in the balance sheets of the state-owned enterprises, as payable debt of the Government of Sri Lanka.
Price Stability and Fiscal Policies
• Inflation rate will be brought back between 4% – 6%. We were able to reduce the inflation that had skyrocketed, to a considerable level. Further, we hope to bring back the inflation rate to a single digit by mid-2023. • When these measures are in progress the country would have to gradually refrain from printing money (Financing the Government by borrowing from the Central Bank to cover the budget deficit). Therefore, the Treasury will have to reduce the budget deficit by a significant amount and utilize various market instruments for this purpose. • While allowing activities of the forex market to be determined on market criterions the existing thresholds and guidelines of that market will be relaxed. • In order to build the foreign reserves according to the set targets the Central Bank intends to purchase foreign currency.
Good Governance
• The IMF is engaged in the process of preparing a Governance Assessment Report in consultation with local experts. This would allow identifying the loopholes that exist in the frameworks of Sri Lankan administration and the institutions that combat corruption. • Laws will be drafted against corruption in line with UN conventions. • It is also expected to include the provisions with regard to the acquisition of assets to the legislative framework by March 2024. • A new Public Finance Management bill that includes strong fiscal policies, laws, thresholds with regard to obtaining foreign loans and government securities will also be drafted. • The individuals who had obtained permits to import vehicles on concessionary tax basis along with the institutions that enjoy tax concessions / tax holidays of the Board of Investment will be made public. Further, large scale government procurement contracts will also be made public.
Progress
• Reforms in the IMF-related program also include improving medium and long-term economic growth. Measures with regard to trade reforms, steps to improve participation of women in work force, skills development, minimizing inefficiency and cost in the energy sector through reforms and changes that take place as a result of climate change will be taken into consideration in this regard.
Future Measures
• During this period the Government intends to submit a comprehensive report on liberalizing the economy and digitalization, sustainable recovery as well as multiple aspects, that go beyond the IMF programs to achieve medium and long-term high growth paths. • Concurrently, talks with our bilateral creditors will begin. We will continue our discussions with them in an open and transparent manner, using the same methods we have used in the past. • Before making final decisions on loan repayment terms, we use an open system that informs all bilateral creditors. The same procedure is followed by other foreign creditors. We hope to carry out the restructuring in a way that is fair to all creditors. • As I stated in an open letter to our official shareholders, we are unconcerned about any creditor. They are fair to everyone. So far, we’ve been open and friendly with all of them. I will continue to do so. • Reports are published on our pro-Grayas on a regular basis. There is no information about the country’s debt hidden.
Honorable Speaker,
We are currently going through a difficult period. We are well aware that a certain section of the society is facing immense hardships due to the tax burden. We also know the entire society is suffering due to inflation. However, we cannot distance ourselves from the policies that have been implemented at this crucial juncture.
The Government and the IMF will review the programme every six months. The first review will take place in June. We have already focused our attention on amending the existing tax mechanism. The Treasury is already in the process of preparing amended proposals. Further, intellectuals and economic experts have already submitted their views in this regard, which we hope to discuss, and reach an agreement.
We are discussing with the IMF to include these tax reforms in our plans at the review in June. In addition, we are discussing the other policy reforms which we think are necessary at present.
Some people try to portray that these issues can be solved through beliefs and confrontations. However, these problems have to be solved through caution, care and wisdom.
Hon.Speaker,
We are at a difficult period of time. However, our difficulties and hardships will be short lived. We can reap the benefits of the commitments and toil within a short period of time. We have to make these sacrifices for the young people of the country, the future generation who are to inherit this nation tomorrow.
Therefore the onus is on all of us to build our country. We have to work together towards this end by setting aside criticism of the past.
If we implement the economic reforms with proper financial discipline throughout the next four years in accordance with this Agreement, a strong economic foundation will emerge for the future of the country. If we deviate from this path, the entire country will find itself in a worse situation in April, than it was in, sometime back.
We hope to schedule the Parliamentary debate on this Agreement in the third week of March. I request the support of all of you in this House in this regard. I also wish to draw the attention of this House to another important matter. We cannot simply be satisfied with only the IMF agreement. This is not the end. This is just the beginning of yet another long journey. We have to traverse that path with vigour.
Discussing with our creditors and restructuring the loans as well as recommencing the process of repayment, is a massive challenge. Increasing the income of the country too should happen simultaneously.
The local production should be increased. More avenues of foreign income should be explored. We should not only expand our share in the world market but also in our region. A colossal economic reform process should be implemented fearlessly and continuously.
All these are not easy goals. However, we have to move forward by making sacrifices for the country. This difficult journey should be made with care. Our primary goal should be building the country. Firstly, secondly and thirdly our sole target should be to build the country. If we follow that line of thinking we can make this journey a success, expeditiously.
Honourable Speaker,
The IMF-approved plan should be implemented and completed in four years.
However, depending on our strength and determination, we should be able to finish it in three to three and a half years. Let’s give it a try. Let us put in the effort.
We need to emphasize a few points here. First, we must prioritize the establishment of a robust social security system for the most vulnerable individuals in our society.
Second, we are currently executing plans and strategies to enhance the value of the rupee.
Strategies and a formal plan to strengthen the rupee are being implemented. Third, anti-corruption legislation must be passed and implemented immediately. Fourth, we should focus on implementing necessary structural reforms in our society. These reforms should be identified and carried out accordingly.
Honourable Speaker,
Our country received no foreign aid during D. S. Senanayake’s premiership. Later, instead of working with our country’s income, a tradition of running the country on foreign borrowings was adopted. It became a cancer that led to our current suffering.
We can’t keep borrowing money all the time. We should strive to be a debt-free country. Therefore, we must all unite to get out of this difficult period. We must pay off all of our previous debts over the next ten years. I am confident that if we stay on the right track, we will be able to achieve that goal.
After we pay off the debt, we should build our capacity to generate enough income to meet the country’s expenses. If we continue on this path, we can make our country one of the most developed in the world by 2048, when we will celebrate 100 years of independence.
Here I would like to draw your attention to another point. Recently, an opinion was published. Theravada Buddhist countries are always economically poor.
Thailand is now working hard to change this perception. We, as the Theravada centre of the world, should work to change that perception. We can change that opinion as children of one mother if we work together. We can re-establish Sri Lanka as a global economic powerhouse.
Honourable Speaker,
When I became the Prime Minister I wasted no time in requesting the support of the Opposition towards the effort of rebuilding the economy of the country.
However I did not receive that support. Subsequently, at the occasion of opening of Parliament as the President I once again requested their support but it was to no avail. During the Budget debate too I requested the same of the Opposition, but they did not come forward. Yet again, at the occasion of the opening of this Parliament Session too I sought their support. But that request too frittered away.
They refused to extend their support citing various reasons. They said that my appointment was unconstitutional. They opined that Prime Ministers cannot be appointed from the National List. They even went to the extent of saying that my ambition was not to salvage the country from the economic crisis but to save the Rajapakses. They said that it was not Sri Lanka that I was trying to take across the obstacle course, but Namal Rajapaksa. However, now the international community has endorsed that I strove to reconstruct the Sri Lankan economy. It has now been proved beyond doubt that accusations of the Opposition are baseless.
I do not intend to respond to those unfounded accusations. My task is not to criticize the past. My task is to build the future of the country. I am committed to building the nation by formulating laws to ensure that past errors would not recur.
Even today, I request the Opposition to join this effort of building the country. Leave your personal political aspirations aside. Think of empowering the country before gaining power for yourself. You can follow your own agenda on other political matters. However, it is imperative that you act out of the box politically with regard to building the economy of the country. Help me in the process of strengthening the economy.
I make that request again, and seek your valuable support in the implementation of IMF Agreement, and building the economy of our motherland.
President Ranil Wickremesinghe said that due to the public sector engaging in business activities, the money that was available for the construction of 100 projects similar to the Mahaweli during the past decades, has been destroyed.
He noted that in the future, the public sector will stop engaging in business and open it to the private sector to create a free and productive economy, the President’s Media Division (PMD) said.
President Wickremesinghe mentioned this at the 71st commemoration ceremony of the late Prime Minister D.S. Senanayake at Independence Square today (March 22), the PMD reported.
Recalling that Mr. D.S. Senanayake’s vision was to create a free economy, the President said that business should be done by the private sector and that the country could be developed with the tax revenue obtained from them.
However, due to the nationalization in 1956, the Government started engaging in business and that is why the tax revenue was inadequate for the development of the country, the President pointed out.
He stated that the country has distanced itself from Mr. D.S. Senanayake’s vision, but following his vision, Singapore has become a developed country today and said that despite our politicians dreaming of making Sri Lanka a Singapore, the destruction caused to Sri Lanka in the last 75 years due to the decisions of certain political movements is immense, it added.
Therefore, the President further mentioned that Senanayake’s legacy should be carried forward to build a strong and powerful Sri Lanka. President Wickremesinghe also laid floral tributes at the statue of the late D. S. Senanayake.
The Chief Incumbent of the Kollupitiya Polwatta Sri Dharmakeerthi Monastery Venerable Dr. Bandarawela Wimaladharma Thera delivered a special sermon, according to the PMD.
Member of Parliament Vajira Abeywardena, Senior Advisor to the President on National Security and Chief of Staff to the President Sagala Ratnayake, Senior Advisor to the President on Climate Change Ruwan Wijayawardena, Former Speaker Karu Jayasuriya, Former Ministers Ravi Karunanayake, Rohitha Bogollagama, Karunasena Kodithuvakku, Rukman Senanayake, former Colombo Mayor Rosy Senanayake, former Provincial Councilor Shantini Kongahage, Army Commander Lt. Gen. Vikum Liyanage and several others had attended the event.
The contribution of non-governmental higher education institutes and the opportunities available to make the sector more efficient were discussed at length at a recent meeting held by the Parliamentary Select Committee.
The Select Committee of Parliament to make suitable recommendations for the expansion of higher education opportunities in Sri Lanka met on 17 March under the chairmanship of Minister Wijeyadasa Rajapakhshe, PC.
During the meeting, the representatives of non-governmental higher education institutes pointed out that while there are opportunities to carry out innovations and new initiatives in the field of higher education, the legal provisions to carry such forward are not sufficient.
They also emphasized the need for a more flexible approach to facilitate the development of the sector.
Representatives of non-government higher education institutions in Sri Lanka such as Nagananda Institute, SLINTE higher education institute, ISOFT Metro Campus, Saegis Campus, ICBT, Royal Institute, IChem were present at the Committee meeting.
Thus, the Committee Chair requested the representatives to submit suitable recommendations in writing regarding the changes and developments to be made in future given the scope of the higher education sector.
Minister (Dr.) Ramesh Pathirana, State Minister (Dr.) (Ms.) Seetha Arambepola, Members of Parliament Rauff Hakeem, Anura Priyadarshana Yapa, Eran Wickramaratne, (Prof.) Charitha Herath were present at the meeting.
To my mind, the Central Bank of any country is an integral part of the sovereign country and it is a ridiculous statement to talk of a Central Bank being independent of its country. It is actually the Central Bank of a country that has to perform the most important function of monetary policy- what monetary policy can bring about the maximum development of the country etc. Thus I fail to comprehend why anyone should ever even think of a Central Bank being independent of its country. It is ridiculous in the extreme.
However today there is a Bill in Parliament to grant independence to the Central Bank!
The Governor of our Central Bank states, as reported in The Daily Mirror of 17/3, it is to:
enable to make unpopular but essential decisions in prioritizing price stability in the country…
to empower the Central Bank to make right decisions, not popular decisions- has the ability to work independently and make decisions without any influence from fiscal authorities and such, decisions cannot be changed at the whims of the Government in power”
It is absurd to grant any power to any body or organization to rule over the Houses of Parliament, elected by the people. This amounts to an infringement over the sovereignty of the people. Instead, the task of a Central Bank is to provide expert opinion on managing the economy, apprize the Government of the best course of action and warn the Government of possible consequences.
I happen to have worked at high level in Sri Lanka handling the allocation of foreign exchange to small industrialists in 1970 as well as in several other countries and have had dealings with Central Banks. A Programme designed and implemented by me in Bangladesh- The Youth Self Employment Programme, implemented by members of the elite Bangladesh Civil Service trained by me is today the world’s largest and most successful employment creation programme the world has known, having bagged over three million youths into self employment, all achieved within four decades. Thus I do speak with a great deal of experience and my work involved the Central banks.
The Central Bank of any country is there not only to guide its parliament to handle its finances but to take active steps to guard its monetary matters its foreign exchange as well as the local currency. This is a sacred task.
When one looks at the past history of our Central Bank it is clear that till 1977, the Central Bank played the important role of providing advice to bolster the economy, to make the economy sound by managing our monetary matters with the foreign exchange we earn but sadly after the end of 1977 played a dubious role to ruin the economy of Sri Lanka. It is this sad path which the Central Bank has been playing from the end of 1977, to make the Governments of Sri Lanka fail in its handling its monetary matters- advising the Government of Sri Lanka to live on loans as dictated by the IMF , which has led Sri Lanka to build up a foreign debt to as much as $ 56 billion today. As pointed out by me in How the IMF’s Structural Adjustment Destroyed Sri Lanka, Godages, 2022,
Before the end of 1977, the economy was handled very carefully by the Government Departments that handled the incoming foreign exchange, under the total gaze of the Central Bank. Then the Central Bank actually controlled all segments of the administration in matters of finance.
After allocations were made for food, medicines etc. small allocations were given for the import of cars, fridges etc. In 1959 I had to wait in queue for two months to purchase a Peugeot 203.
It was through this careful handling that we managed the economy. Even when the country had plenty of foreign exchange and implemented the Gal Oya Development Programme where we selected Morrison Knudson, the prestigious US firm that built the Hoover Dam and paid them in foreign currency to build the Gal Oya tank, three times the size of Parakrama Samudra and build the entire District of Ampara, we were very strict on the use of foreign exchange. This was the golden era that we can now talk of where almost a million acres were opened up for cultivation, tanks and irrigation structures built, employment found for thousands, agricultural marketing organized to enable producers to benefit, self sufficiency achieved in many areas like paddy production by 1970. I have played a leading role in this phase in many government departments that were run very efficiently.
To my knowledge the Central Bank started playing a dubious role when President Jayawardena commenced the policy of Running the country on loans as advised by the IMF and not repaying them. Then the Central Bank of the country instead of warning him, sang hossanahs in praise of this dubious method of running a country. In the words of the Central Bank, 1977 was a clear watershed in the economic history of Sri Lanka:
when the country turned away from a predominantly inward looking, tightly controlled and welfare oriented strategy to one which primarily emphasized export growth, competition and higher capital investment for economic growth and employment generation. The rapid spurt of the economy in 1978 was the immediate response of a hitherto long stagnant economy to the relaxation of controls and the restoration of price incentives. The economy in its performance in 1978 has clearly shown that given an appropriate policy climate it has the potential of moving onto a path of sustained economic development”(Annual Report of the Central Bank:1985)
The Central Bank shrewdly avoided telling the basic fact that the foreign debt of Sri Lanka had increased to $ 4 billion by 1985.
The Central Bank also looked away when the development infrastructure- the colonization schemes run by the District Administration, the Small Industries Department that made Sri Lanka self sufficient in all textile manufacture, the Department for Development of Agricultural Marketing which offered high prices to producers and also made Sri Lanka self sufficient in all fruit products- juice, jam etc in the three years 1955to 1958 and many more Departments were abolished or sidelined. That was the contribution of the Central Bank after 1977!
I have sussed up what did really happen when the economy was opened up to run with money borrowed , not utilized for economic development but instead allowed to be spent for fun and dance by the rich in my books:
Microenterprise Development… The Way Out of the World Bank & IMF Stranglehold, Sarasavi, 1997
How the IMf Ruined Sri Lanka & Alternative Programmes of Success, Godages, 2006,
How the IMF Sabotaged Third World Development, Godages/Kindle,2017
: How the IMF’s Structural Adjustment Destroyed Sri Lanka(2022):
. Following this neoliberal economic policy of relaxing foreign exchange use and meeting the shortfall with proceeds of privatization and loans has lead to a situation of foreign debt- by 1986 the foreign debt grew to $ 4 billion and by 2008 it was at $ 17.7 billion. In 1977 our foreign debt was only $ 750 billion and that too on projects, not on consumption. Devaluation of our Rupee was from Rs. 15.5 to Rs 31.6, in 1978 a devaluation of over a 100% in the very first Year.”
This sums up the work done by the Central Bank.
The Annual Report of the Central Bank 1978, reports:
Substantial capital inflows, together with resources from the IMF went on to create a favourable balance payment:”
In my words, the words favourable can be concluded to be misleading in the extreme, to refer to resources(loans)from the IMF as favourable because the IMF finances are loans on interest that increase the foreign debt of the country. Actually the loans worsened the economy.”(From How the IMF’s Structural Adjustment Destroyed Sri Lanka, Godages, 2022)
The Central Bank had also to face some real music on 25 th January 2001, when our two State Banks had to pay a massive oil bill and did not have sufficient foreign dollars. The two banks went hat in hand to the private banks that had collected dollars. The foreign bank that held the foreign currency increased their price to Rs `100.00 to Rs 106.00per dollar when the dollar was trading at Rs 85.00. Our two State Banks had no alternative other than to buy the dollars at the high price resulting in an immediate devaluation of 15% happened. In explanation the Central Bank said that it has control only over the domestic money supply”(The Island Feb 17, 2001). The question then emerges as to who controls the foreign exchange of the country. It is very very silly to talk of a Central Bank that only controls the local currency!.
What really did happen on 25 th Jan 2001 was that even the foreign exchange earnings of a sovereign country is a commodity exploited to make a profit” (page 61) It is really absiurd for a Central Bank to state that it does handle only the local currency. In the pre 1977 era, the main task of the Central Bank was to handle the foreign funds that came in. . It is correct to state that in the pre 1977 era the main role of the Central Bank was to control the foreign exchange that came in.
Is it to this Central Bank that has a dismal record that we are proposing independence. This deserves hard thinking.
Garvin Karunaratne. Ph.D. Michigan State University
Equinox and Solstice are both important astronomical events that mark the changing of seasons, but they differ in their specific characteristics and meaning. Here are the main differences:
An equinox occurs when the Sun is directly above the Earth’s equator, and day and night are of approximately equal length all over the world. The word “equinox” comes from Latin and means “equal night.”
A solstice occurs when the Sun is at its highest or lowest point in the sky relative to the Earth’s equator. The word “solstice” comes from Latin and means “sun standing still.”
There are two equinoxes in a year, one in March and another in September. The March equinox marks the beginning of spring in the northern hemisphere and autumn in the southern hemisphere, while the September equinox marks the beginning of autumn in the northern hemisphere and spring in the southern hemisphere.
There are also two solstices in a year, one in June and another in December. The June solstice marks the beginning of summer in the northern hemisphere and winter in the southern hemisphere, while the December solstice marks the beginning of winter in the northern hemisphere and summer in the southern
During an equinox, the duration of day and night is roughly equal all over the world, except at the Earth’s poles where the day and night are six months long.
During a solstice, the duration of day and night is at its maximum or minimum depending on the hemisphere. In the hemisphere that experiences summer solstice, the day is the longest and the night is the shortest of the year, while in the hemisphere that experiences winter solstice, the day is the shortest and the night is the longest of the year.
Both equinoxes and solstices have been celebrated and observed by various cultures and religions throughout history. For example, the spring equinox is celebrated as the Persian New Year (Nowruz) and as the Hindu festival of Holi, while the winter solstice is celebrated as Christmas in Christianity and as Yule in pagan traditions.
The seasons change on Earth because the planet is slightly tilted on its axis as it orbits the sun. This means that at different times of the year, different parts of the Earth receive more or less sunlight. If the Earth were not tilted, the sun would always appear directly above the equator, the amount of light received at any given location would be constant, and there would be no seasons. There would be no need to mark the equinoxes or solstices either.
The two solstices occur in June (20 or 21) and December (20 or 21). (21 or 22). The sun’s path in the sky is the furthest north or south from the Equator on these days. The winter solstice is the shortest day of the year in one hemisphere, and the summer solstice is the longest.
The June solstice marks the start of summer in the Northern Hemisphere; this is when the North Pole is tilted closest to the Sun and the Sun’s rays are directly overhead at the Tropic of Cancer. Winter begins on the December solstice. The South Pole is tilted closest to the Sun at this point, and the Sun’s rays are directly overhead at the Tropic of Capricorn.
(The seasons are reversed in the Southern Hemisphere.)
Norochicolai breaks down again. Is there no other way to produce our power.
I enclose one of my Papers that tell us that we can have all our power we need within one year at less than the cost of one years supply of oil we use for power now.
I am prepared to bell that cat, if there is no one else younger than me. I designed and implemented the youth self employment programme in Bangladesh in nineteen months and trained the officers of the elite Bangladesh Civil Service to continue it. Today, in four decades that programme is cracking with over three million youths employed.
Over the past seventeen years, thousands have been gathering to chant the Tipitaka under the Bodhi Tree from December 2nd-13th. Since then annual chanting ceremonies have spread to all the ancient pilgrimage places of the Buddhadharma. Once again, the sound of the Buddha’s words can be heard all over the land of the Ayradesh. Today, we are delighted to share with you that we have completed the recitation of the entire Suttapittaka this past December. These texts, shown here on ancient palm leaves, are now being recited by thousands of monks and laypeople with the single aim of preserving, promoting, and protecting the teachings of the Buddha in our lifetime. Our chanting program now moves to the Vinaya Pitaka where the arrow is pointed in the image below. This diagram gives you an entire description of all the texts that are contained within the Pali Canon.
In this 21st century, we have one voice- one sound from eleven Theravada countries who come together to sit and recite the precious Tipitaka. Every evening we also have great masters come to give talks on the dharma. This golden period provides an opportunity for all of us to study the teachings and hear wise reflections to enhance our growth on the spiritual path. We are so grateful to the Corporate Body of the Buddha Educational Foundation for their unwavering support of printing the Pali Tipitaka. It is printed with such care on special paper and hardbound. It is completely given as a dharma gift. We also offer sincere thanks to Khyentse Foundation, without whose support the spread of the ceremonies to other sacred sites would not have happened. Finally, we are delighted to have the support of both the International Buddhist Confederation and the Government of Uttar Pradesh in our efforts to revitalize Buddhist culture in its ancient Motherland.
Make Merit with Offerings: Since the beginning, our work has been entirely volunteer based. In this regard, if you feel moved to support our work with flowers, food, or media offerings during these ceremonies, we welcome you to send an email to us here. Promoting, protecting and preserving the teachings of the Buddha:
Now we bring both the Mahayana and the Theravada together to recite the precious teachings of the Buddha in Pali. These are just some of the magnificent benefits of coming together as a Mahasangha.
Now we are extending our work to all the sacred sites of the Buddha in India. We are now working with officials in India to strengthen these programs so that we can promote dharma with spirituality in mind. Here are some pictures from our recent chanting programs in all the sacred sites of the Buddha, We are so grateful to our primary sponsors including the Khyentse Foundation and now most recently the UP Government of Ministry of Culture and Tourism, International Buddhist Confederation. Without their support, these programs would not be possible to execute. Sarnath, Dhammekka Stupa Indian Buddhist Cultural Performances, Nagpur Deekashabhoomi Center
Lucknow, Dhammapada Recitation
Vaisali, Vinaya Pitaka RecitationPlease join us as we work to keep the Buddha’s teachings alive in the land of Aryadesha. Altogether, we are creating the positive links for wisdom and compassion to flourish at the Seat of Enlightenment. With Loving-Kindness Wangmo and Richard DixeyJoin our Buddha Carika Pilgrimages in 2023: We will be offering a first-class experience to join us in Bodhgaya, Sarnath and Nalanda for our Buddha Carika pilgrimage. For more information, please send us an email here.
We have pledged to make India’s national security our topmost priority. This was first articulated in 2020 by the then Foreign Secretary Admiral (Rtd) Jayanath Colombage. During incumbent Foreign Minister Ali Sabry’s recent visit to India, this pledge was again reiterated. He explicitly stated that Sri Lanka would go to the extent of disallowing any other from undermining under the guise of anything” India’s legitimate security or other interests. This brings forth the most pertinent question as to whether prioritizing India’s security would secure our security.
‘India’s Security First’ – A Corruption of former Prez GR’s Original Stance
It is noteworthy that both Admiral Colombage and Minister Sabry are offsprings of the Gotabaya Rajapaksa Administration. Yet, their take on Sri Lanka’s policy vis-a-vis India is a corruption of the stance former President Gotabaya clearly stated during his interview with the Hindustan Times in late November, 2019.
The interview was with senior and highly respected journalist Padma Rao Sundarji when the latter was in India – his first official State visit as the Executive President of Sri Lanka.
Journalist Sundarji’s first question was the former President’s objective of visiting India. It was obvious from the latter’s response that he was keen to avoid during his tenure the misunderstandings that spoilt bilateral relations during the Mahinda Rajapaksa administration.
In this regard, former President Gotabaya clearly stated, We will not do anything to jeopardise India’s interests or act against the concerns of India.”
Elaborating further, the former President emphasized Sri Lanka’s wish to remain neutral, avoiding any involvement with world power rivalries. Observing the importance the Indian Ocean has assumed, committed as a strategically located nation to do everything possible to keep the region as a zone of peace.
Hence, it is clear that former President Gotabaya did not enter Office with plans to make Sri Lanka a dominion of India. The plan was very much to be a strategic partner of the region and engage with all nations in the truest sense of neutrality. It is in that sense, President Gotabaya pledged to refrain from any act that will jeopardise India’s interests or concerns.
Assuring to refrain from causing India any concern (as specified by the former President ) and vowing to disallow any other from undermining India’s legitimate security and concerns by making India’s security Sri Lanka’s top priority are two very different agendas. How former President Gotabaya’s original stance came to be thus corrupted is an interesting question.
Hurting China to Heal India
The very next day following former President Gotabaya Rajapaksa assuming Office, India’s External Affairs Minister Dr. S. Jaishankar came in person to extend an invitation to a State visit in India. Whilst in India, the former President made two statements – one that was applauded and the other that caused some concern back in Sri Lanka.
The latter’s stance on the 13th Amendment to the Sri Lankan Constitution (13A) was applauded. His plans to release the Hambantota Port from the 99-year lease from China caused some concern.
There was high hope that the Gotabaya Administration would be able to regain full control of this strategic asset. Hence, it was not the plan to regain it that caused concern. The worry was with the blunt manner it was expressed.
China and India are rivals. Hence, Sri Lanka needs to be careful in the comments she makes of one rival with the other. The fact that the former President communicated his plans with India on a matter that concerns China, before even discussing it with China, in a manner that was rather dismissive of China, was bound to hurt China’s sensitivities. Thus, it was the lack of diplomacy and not the principle that caused concern.
These concerns, most unfortunately, were not without merit. China reminded the Gotabaya Government that the leasing of the Port was a commercial agreement. To challenge it would be bad business, noted China. This dashed Sri Lankans’ hopes of nullifying the lease agreement.
Unable to challenge this argument, the Gotabaya Administration concentrated on the security aspect. As such, all matters pertaining to the security of the Port was re-established with the Government of Sri Lanka. This was not contested by the Chinese Government.
However, the relationship with China did not improve there onwards. The two invitations from the Chinese Government were quietly shelved by the Gotabaya Government. Whether it was really due to the then ongoing pandemic is an open question for China increasingly experienced step-motherly treatment from the Gotabaya Government. This includes the cancellation of projects Chinese companies won through the tender process due to ‘third party’ concerns.
It was not only China, but even Sri Lanka’s other all-weather friends but bitter rivals of India like Pakistan felt sidelined. This was especially felt during the then Pakistan PM Imran Khan’s visit, when the State visit arrangements were made modest for no apparent reason.
It is in this context that the two opposing arguments from the former Central Bank Governor Ajith Cabraal and former President Gotabaya must be analysed. Cabraal vehemently disagrees with the debt ‘standstill’ unilaterally taken by Sri Lanka on 12.04.2022. He claims such a drastic step was unnecessary as there was over USD 10 billion credit in the pipeline. Out of this, USD 2.5 billion was expected from China.
According to the former President, Sri Lanka was waiting for these pledges to materialise for a year, but without result. The bottom line however, is that the mismanagement of our foreign policy is as much to blame for the forex crisis as our economic mismanagement.
India’s Reiteration for 13A
When former President Gotabaya visited India, he met Indian PM Narendra Modi for an hour-long discussion. Soon after, in a press release PM Modi stated, I am confident that the Government of Sri Lanka will carry forward the process of reconciliation, to fulfill the aspirations of the Tamils for equality, justice, peace and respect. It also includes the implementation of the 13th Amendment.”
For Sri Lankans, this was a surprise statement from India. The 13A came about in 1987 with the Indian intervention. Since then, it has remained a very controversial topic. Generally, it is seen as a white elephant, which caused an extra layer in the political administration. That layer has not delivered any tangible benefits, but is an enormous cost to the tax payer, say critics.
It is not only Sri Lanka that has suffered because of the 13A. It had been a costly affair also to India. Hence, the 13A is a reminder of India’s failed policy with regard to Sri Lanka. In that context, one would have thought India would have preferred to forget than resurface the 13A.
Sri Lanka was pressurized to accept the 13A on the pledge that India will end terrorism in Sri Lanka. India however, failed miserably in this endeavour. Not only India failed to usher peace in to the Island Nation by ending terrorism, but also became a victim of it. As disclosed by the then Indian Defence Minister George Fernandes in December 1999, the IPKF suffered 1,165 personnel killed in action and 3,009 others wounded.
When the Indian Government withdrew its military contingent in 1990, Sri Lanka’s security situation was in a far worse state than it was when the IPKF landed in 1987. The LTTE emerged with the exaggerated title, ‘militarily undefeatable’. Buoyed by this recognition, the LTTE dealt India with the worst blow by assassinating former Indian Premier Rajiv Gandhi in 1991 on Indian soil.
India promoted the 13A as a solution to terrorism. However, implementing the 13A did not resolve the issue. In fact, it exacerbated the problem. Therefore, it is a matter of great curiosity that the Modi Government began to call for the implementation of the 13A from the day the former President took Office.
This is made even more curious for India was not as interested in the Provincial Council system during the Yahapalana Government. During that Government, Provincial Councils fell defunct as elections were not held.
India’s Security First Amidst Demands to Implement 13A in Full
As noted by Sundarji, much water has flown since the 13A was introduced. Thus, some considerations to these changes might be needed before implementing it.
Responding to this observation, the former President explained that since Independence in 1948, certain Tamil politicians from the North and East have been focused on devolution and not development. However, the people in these areas are in need of development.
The 13A is already part of Sri Lankan law. The reason Sri Lankans are opposed to the implementation of powers as Police and land is because of its potential to heighten ethnic tension, which can lead to armed conflict. After suffering for over 30 years of terrorism, Sri Lankans’ legitimate fears cannot be overridden.
The justification for pushing the Sri Lankan Government to implement powers it has been reluctant to do so thus far is to fulfill the aspirations of the Tamil for equality, justice, peace and respect.” It is noteworthy that over 50 per cent of Tamils live outside the North and East Provinces. Furthermore, not a single entity had ventured forward to specify the exact points Tamils are denied equality, justice, peace or respect.
Hence, it is hard to dismiss nagging worries that India’s interest on a failed constitutional amendment might have a hidden agenda detrimental to Sri Lanka’s interests. Unless India clarifies these observations, we need to ask ourselves one simple question. We may make India’s security our topmost concern. In the process we may even destroy our other bilateral relationships. However, is India committed to our security?
Opposition MP Gevindu Cumaratunga yesterday (19) alleged that the Wickremesinghe-Rajapaksa government was going ahead with a project launched by former Justice Minister Ali Sabry with the backing of President Gotabaya Rajapaksa to conduct Law College examinations only in the English medium, much to the disadvantage of Sinhala and Tamil students.
Addressing the media at Sri Sambuddhathwa Jayanthi Mandiraya at Thunmulla, the leader of civil society group Yuthukama urged all political parties, regardless of whatever differences, to vote against extraordinary gazette notification of 2020 Dec 30 No 22018/13 to be submitted to Parliament by Sabry’s successor, Dr. Wijeyadasa Rajapakse, PC, tomorrow (21).
The SLPP National List MP said that those who represented the interests of the South, the North as well as the Upcountry could reach a consensus on the issue at hand quite easily.
Responding to The Island query, lawmaker Cumaratunga said that Uththara Lanka Sabhagaya, consisting of a section of rebel SLPP MPs, backed the campaign to protect the language rights of Sinhala and Tamil communities. The first-time entrant to Parliament said that MPs with a conscience couldn’t back this move, under any circumstances, whichever the party they represented.
At the onset of the media briefing, MP Cumaratunga said that the denial of language rights of current and future students was a grave violation of the Constitution-Article 12 and Article 18. In terms of Article 12, no one should be discriminated against on the basis of language whereas Article 18 recognized Sinhala and Tamil as National Languages with English being the linking language.
Alleging that the previous Gotabaya Rajapaksa goverenment planned to implement the controversial law even without securing parliamentary approval, lawmaker Cumaratunga appreciated Minister Wijeyadasa Rajapakse’s decision to place it before parliament.
The civil society activist said that this despicable move should be examined against the backdrop of growing external interventions as the country struggled to cope up with the developing political-economic-social crisis. The passage of the new law could cause further deterioration of parliament, MP Cumaratunga said, adding that the House faced a serious credibility issue.
How could elected MPs whichever party they represented back a move that directly affected the concerned communities,”? Lawmaker Cumaratunga asked.
Referring to a recent call by the Justice Minister to discuss the issue at hand, MP Cumaratunga said that among those present on the occasion were Attorney General Sanjay Rajaratnam, PC, and Dr. Athula Pathinayake, Principal of Law College. Those who opposed this move asked Dr. Athula Pathinayake what he really intended to achieve by conducting Law College examinations in English, only. However, the Law College Principal failed to provide a plausible response,” the MP said.
Responding to strong criticism of their stand, MP Cumaratunga stressed that the importance of English as a language couldn’t be underestimated. But, ongoing efforts to promote English shouldn’t be at the expense of Sinhala and Tamil, MP Cumaratunga said, questioning lawmakers’ right to deprive Sinhala and Tamil communities of basic rights.
Ratnapura District SLPP MP Gamini Waleboda said that an influential section of the Bar Association of Sri Lanka (BASL) was behind this move. In a note dated March 17, addressed to all members of parliament urged them to defeat the contemptible move.
Lawmaker Waleboda said that there was no prohibition for those who wanted to sit law examinations in English. There was absolutely no issue over that but the bid to deny the language rights of those who wanted to sit examinations in Sinhala and Tamil was not acceptable under any circumstances. According to him, the BASL hadn’t consulted its membership regarding this move.
MP Cumaratunga also questioned the failure on the part of the apex court to make available to Parliament its interpretations in Sinhala. The Supreme Court continues to provide such clarifications in English only.
Responding to MP Cumaratunga’s allegation that he with the backing of the then President Gotabaya Rajapaksa resorted to action to make English compulsory for those studying at the Law College, incumbent Foreign Minister Sabry said: That’s not correct. It is the council of legal education which formulates regulations. The council consists of CJ, two senior SC judges, AG, SG, Secretary Justice and six senior lawyers of vast knowledge and experience.
In terms of the constitution all higher education institutions can decide the language of studies and education. That’s how medical faculty, engineering faculty, IT faculty and management faculty conduct studies in English. Already Peradeniya and Jaffna universities do legal studies in English. It is good to do it, that’s how they become competitive. Even in India all legal faculties are in English.
The President’s Counsel alleged that the kith and kin of certain people articulating this position received their education in English. The minister questioned why politicians get involved in this issue if the council of legal education made the relevant suggestion.
Considering the specialty and importance of the English language, the Education Ministry has decided to teach ‘Spoken English’ in all national schools, starting from grade one from March 30.
Addressing an event at the Colombo University yesterday, Minister Susil Premajayantha said necessary updates will be made to bring all school syllabuses from Grades 6–9 and 10–13 to an international level. A pilot project in this regard will be started next month.
He also said that the ministry is planning to teach the subject of artificial intelligence along with information technology. The necessary course development and resource planning are currently being done, the minister said.
The minister further said that the ministry is working to overcome the challenge of meeting the global sustainable development goals related to the education sector by 2030. (Chaturanga Pradeep Samarawickrama)
Finland has been voted the happiest place in the world for the sixth consecutive year while Sri Lanka was ranked 112th, according to the World Happiness Report 2023 released on Monday.
Sri Lanka’s position has improved from the 2022 index where it was ranked 127th.
In order to uncover the happiest spots around the globe, researchers analysed six key factors: social support, income, health, freedom, generosity, and absence of corruption. Despite several overlapping crises, the study found that global life satisfaction is just as high as those in pre-pandemic years.
With thousands of lakes and near endless forests, the Nordic nation of Finland is known for its extensive welfare system, high trust in authorities and low levels of inequality among its 5.5 million inhabitants.
While Ukraine’s ranking improved from 98 to 92 this year, despite the Russian invasion, its overall score fell from 5.084 to 5.071, on a scale of zero to 10.
Professor Jan-Emmanuel De Neve, an editor of the report, said there had been an “extraordinary rise in fellow feeling across Ukraine” despite what the report called a “magnitude of suffering and damage in Ukraine” since the 2022 invasion.
Last year “benevolence grew sharply in Ukraine but fell in Russia,” the report found, referring to acts like helping strangers or making donations.
The report also cited a “much stronger sense of common purpose, benevolence and trust in Ukrainian leadership” than after Russia annexed Crimea in 2014.
Northern Europe once again dominated the top spots — with Denmark in second place followed by Iceland. Israel occupied fourth position, up five spots from last year.
War-scarred Afghanistan, which has occupied the bottom spot on the table since 2020, saw its humanitarian crisis deepen since the Taliban government took power in 2021 following the US-led military pullout.
The World Happiness Report, first published in 2012, is based on people’s own assessment of their happiness, as well as economic and social data.
In the index, neighbouring India ranked 126th and Pakistan ranked 108th. (Darshana Sanjeewa Balasuriya
Following the Executive Board discussion on Sri Lanka, IMF Managing Director Kristalina Georgieva said that Sri Lanka should stay committed to the multi-pronged disinflation strategy to safeguard the credibility of its inflation targeting regime.
Sri Lanka has been facing tremendous economic and social challenges with a severe recession amid high inflation, depleted reserves, an unsustainable public debt, and heightened financial sector vulnerabilities. Institutions and governance frameworks require deep reforms. For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical.”
Ambitious revenue-based fiscal consolidation is necessary for restoring fiscal and debt sustainability while protecting the poor and vulnerable. In this regard, the momentum of ongoing progressive tax reforms should be maintained, and social safety nets should be strengthened and better targeted to the poor. For the fiscal adjustments to be successful, sustained fiscal institutional reforms on tax administration, public financial and expenditure management, and energy pricing are critical.”
Having obtained specific and credible financing assurances from major official bilateral creditors, it is now important for the authorities and creditors make swift progress towards restoring debt sustainability consistent with the IMF-supported program. The authorities’ commitments to transparently achieve a debt resolution, consistent with the program parameters and equitable burden sharing among creditors in a timely fashion, are welcome.”
Sri Lanka should stay committed to the multi-pronged disinflation strategy to safeguard the credibility of its inflation targeting regime. As the market regains confidence, the authorities’ recent introduction of greater exchange rate flexibility will help to rebuild the reserve buffer.”
Maintaining a sound and adequately capitalized banking system is important. Implementing a bank recapitalization plan and strengthening financial supervision and crisis management framework are crucial to ensure financial sector stability.”
The ongoing efforts to tackle corruption should continue, including revamping anti-corruption legislation. A more comprehensive anti-corruption reform agenda should be guided by the ongoing IMF governance diagnostic mission that conducts an assessment of Sri Lanka’s anti-corruption and governance framework. The authorities should step up growth-enhancing structural reforms with technical assistance support from development partners,” she said in a statement.
The Executive Board of the International Monetary Fund (IMF) has approved the Extended Fund Facility to Sri Lanka at its board meeting held today, according to State Minister of Finance Shehan Semasinghe.
He further said that President Ranil Wickremesinghe will make a special statement on this tomorrow (21).
The International Monetary Fund (IMF) has announced that the IMF Executive Board approved Sri Lanka’s program under the Extended Fund Facility (EFF), the President’s Media Division also confirmed.
The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.
This is a historic milestone for the country as the Government seeks to restore macroeconomic stability and achieve debt sustainability, the PMD reported.
Earlier this month, Sri Lanka received IMF-compatible financing assurances from its official creditors, including Paris Club members, India and China, allowing the IMF to convene an Executive Board and consider Sri Lanka’s request for a loan.
The program is expected to provide much-needed policy space to drive the economy out of the unprecedented challenges and instill confidence amongst all the stakeholders.
Sri Lanka reached a Staff-Level Agreement with the IMF on a four-year program supported by the Extended Fund Facility on 1st September 2022. The program, amounting to US$ 3bn, is expected to restore macroeconomic stability and debt sustainability while protecting vulnerable groups and safeguarding Sri Lanka’s financial system.
Since September, the Government of Sri Lanka has held official creditor meetings to update stakeholders on the country’s reform agenda and share information transparently as well as engaging with commercial creditors.
Following the IMF Executive Board approval, the disbursement of the first tranche under this program is expected to take place in the coming days.
President Ranil Wickremesinghe has welcomed the announcement:
In the 75 years of Sri Lanka’s independence, there has never been a more critical period for our economic future. Our official creditors have declared their support following continuous and positive engagements over the last few months, and we are pleased that the IMF Executive Board approved our program, enabling Sri Lanka to access up to US$ 7 billion in funding from the IMF and IFIs. From the very start, we committed to full transparency in all our discussions with financial institutions and with our creditors. I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda.
Since taking office last July, it has been my priority to stabilize Sri Lanka’s economy and achieve sustainable levels of debt. To do so, we have taken some tough decisions, but we did so with a commitment to widening our social safety nets, protecting the vulnerable, rooting out corruption and ensuring we can grow an inclusive and internationally attractive economy. The IMF program is critical to achieving this vision for our country, and we are committed to successfully completing the IMF program and achieving debt sustainability. We will continue to engage with all our creditors, and I encourage both our bilateral and commercial creditors to strengthen and foster coordination in the context of our forthcoming engagement. The IMF program will also be imperative to improving Sri Lanka’s standing in and access to international capital markets, and it will demonstrate that Sri Lanka is once again a country attractive to talent, investors and tourists.”
The Cabinet of Ministers has authorized the Finance Ministry Secretary or the Treasury’s Deputy Secretary to sign the Promissory Notes and other required documents as soon as Sri Lanka receives the IMF-supported Extended Fund Facility (EFF) approval from the IMF Executive Board.
The decision was taken during the Cabinet meeting held this evening (20), according to Cabinet Spokesman and Minister Bandula Gunawardene.
Sri Lanka is expected to receive final approval for about $2.9 billion bailout from the International Monetary Fund (IMF) on Monday, a key step for the bankrupt nation to revive its economy from the worst crisis in decades.
The funds are crucial to restore stability and debt sustainability for an economy mired in a recession. Through 2022, shortages of essential goods from fuel to medicines loomed large, stoking Asia’s fastest inflation and depleting funds.
Since defaulting on its dollar debt in May, Sri Lanka has taken tough measures to put its economy back on a steadier path, including cutting subsidies, raising taxes and loosening its control on the currency. It also increased borrowing cost to the most since 2001.
Sri Lanka also secured debt assurances from bilateral creditors including India, China and Paris Club nations and initiated good-faith negotiations with private bondholders as pre-requisites to getting the bailout.
Sri Lanka defaulted on its foreign debt in April 2022 as the country plunged into its worst economic crisis, running out of cash to finance even the most essential imports and causing massive social unrest.
Widespread protests over economic mismanagement, acute shortages of food, fuel and medicines, and runaway inflation forced President Ranil Wickremesinghe’s predecessor Gotabaya Rajapaksa to flee the country and resign in July.
The IMF’s executive board was expected to sign off on Colombo’s bailout application later on Monday after a long delay in securing financial assurances from China, Sri Lanka’s largest bilateral lender.
Beijing had said this year it was offering a two-year moratorium on its loans to Sri Lanka, but the concession fell short of IMF expectations for the sustainability of the island’s debt.
President Wickremesinghe had said after China agreed to restructure its loans that he expected the first tranche of the $2.9 billion IMF package would be made available within the month.
Sri Lanka is seeking a 10-year moratorium on its foreign debt, President Ranil Wickremesinghe’s office said on March 20, 2023 on the eve of a desperately needed $2.9 billion IMF bailout.
Mr. Wickremesinghe’s office quoted him as saying the widely expected International Monetary Fund (IMF) rescue will only give us a breathing space where they will say we are no longer bankrupt”.
All the money we have to repay this year, I hope we will be given at least 10 more years to repay it,” Mr. Wickremesinghe told a meeting of students in Colombo on Sunday.
He did not give details of his plans to restructure Sri Lanka’s $46 billion external debt.
Sri Lanka defaulted on its foreign debt in April 2022 as the country plunged into its worst economic crisis, running out of cash to finance even the most essential imports and causing massive social unrest.
Widespread protests over economic mismanagement, acute shortages of food, fuel and medicines, and runaway inflation forced Wickremesinghe’s predecessor Gotabaya Rajapaksa to flee the country and resign in July.
The IMF’s executive board was expected to sign off on Colombo’s bailout application later on Monday after a long delay in securing financial assurances from China, Sri Lanka’s largest bilateral lender.
Beijing had said this year it was offering a two-year moratorium on its loans to Sri Lanka, but the concession fell short of IMF expectations for the sustainability of the island’s debt.
Mr. Wickremesinghe had said after China agreed to restructure its loans that he expected the first tranche of the $2.9 billion IMF package would be made available within the month.
Officials involved in the negotiations said the terms of debt restructuring must be finalised and agreed by all parties before June, when the IMF was expected to review the bailout programme.
Sri Lanka will not be able to draw down the second tranche unless a debt restructuring plan is agreed with all creditors,” said one of the officials, who asked not to be identified.
Colombo is also banking on the IMF deal to unfreeze billions of dollars in foreign aid for projects suspended since Sri Lanka defaulted on its loans last year.
The government has already doubled taxes, increased energy tariffs threefold and slashed subsidies in an effort to meet the preconditions of the IMF bailout.
The austerity measures have sparked widespread protests and led to strikes that crippled the health and logistics sectors last week. Wickremesinghe has said he had no alternative but to go with an IMF programme.
Sri Lanka’s economy shrank by a record 7.8% last year as it grappled with its worst foreign exchange crisis since independence from Britain in 1948.
The Secretary to the Treasury has informed the Board of Directors of Sri Lanka Telecom PLC (SLT) and Lanka Hospitals PLC that the Cabinet of Ministers has granted approval in principle for the divestment of the stakes held by the Treasury Secretary in the two companies.
Accordingly, the Secretary to the Treasury has informed the Board of Directors of SLT and Lanka Hospitals that the Cabinet of Ministers has granted its approval in principle for the divestment of the stake held by the Treasury Secretary in the respective companies.
The companies have announced that they have received the approval of the Cabinet of Ministers to sell the shares owned by the government in Sri Lanka Telecom PLC and Lanka Hospital PLC, which are two companies listed in the Colombo Stock Exchange (CSE), as per the policy decision of the government.
Notifying the Colombo Stock Exchange of this decision, Sri Lanka Telecom says that the divestiture will be implemented in the near future by the State-Owned Enterprise Restructuring Unit of established under the Ministry of Finance, Economic Stabilization and National Policy, subject to following the due process. Meanwhile, Ceylon Hospital PLC has also issued an announcement stating the same.
The Treasury holds a 49.50% stake of the issued share capital of Sri Lanka Telecom PLC.
Meanwhile, a 51.34% stake of the share capital of Lanka Hospital PLC is held by the Sri Lanka Insurance Corporation, representing the Government of Sri Lanka.
The Central Bank of Sri Lanka (CBSL) has requested the Attorney General to consider instituting criminal proceedings against three pyramid-type prohibited schemes operating in the country.
Accordingly, the CBSL has carried out investigations to ascertain whether the entities Fast 3Cycle International (Pvt) Ltd (F3C), Sport Chain App, Sports Chain ZS Society Sri Lanka and the OnmaxDT have violated the provisions of 83C of the Banking Act.
In relation to the examination conducted, the CBSL has determined that the three relevant entities and Directors, Founders and Promoters of those entities have conducted prohibited schemes in contravention of the provisions of the said act.
The CBSL had further notified the general public regarding the matter, in a special notice published in local newspapers.
Sarath Wijesinghe (President’s Counsel, LLM International Law London UCL, Solicitor in England and Wales former Ambassador to UAE and Israel and former Secretary Bar Association of Sri Lanka, President Ambassador’s Forum)
Justice Delayed is Justice denied
Justice delays is justice denied is the famous quotation by ‘’Lord William Gladstone’’ said on legal system – indicating that this old and worldwide issue that needs attention still in the main agenda in the modern society still prevails, timely and current. Laws delays retards development, affects law and order, encourages crime while discouraging foreign investments and good will that needs for a country, Image of the nation is shattered, brings down doing well index, productivity is fallen with the loss of confidence of the citizen and the foreigners planning to invest, and generally affects foreign policy and the image of the country that needs in all respects in devilments and conduct in the family of nations on the globe. Laws, delays blocks all other cogs of the governance system in the hub of activity and productivity. Laws delays measure indicates the image and the standard of a country in the community of nations. Some countries have minimized the laws delays but many have not. Sri Lanka is not the only country that suffers from laws delays due to various reasons and interpretations given when other countries are aware of the issue and finding solutions, taking corrective measures. When legal system paralyzes the other parts of the system follow suit leading to a slow decay and a grinding halt of the system partially or completely in the end. Laws delays are rampant in Sri Lanka. It takes decades (15 to 25 years and sometimes more) to reach the rape murder and major crimes to the trial stage with the witness are dead or cannot be traced that are reported so often on the media. Civil cases are the same especially partition and many civil suits stagnate in Court of Appeal and Supreme Courts moving up and downward on appeals refusals ect with technicalities and complicated appeals procedure. By the time the trials on rape cases are taken up for trial the victims are matured married and the evidence is shattered with the conducting police officers and government servants dead or cannot be traced on transfer and cannot be found and the victims may lose interest due to social impediments. Some civil cases delay for generations.
Take Law to your own hands
It may come to a stage when litigants prefer to resort to other means to resolve their disputes by themselves may be with the underworld , because litigation is so expensive, delayed ,unfair, complicated and time-consuming (mostly) proving the famous village adage that ‘’those who resort to litigation destroys themselves.’’ ‘’Nadu Yanno Wanasanno ‘’Civil and partition cases are the most time consuming that some partition cases are delayed up to 30 years or more with litigants part with the rest of the property for legal expenditure which are true incidents. ‘’Vinodes’’ case in India of the murder of 5 year child took 22 years with 36 witnesses to testify. It is almost same in Sri Lanka. In UK the backlog of 63000 cases is still not resolved according to Law Society Gazette but they are improving fast using modern technology and methods. In Sri Lanka five family members were convicted of murder recently for the offence committed in 2009. Examples in Sri Lanka are numerous. When the cases of rape, juvenile, offence are taken up for trial, on children, girls are they may be married, abroad or the witnesses may be missing. 10 year child was molested and it took 11 years to reach the trial stage when the child is a matured person and the accused was missing. At times land civil cases take two to three decades to reach the trial stage thereby the citizen loose the trust on the court system and resort to take laws into their hands while loose trust on the legal system at all, increasing the crime rate as a result. Litigation in Sri Lanka is expensive and complicated in view of the complexity of the legal system which is a mixture of Roman Dutch, English, and personal laws in the complicated legal process expensive to handle. In UK there is one system of law to all including immigrants vociferous and in large numbers. This issue is discussed spoken with no permanent or proper solutions found yet. We must have a simple law for all understood by all, instead of depending on legal systems such as Penal Code introduced in 1800’s. Personnel laws to be streamlined including ‘’Thesawalami’’powerful and traditional personal law confined to Jafna.UK is keeping pace with the new trends when we still cling into the systems inherited by colonel masters. There is a functioning law committee of BASL and Law Reforms Committee supposed to be active but inert and inactive. Yet laws delays is rampant. These are not exaggerations which is experienced by 10% populating engaged in litigation today still increasing.
Alternate ways of resolution of cases
This is happening worldwide especially in financial hubs that needs speedy justice such as Arbitration, Conciliation, and other ways of speedy resolutions of disputes, which are fast and less time-consuming tough and expensive. Singapore, Japan, UK, EU have centres for alternate dispute resolutions. In UK, Europe and even in India small claims courts are available with less complicated procedure without lawyers for the litigants to handle own litigation is a different friendly atmosphere, which is a successful process ideal to be followed in Sri Lanka too, with a proposition to upgrade mediation centres to small claim courts.
Pending with backlog of cases
There are around 750,000 unresolved cases in the Magistrate courts. With 3486 cases pending in the Supreme Courts,4817 cases pending in the Court of Appeal, 5870 in the civil appellate court, 16811 in High Courts, 167945 in District Courts, 200000 on pending mediation and in labour tribunals and arbitration trials, with 11 judges per one million. (Statistics are changing based on different research groups led by Ministry of Justice) Laws delays has an impact on the crime and disturbances in the society in losing the trust on the system which has an impact on the economy and the trade when traders are disturbed with no quick solution on the resolution of their disputes with the most expensive and complicated commercial High Court not accessible to the ordinary trader. It has a direct relevance and impact on increase of crime and prison congestion and unrest. Speedy resolution in litigation is a pre-condition and a pre requisite on foreign investments and investors who are disappointed with the system in Sri Lanka and the quality of the legal profession which includes judiciary on knowledge, competency and conduct which is a serious drawback on development and investment. Lawyers and legal system plays a pivotal role in development and business in other parts of the world expecting us to maintain high standards.
Competency and Honour of the Legal Professionals and Judges
Are our lawyers, Judges and legal system living up to expectations and on international standards is a moot issue compared to standards maintained by small but developed countries such as Singapore, Hong Kong and some Caribbean counties engaged in international law and business with the world. These are experienced by average citizen who will have no good word on the legal system, the general conduct and it is the duty of the profession and professionals to work on a programme to save the nation and the profession on adverse inferences which affect all. It is a pity that foreign legal firms engage in practice in Sri Lanka with the cover of juniors Sri Lankan lawyers in multibillion transactions involving billions and/or they carry on legal work online which Sri Lankan Lawyers must take serious notice of. It is to be noted that the competence dedication and knowledge is to be improved to the expected levels if not on international standards. Bar council in India has allowed entry of foreign lawyers which is a significant development to keep pace with the world trends with transparency and challenging which is a matter that Sri Lank should follow. UK and Sri Lanka had reciprocity on the court audience for the lawyers in both jurisdiction could practice with professional arrangements made. Sri Lankan Attorneys-at law could engage in legal practice in UK having obtained qualifications form the Law Society and permission from the Bar Council permission engage in legal practice as Barrister at law until Sri Lankan side unilaterally declined to proceed, which is a pity in deed and it is time to restore in the interest of the younger generation awaiting to see the world with new visions and education from international universities a matter that has to be looked into by the Minister of Justice.
Lawyers Law College Bar Association and the Ministry of Justice
These are main groups in dealing with laws delays and implications, and main institutions of justice to the benefit of the sociality for their grievances in resolution of dispute3s, for justice and fair play, in protecting the life and property of the citizen. Lawyers are a product of Law College- the only professional training institution in Sri Lanka managed by the Council of Legal education to produce lawyers in Sri Lanka and to train them for the professional training CLE headed by the Chief Justice and majority of Supreme Court Judges. Currently there are over 18000 lawyers in Sri Lanka The Law College is managed in which they obtain mandatory membership of the Bar Association which is the only main recognized association for lawyers, The Law College is administrated by the Council of Legal Education also headed by the Chief Justice, who are extremely busy and requiring academic excellence and international exposure.
Minister Ministry of Justice Attorney General and Legal Draftsman
Ministry of Justice is headed generally by a lawyer who will mastermind the conduct of the judicial system and administration who also plan and involve in appointments and strategies with the AGs Department, Judiciary, Legal Draftsman, Court and Office (court offices only and not ‘courts’ or judges ) administration countrywide with the general impression of one of the most corrupt among Motor Traffic, Customs, Passport/ID and similar institutions with a reputation of institution of questionable nature which is only applicable to the corrupt lot leaving aside the honest officers. Reputation power and conduct of Minister of Justice depends on his personality and management skills of the process in delivery of justice to the citizen by the concerned parties in the process the Minister is playing a key role, in delivery of justice to the citizen offering a fair independent and effective system of justice. Generally the minister of justice has traditionally been an inactive and inert institution in the past until Hon;felix Dias Bandaraneika’s introduction of the Administration of Justice Law act 44 of 1974 was enacted to help the poor and needy litigants with drastic reforms on a mixture USA and many models including serving summons using modern technology, and many other steps to make the system simple, affordable and safe and to encourage personal representation in litigation, encouraging mediation, and reconciliation, A powerful group of lawyers led by Mr H W Jayawrdena QC, protested against the law reforms and the act was scrapped from the change of government then. People did not understand the admirable attempts made on legal reforms, by increasing the number of judges, introducing drastic changes in modernizing and innovative changes proposed by him (Felix) who became immensely unpopular among the legal fraternity died an unhappy person after a brief illness as a cancer patient- a great man with a vision and intellect indeed- Attorney-General who is an institution as the advisor to the state plays a pivotal role in representing and advising the state in all matters, whilst expected to be fair and impartial. Legal draftsman holds an important position in drafting and mauling legislation to be submitted to the lawmakers.
Trends of modernization of the legal system
Trends and conduct of young lawyers have been encouraging with the modern BASL trends. Rajive Amarasuriys the past Secretary has conducted a record number of webinars on varied subjects which is credible. Past President and an able law teacher controversial Saliya Peris PC – yet concentrated more towards social reforms than legal reforms, has been for moderation trends, and the legal profession expects lot more from the current pair Isuru Balapathab and (Secretary) and Kaushliya Nawaratna President elect) to be more proactive and modern who appears to be more balanced and professional to lead the professional during the new era. The writer has been once the General Secretary of BASL and Administer Legal Aid Commission acknowledges the assistance given to him during his tenure of office on the initiation and expanding the fundamental rights Jurisdiction to what it is today, with many steps such as life membership, diary which is a pocket book for all professionals, initiation of law reports are pleasant memories. There are good trends on digitalization, yet introduction of transferring files via email, what Sapp, hearing cases zoom, are to be encouraged and introduced with the world trends to attract international players.
Judiciary and Legal Aid on administration of justice aiming at prevention of laws delays
By passing arbitrary judgements does a man become wise? A wise man is one who investigate both right and wrong ‘’Dhammapada ‘’
Judges are a main component of the system of administration of justice acting as umpires in the adversarial system we follow in Sri Lana as any other commonwealth nation. Today judges are well-paid remunerated and protected and they are protected unlike few years ago when they were not looked after so well. They are politically insulated who are responsible for ultimate decisions on life and property and protection of personal and property rights and rights of the citizen with highest expectations of justice and fair play. They must be temperamentally suited with judicial temperament for the responsibility thrust on them living glass boxes scrutinized by the public for independence. Some judicial officials especially in the minor judiciary are unsuited to be a judge in when they are mentally and temporarily does not deliver justice fairly and carefully. Sadly we receive bad news on judiciary and lawyer on their conduct which is worrying in deed. It is necessary for judges to go through a rigorous training period as in other countries. Whether it is happening is a moot issue. Knowledge and competency of the higher judiciary should be revived considering the judgments they deliver and reluctance on promptly effectively and properly. Legal aid is not a favour but a human right as in UK , where the citizen is entitled to a fair hearing for a reasonable/affordable fee and expenditure for which legal aid is given in the advanced society with an advance system of legal aid available in the UK and commonwealth jurisdictions where a similar system is inherited to Sri Lanka modified to function as the legal aid commission jointly managed by the Judiciary, Bar Association and the Ministry of Justice for the delivery of justice at an affordable price. One of the main reasons of laws delays is the cost and complexity of litigation and combination of legal systems such as Roman Dutch Law, traditions personal laws, English law and international/traditional law and conventions and it is the duty of the BASL and the profession to find ways to make law simple for the common man and assist the legal aid system scheme as in UK where eligible litigant is entitled to legally up to the services of the QC. In the adversely system the judge acts as an umpire when the parties to litigation make representation on behalf of clients which is expensive when the litigant is expected not to have a sound knowledge of law. Therefore our system there should be changes for the judge to intervene as in a civil system where Judge takes a main role also encouraging mediation and settlements with system of prehearing where the cases in UK are settle date at the door step (idiomatic meaning) by lawyers who act strictly professionally to assist expedition disposition which helps them and the reputation of the profession. In Sri Lanka sometimes Judges are mere umpires when at times we are blessed with top judges. In expeditious disposition of cases the judge’s involvement/leadership is paramount so that some judges resolve cases with ease reasonably and family. Judge play a main role in delivery of justice and prevent laws delays. Some judges are smart and fast but if they have a common approach with targets by the Judicial Service Commission to supervise judges with guidelines the results will be overwhelming.
Way forward in providing delivery of speedy justice to the citizen – the need of the hour
Laws delays is a pain on the citizen awaiting a peaceful and conformable life due to no fault of himself, where many external factors are responsible for the agony. Lawyers should be educated, committed , concerned on the community and abide by the rules and customs on practice and procedure, Judges should be fair educated human beings act professionally with judicial temperament, Legal system should be clear and understood to all equally as the citizen is presumed to possess knowledge of law and procedure, The court system and the staff is to be efficient and free from bribery and corruption, there should be speedy disposition of cases provided at an affordable expenses and free legal aid for these cannot afford to. Confidence and trust on the Judiciary legal profession and the court structure is paramount and the system including supporting institutions on reports, information, need to be provided at the time for the inquiring process. Are lawyers and their conduct a part of the problem? Partially yes! It is time for them to realise the expeditious disposition will help them the profession and the nation in the long run! In order to gain the trust and confidence of investors expecting and efficient legal system in the host country. Improving language and IT skills of the professionals is also of great importance in the process. The system should run smoothly with the documents, reports and the support and cooperation of the staff and statutory bodies. The Ministry of Justice is acting a pivotal role as the provider of services and decision maker in appointments policy making decisions and the success depends on the understanding and commitment of all parties who should act together for the betterment of the society they are blessed with. Legal profession has the main responsibility, being the profession providing the judiciary, and Attorney General primarily lawyers pledge to serve the society in safe guarding human rights, properly delivery of legal service and acting as officer of courts assisting the judiciary. Laws delays affects every citizen and it must be checked and curtailed in the interest of the nation at large, a joint exercise by the legal profession, Judiciary, Ministry and the community civil society and greater community.
Historians will not consider Kurunegala as a particular era during the Sinhala Kingdoms because four to five kings reigned during this era. It is not recognisable to identify as a historical period.
According to ‘Dalada Pujawaliya’ during the Kurunegala era, approximately one hundred per cent of the government’s income from ships was directed to the sacred temple where Buddha’s tooth relic is housed. The income from the ships aided Sinhala kings in maintaining the country as a leading source of income along with trade.
The Aryans who came to Sri Lanka dealt with agriculture and raised paddy farming to an excellent level up to the twelfth century. Whilst the water was obtained through irrigation systems during that epoch, through lakes and ponds, the people managed to do paddy farming in the North and Southeast. A decline in crops caused a colossal drop in production ultimately.
There was no reason for kings to abandon fertile places and come to places like the Dhambadenya and Kurunegla area, which is highly populated. Historians believe it was because of the geographical set-up, climatic changes, foreign invasions and nature. Mahavamsa does not show any annexation of Dambadeniya with Kurunegala, but it mentions that after the demise of Parakramabahu III, Buwanekabahu’s son held the throne.
During the Kurunegala epoch, the King’s primary income consisted of the agricultural produce that farmers contributed to the King. King’s second income was from precious stones such as pearls and various types of precious gems ranging from blue diamonds, moonstones and Pishparaga”. The King’s second income came from the penalty courts served on King’s subjects known as the Marala Badda”.
Those who did the King favours were given several plots of land by the King, known as Prvaniya or Dival. Also, Royal servants who conformed to the king’s problems and went to distant places received several properties distributed by kings known as Prvaveniya” or Divel”. Historical records also mentioned that government servants who travelled up to faraway places did not incur any expenses to the royalty, who went on official duties and were allowed to reside in such schemes, thereby incurring no extra costs because they were permitted to live in such properties.
Parakramabahu IV donated an ashram to Buddhist priests. He planted Paranagama king coconut, breadfruit, and fruit trees, such as morawaka, to assist the ashram. The King commanded that folks trained for military purposes should work free of charge for the nation’s sake on behalf King’s behalf, but payment had to be made only for regular soldiers. During this period and a substantial amount of wealth King Parakramabahu II spent on religious activities. Parakramabahu II had given alms to one to one thousand Buddhist priests, whilst Pandit Parakramabahu IV built a three-level building and performed every aspect of religious observations.
During Parakramabahu IV’s reign, past battles with ‘Soli’s reign in India were exposed. Still, the King brought several languages professors, translated them into Sinhala from the Pali language, and distributed them throughout Ceylon.
During Dambadeniya’s reign, it is recorded in the folk tales that many people visited on pilgrimage to see the scared Dalada by using elephants, horses, cattle etc. And many rich people thinking was that it would give rise to many accidents. These people would have been the officials or officers who were the favourites of the kingdom.
The country’s economy was greatly influenced by internal trade and exports. During this aeon, undoubtedly, Muslims were prominent tradesmen. It also proves that Roman coins were found in four dams made of Alexdarian metal by kings Niro and Westphalian, with evidence of trade agreements with Rome. It differs from the country’s economy during the Anuradhapura and Polonnaruwa era. However, there was evidence to prove how kings and the people were very pious. There was no foreign invasion during the Kurunegala epoch, as per Mahavamsa.
Sufian Siddique Independent researcher and freelance columnist, Dhaka
Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina inaugurated a 131.5-kilometre-long India-Bangladesh Friendship Pipeline (IBFPL) from Siliguri in North Bengal to Parbatipur in Banglaesh’s Dinajpur province Saturday (18 March).
The pipeline, built with Rs 377 crore drawn from a line of credit offered by India to Bangladesh, will carry one million tonnes of high-speed diesel from Numaligarh refinery in Assam to Bangladesh Petroleum Corporation’s Parbatipur depot.
The ground-breaking ceremony for the pipeline, which starts from Numaligarh refinery’s marketing terminal in Siliguri and enters Bangladesh through the Banglabandha border post, was held in September 2018.
The pipeline will go a long way in meeting Bangladesh’s burgeoning energy needs. Apart from meeting Bangladesh’s acute energy needs, India’s help to its eastern neighbour is also aimed at strengthening ties with all neighbors furthermore. it will usher a new era of bilateral energy cooperation. Not only that, through Bangladesh, it can achieve its untapped opportunities from the northeastern region. So, both Bangladesh and India came forward to enhance their energy security based on reciprocity and enhance South Asian regional cooperation.
The pipeline will go a long way in meeting Bangladesh’s burgeoning energy needs. The new pipeline is another milestone in Indo-Bangla ties. Bangladesh’s rapid development is fuelling its hunger for more power. We are very happy that India is meeting this demand not only through this pipeline, but also other projects like the Maitree Super Thermal Power Plant and supply of power from the Godda thermal power plant in Jharkhand.
Bangladesh faces a major energy crisis that threatens to hobble its growth. Long power cuts are common even in capital Dhaka, and this has stunted production in key export industries, especially the ready-made garments sector that accounts for nearly 85 per cent of the country’s exports.
In early October last year, Bangladesh suffered a grid failure that left nearly 80 per cent of the country without power. Due to daily power outages, many industrial units in Bangladesh reported a fall in production by up to 50 per cent last year, thus affecting the country’s export earnings.
The energy crisis in Bangladesh, which is an energy-deficit country, was intensified by the conflict between Russia and Ukraine, and the consequent exponential increase in oil and gas prices. This compelled Bangladesh to stop purchase of gas and shut down several diesel-run power plants.
In the near future, Bangladesh needs to transition from conventional energy sources to ensure its energy security and long-term sustainability. Following the Ukraine crisis, energy security has become a major concern for developing and least-developed countries. In this context, cross-border energy cooperation could perhaps help Bangladesh to mitigate its energy crisis.
During Prime Minister Sheikh Hasina’s visit to India in September 2022, Bangladesh requested that it be allowed to import power from Nepal and Bhutan via India. The Nepal Electricity Authority (NEA) sought approval from the Indian authorities to export 40-50 MW of electricity to Bangladesh through India’s existing transmission infrastructure. In August 2022, Bangladesh and Nepal decided to request India to allow the export of 40-50 MW of electricity from Nepal to Bangladesh in the initial phase by utilising the high-voltage Baharampur-Bheramara cross-border power transmission link. As per the understanding reached during the secretary-level Joint Steering Committee (JSC) formed for Nepal-Bangladesh energy cooperation, the NEA and the Bangladesh Power Development Board requested India for a trilateral energy sales and purchase agreement utilising the power line.
Given this scenario, the India-Bangladesh Friendship Pipeline (IBFP) will mark an important milestone in Bangladesh’s quest to fully meet its energy needs, the country’s energy minister Nasrul Hamid told recently.
Hamid said that the IBFP would have been commissioned earlier had it not been for the pandemic that disrupted construction.
This pipeline will result in quick transport of diesel into Bangladesh and will do away with our reliance on importing the petroleum product in oil tankers by road and rail from India that take a long time and are subject to procedural delays at times,” said Hamid.
Apart from this project that will go some way in meeting Bangladesh’s energy demand, the first unit of the US $2 billion Maitree Super Thermal Power Production at Rampal in Bangladesh’s Khulna province is already supplying 660 MW to the country’s national grid.
The 1320 MW Maitree project is being built under a concessional financing scheme offered by India to Bangladesh. The two countries set up the Bangladesh India Friendship Power Company Limited (BIFPCL), a 50:50 joint venture between India’s National Thermal Power Corporation and Bangladesh Power Development Board.
Once completed, this will be Bangladesh’s largest power plant. Prime Ministers Modi and Sheikh Hasina jointly unveiled the first unit of the plant during the latter’s visit to New Delhi in September last year.
Bangladesh is also awaiting power from the Adani group’s 1600-Megawatt thermal power station at Godda in Jharkhand. Tawfiq-e-Elahi Chowhury, the Energy Advisor to Prime Minister Sheikh Hasina, had said last month that Bangladesh is looking forward to importing at least 600 MW of power from this plant to meet its peak summer demand.
The first unit of this plant has already been synchronised with Bangladesh’s power grid and after completion of some formalities and last-minute negotiations between the two sides, export of power to Bangladesh from the plant is expected to commence within the next few weeks.
Bangladesh power minister Nasrul Hamid said that his country wants to import more energy from India. We are holding talks with India on this. We’re exploring all possibilities. The Maitree power plant is just the beginning, and we can have more such projects. India is already playing a large role in helping us meet our growing energy needs and we expect this role to grow exponentially in the coming months and years,” he said.
India’s help to Bangladesh in meeting its energy needs is also aimed at offsetting that country’s dependence on China, whose investments in Bangladesh’s energy sector stand at US $ 8.31 billion.
Beijing has offered to help Bangladesh’s transition to renewable sources of energy. This time, New Delhi has also nudged the United States to step up its energy cooperation with Bangladesh, especially in the field of renewables. US Presidential envoy on climate, John Kerry, offered to help Bangladesh in strengthening its power grid and transition to clean energy.
India is also playing a key role in helping Bangladesh access clean and cheap energy from Bhutan and Nepal. New Delhi has proposed expansion of power trade within the BBIN (Bangladesh, Bhutan, India, Nepal) framework and multilateral talks facilitated by New Delhi are currently on in this regard.
India has also promised to export power generated from its upcoming hydro-power projects in Sikkim and Arunachal Pradesh once these are commissioned. We are keen on importing power generated from hydel plants in India as well as Nepal and Bhutan in order to transition to clean energy. India’s help in this transition is critical,” said the Bangladesh power minister. The India-Bangladesh Friendship Pipeline is, thus, a major milestone in India’s efforts to help Bangladesh tide over its energy crisis. It is also part of New Delhi’s efforts to strengthen ties in the neighbourhood.
Prime Minister Sheikh Hasina on Saturday said the inauguration of “India-Bangladesh Friendship Pipeline” is a milestone achievement in mutual cooperation for the development of the two friendly neighbours. Sheikh Hasina hoped that Bangladesh and India would jointly celebrate many such successes in the days to come.
The pipeline will play a significant role in protecting the energy security of both country. Indian Prime Minister Narendra Modi said India-Bangladesh Friendship Pipeline will enhance cooperation in energy security between the two countries. This pipeline would further speed up the development of Bangladesh and be an excellent example of the increasing connectivity between the both the countries. Narendra Modi said Bangabandhu Sheikh Mujibur Rahman’s ‘Sonar Bangla’ vision included the harmonious development and prosperity of the entire region. This joint project is a perfect example of their vision. The two south Asian nations–Bangladesh and India have also expressed fresh vow to work together as partners in order to achieve the desired benefit for them and bring peace and prosperity in the region as a whole. The 130-kilometre pipeline between the two countries was built at an estimated cost of INR 377 crore.
The supply of diesel through this pipeline will reduce the cost and will also reduce the carbon footprint of the supply. The pipeline has a capacity to transport 1(one) million metric ton per annum (MMTPA) of High-Speed Diesel (HSD).
We hope our neighbour state would
continue to walk step by step with our
country to help it achieve the desired progress,
stability and prosperity
The pipeline will carry diesel from Assam-based Numaligarh Refinery Ltd’s (NRL) marketing terminal at Siliguri in West Bengal to the Parbatipur depot of Bangladesh Petroleum Corporation (BPC). It will supply High Speed Diesel initially to seven districts in northern Bangladesh.
The operation of ‘India- Bangladesh Friendship Pipeline’ will put in place a sustainable, reliable, cost-effective and environment friendly mode of transporting HSD from India to Bangladesh. Bilateral relations between two countries is a role model for neighbourhood diplomacy.
President Ranil Wickremesinghe emphasized that the Royal College cricket team’s effective captaincy ultimately led to the team’s victory at a time when all of the matches were being lost and that his effort to lift the defeated country to the path of victory is similar to that of the captain of Royal College cricket team.
The President recalled that when he assumed office last July, the country was experiencing a multitude of crises such as shortage of fuel, food, and fertilizer. He compared this to the Royal College team, which had suffered a string of defeats, and claimed that many people believed the country would not be able to recover.
However, President Ranil Wickremesinghe stressed that his team was able to change this situation and create economic stability in the country during the last seven months and emphasized that Sri Lanka is no longer a bankrupt state.
President Ranil Wickremesinghe made this statement while addressing the 32nd Interact District Conference held at Temple Trees this morning (March 19), according to the President’s Media Division (PMD).
He said that everyone would be able to witness a developing country in the next two years, and to make Sri Lanka the most prosperous country in the region, it is necessary to build the economy in addition to stabilizing it today.
The President added that the 25-year plan to make Sri Lanka a successful nation by 2048 has already been implemented and it can only be achieved with the commitment of the current youth.
This conference was organized by St. Thomas’ College, Wesley College, Vishaka Vidyalaya, and Girls’ High School, Kandy, and it drew about 700 students from various schools all across the island.
President Ranil Wickremesinghe was welcomed by the Chairperson of the 32nd Interact District Conference, Abdullah Siddeek who delivered the welcome speech.
Appreciating his support and participation in the Interact Global Youth Movement, District Governor of the Rotary International District 3220 for Sri Lanka & Maldives Pubudu De Zoysa presented a badge to the President and Interact District Conference President Abdullah Siddeek presented the President with a plaque.
More than a million Sri Lankan paddy farmers in all 25 districts will get vital assistance through a shipment of over 36,000 metric tons of fertilizer handed over today by the United States to the Ministry of Agriculture, says the United States Embassy in Sri Lanka.
The shipment of Triple Super Phosphate (TSP), which was funded by the United States Agency for International Development (USAID) has been procured by the Food and Agriculture Organization of the United Nations (FAO) for distribution free-of-charge to farmers.
This second shipment of USAID-supported fertilizer is delivered on a promise USAID Administrator Samantha Power made last September in response to Sri Lanka’s food security challenges. It brings the total of USAID-supported TSP and urea fertilizer to more than 45,000MT over the last year, according to the US Embassy in Sri Lanka.
U.S. Ambassador Julie Chung said, Farmers are working hard to maximize rice production and meet the country’s food needs under difficult circumstances, and the United States is committed to assisting. This year we celebrate 75 years of bilateral relations between Sri Lanka and the United States. Our story is one focused on people, progress, and partnership, and our commitment to supporting the people of Sri Lanka in good times and bad will not waiver.
Today’s fertilizer donation is a demonstration of America’s enduring goodwill and commitment to the people of Sri Lanka. It comes without strings attached and it is a testament to how the American people stand with the people of Sri Lanka”, Ambassador Chung added.
The United States, through USAID, provided $46 million in funding to procure essential fertilizer, providing much-needed nutrients to paddy crops, helping increase paddy production, and averting a food crisis. This funding also provided cash assistance to small-holder farmers who were affected by low yields over the past few agricultural seasons and on account of the prevailing economic crisis. The program is being implemented by UN FAO with oversight provisions to ensure transparency and accountability, the US Embassy in Sri Lanka added.
Speaking at the handover Minister of Agriculture, Mahinda Amaraweera expressed his gratitude to the people of America and FAO for providing timely support to reinvigorate the local agricultural sector. Through this support, we are certain the yield of the upcoming harvesting seasons will improve steadily. Our eventual aim is to minimize dependency on rice imports and further empower Sri Lankan paddy farmers,” Minister Amaraweera added.
Fertilizer will help local farmers boost their production so that the country is food secure. Most importantly, this also can jump-start market-driven agricultural production and potentially lead to Sri Lanka becoming a food exporter,” said USAID Mission Director for Sri Lanka and Maldives, Gabriel Grau.
In the last year, the United States has provided more than $270 million in new support to Sri Lankans amid the ongoing economic crisis. In addition, the U.S. the largest donor to the UN Humanitarian Needs Plan for Sri Lanka.
We thank the U.S. government for the support extended at a critical juncture, enabling this consignment of TSP fertilizer, the first to arrive in the country in two years, which will be distributed to all paddy farmers based on the extent of their cultivation and the advised application for each of the agricultural zones through the support of the Ministry of Agriculture,” said FAO Representative for Sri Lanka and the Maldives, Mr Vimlendra Sharan.
Minister Amaraweera and FAO Representative Sharan joined Ambassador Chung and USAID Mission Director Grau at today’s handover ceremony.
This assistance is one component of the United States’ long-standing partnership with the Sri Lankan people to promote a healthy, educated, and employed population. To find out more about USAID’s work, you can see usaid.gov/sri-lanka.
Sri Lankan central bank governor Nandalal Weerasinghe told media on Sunday that the country’s dollar crisis” is over, as the International Monetary Fund (IMF) is set to approve a 2.9 billion U.S. dollar bailout package for the country on Monday.
He said Sri Lanka will hence has adequate foreign reserves for imports for essential sectors, adding that the IMF package will boost investor sentiment and enhance the country’s access to more foreign funds and investments.
The IMF package will include budgetary support to Sri Lanka’s government, which is a new element in IMF lending, he said. Sri Lanka started the related negotiations with the international lender in 2022 after the South Asian country was hit by a severe economic crisis.
When Sri Lanka’s top corporates have stashed away some $53billion in overseas accounts, it is because they are cheating the country, they don’t want to invest in Sri Lanka or they are as corrupt as the politicians. Whatever, the reason, their collective silence in not coming forward to bail out Sri Lanka & fully aware that the ordinary people & middle class will suffer, shows moral decline of Sri Lanka’s corporate community. These handful of Sri Lankan corporates could have easily come up with a plan to present to the public on how Sri Lanka could move forward with their investment without falling subject to more IMF loans. In understanding what the IMF imposes for loans given, whom these conditions apply & affect, the eventual outcomes like poverty, inequality, debt & depression – people should ask the Sri Lankans promoting going to IMF, why they are so gaga over it!
Conditionality in IMF Loans – loans are given with conditions though countries have to pay back loan with interest. These conditions are often intrusive & interfere in the internal affairs of countries. All conditions target only lower-classes & middle classes as a result of forcing governments to reduce spending on social welfare, increase taxes, increase prices of essential goods, increase interest rates, facilitate firms to go bankrupt, wage cuts/freezes, pension reforms, military cuts, force state entities to be privatized. These making already ailing countries fall further into disarray & increase poverty, unemployment, depression & social unrest. All of these IMF conditions have domino effect.
IMF exchange rate reforms have often led to removing controls that facilitated corrupt politicians & corporates to transfer money out of the country (Goldenberg scandal)
IMF allows inflationary devaluations.
IMF insists on neo-liberal policies like blanket privatization that creates private monopolies who exploit consumers without controls. Unit in the Ministry of Finance set with task of restructuring” (privatizing) 420 state-owned enterprises under GoSL especially 55 strategic SOEs that employ around 1.9% local labor.
IMF bail outs often lead to corrupt governments not planning but agreeing to IMF conditions to take more loans. The cycle of debt continues & IMF is happy because its neo-liberal policies can continue while also getting countries to fork out interest.
IMF also stands guilty of keeping policy & decisions secret from public domain & among select politicians who are happy to endorse IMF conditions & policies.
IMF short-term solutions often lead to long-term problems for countries who have to deal with rising poverty, social unrest & failing economy.
One of the core reasons for countries to go to IMF is its low interest, but what countries & people who promote going to IMF does not factor in is the conditions that result in long-term crisis for countries. Such crisis enables IMF to re-enter with fresh loans, more conditions and this cycle continues which works well for IMF who is part of the neo-liberal capitalist apparatus involving in securing national resources/assets under corporate control.
Successive Govts accused of corruption have however fallen naively victim to seeking advice from international advisors as well as local bodies that are funded from overseas, who peddle the privatization option & neo-liberal ideologies & the corrupt status of governments are used to cunningly draw them to agree to policy changes that fulfil the wish lists of these globalists.
Paikiasothy Saravanamuttu … China’s unwillingness to accept the proposed debt restructuring might deprive Sri Lanka of the US$ 2.9 billion credit facility, from the IMF”
The main opposition Samagi Jana Balawega too have been mooting for IMF bailout, while JVP leader Anura Dissanayake claimed there was no other alternative & party stalwart Sunil Handunetti claimed that the government was not going to IMF because of corruption.
The Joint Apparel Association Forum (JAAF) welcomes… the long-awaited USD 2.9 billion bailout package. JAAF says it is imperative that the country makes progress on other reforms required to get the country back on a growth agenda. These include reforms of the State-Owned Enterprises, labour law reform and pursuing Free Trade Agreements with countries like Australia, Japan, Korea and Canada which have enormous potential”
We are now in sight of the ‘IMF agreement approval’ and with it more positive economic sentiments like more FDI and better credit facilities will come Sri Lanka’s way/ If you take these positive factors into consideration Sri Lanka may be the first country in the world to have recovered from an economic crisis in such a short time”,Duminda Hulangamuwa, the Vice Chairman of the Ceylon Chamber of Commerce and a Senior Partner and the Head of Tax at Ernst & Young
Development Economist Professor Jayati Ghosh and Economist and Social Scientist Dr. Howard Nicolas believe that the path Sri Lanka chose for economic recovery with the support of the IMF would hurt the island’s poor and marginalised segments and they believed that debt forgiveness would be the only solution for Sri Lanka’s recovery.
So while the political opposition, key corporates & civil society are claiming IMF is the only solution, economists Jayati Ghosh & Dr. Howard Nicolas eloquently argue why IMF is not the solution. This is further backed by OXFAM report says 80% of covid-19 loans given by IMF have pushed nations to poverty.
However, ADVOCATA Chair Murtaza Jafferjee claims Sri Lanka would lose access to international creditor markets as soon as it resolves to debt forgiveness while also causing a collapse in the country’s banking system. We can see who is right in time to come. ADVOCATA is linked to Mont Pelerin Society & Atlas Network. ADVOCATA stalwarts not only promote IMF bail outs but campaign to privatize SOEs. Everyone’s easy solution is sell one’s silver. Thereafter, what happens is not their concern.
When Sri Lanka’s then Finance Minister & present Foreign Minister Sabry announced default on debt repayment, this was the outcome.
Yet it was not only politicians & CBSL that mooted default on repayment, Sri Lanka’s top businessmen, think tanks & economists called for the same.
It is no wonder Sri Lanka is in this abysmal state – we cannot rely not only on the politicians but even the corporates & the think tanks that are heavily reliant on foreign funding. Making matters worse is that the majority of these companies that mooted debt default, had made use of the 2017 Foreign Exchange Control Act to deposit their profits overseas. We have to wonder how many of these companies have been indirectly responsible for the economic collapse as well as question why they are promoting IMF $2.9b bailout with austerity for the poor & middle class, when they could have easily come to an arrangement with the GoSL & brought this $2.9b of their $53b back to Sri Lanka.
Former Prime Minister of Australia Paul Keating has labelled the AUKUS military alliance and more specifically the recently concluded submarine deal as the worst mistake Australia has done in its history. His national press club address has been widely publicised and does not need repetition here.
It is however interesting to discuss a few basic issues he mentioned as reasons for his criticism. Firstly, his assertion that the AUKUS alliance is all about maintaining US hegemony over the South China sea and containing, to the extent possible, China’s ability to move freely within and outside this area of the sea. Secondly, the futility of a few submarines, nuclear or otherwise, attempting to do this in the shallow, easily detectible sea off China and thirdly, the formation of a military alliance that includes Australia where Australia faces no threat militarily from China.
At the outset, in context, it is useful to mention Newtons third law that every action has an equal and opposite reaction. The formation of this alliance too could be looked at from this perspective. Accordingly, while trading profitably with each other, the three countries in the Alliance, the US, Australia, and UK, will strengthen their military and China will do their best to outdo, but more importantly outsmart all three. The already accelerated arms race will get to high gear now with billions of dollars being spent more on posturing than on any real military encounter by any of the constituents of AUKUS. Consequences for the ordinary people in all these countries and all other countries will have a flow on effect as funds available for the welfare of the people will be eroded and diverted to military expenditure.
Before Newton, Buddha came out with a truism called dependent origination or in Pali, paticca samuppada. As stated in a Buddhist enquiry article (https://www.buddhistinquiry.org/article/dependent-origination/, what the dependent origination or paṭicca-samuppāda actually describes is a vision of life or an understanding in which we see the way everything is interconnected—that there is nothing separate, nothing standing alone. Everything effects everything else. We are part of this system. We are part of this process of dependent origination—causal relationships effected by everything that happens around us and, in turn, effecting the kind of world that we all live in inwardly and outwardly.”
This is the first reality one will have to understand and accept as a reality. Many actions will follow from the military alliance and the submarine deal. The alliance appears to not understand and to disregard the interconnected nature of these actions These will lead to ongoing consequences, most which will be negative rather than positive. Although not a military issue, Australia and the world witnessed the reaction of the Chinese government when some actions of Australia, including its role in the WHO attempt to carry out an inspection of Chinese facilities to ascertain whether the COVID virus originated in a Chinese laboratory. This attempt by Australia without any discussion with China, cost the country dearly with several commercial sanctions which incidentally are still in place. As Mr Keating said, diplomatic and commercial disagreements are being linked to non-existent military confrontations in the guise of foreign policy.
The distrust created with China by AUKUS and the submarine deal will have consequential reactions from China. It is hard if not impossible to see how trust can be restored in an environment where diplomacy has been superseded by militarism. It is unfortunate for the future generations that the current leadership of the two major political parties in Australia have consigned them, without any discussion with them, to an uncertain and confrontational future with China, the worlds next superpower in the not-too-distant future.
In any military conflict, irrespective of which side wins”, there are no real winners or losers. It is just a scenario where the aggressors, the defenders and the bystanders play musical chairs, with each category moving around taking on each other’s roles in a cyclical manner. It is a futile, costly exercise that could have been avoided if disagreements were discussed and resolved through compromise and respect for each other. Many either ignore or are indifferent to the damage a war inflicts on the families and loved ones within each category, and a countless number of people who are not directly associated with a war.
During World War 2, estimates for the total number of casualties in the war vary because many deaths went unrecorded. Most suggest that some 75 million people died in the war, including about 20 million military personnel and 40 million civilians. Many civilians died because of deliberate genocide, massacres, mass-bombings, disease, and starvation. The Soviet Union lost around 27 million people during the war, including 8.7 million military and 19 million civilian deaths. (https://courses.lumenlearning.com/suny-hccc-worldhistory2/chapter/casualties-of-world-war-ii/
Outside of World War 1 and 2, the Korean war, the Vietnam war, the Afghanistan, Iraq and other military conflicts have witnessed the deaths of millions.
If a war is to be fought, and countries are indifferent to the death and destruction it causes, each side has to have the resolve, strength and the equipment to match the other side. As Mr Keating says, whether a few submarines, nuclear powered but firing conventional weapons does not seem to be indicative of parity. In the name of parity, if nuclear weapons are to replace conventional ones, the nuclear arms race will intensify, and more people will face death and destruction if a military engagement occurs and nuclear weapons are used. In such possible scenarios, it likely that China will enhance their defence capability in the face of AUKUS nations ramping their military capabilities. With technology advancements being what they are and potentially exponential advancements, the nuclear submarines being designed and built could well be obsolete when they are built and are seaworthy. The world does spend a lot of money to kill people.
Mr Keatings third point is about the military strategy Australia has chosen in association with the US and UK over a diplomatic strategy with China. He has maintained, rightly, that China is Australia’s largest trading country and therefore commercial considerations rather than military ones should underpin the relations between the two countries. Again, as he says, the country’s foreign policy should not be dictated by military requisites but diplomatic requisites and mutual trust and not distrust. A military build up as envisaged is bound to foster mistrust between China and Australia and eventually impact adversely on the trading relationship between the two countries.
According to the website Statista (https://www.statista.com/statistics/622568/australia-export-partners-by-value/), in 2021, China was Australia’s leading export partner, importing approximately 115 billion U.S. dollars’ worth of goods, followed by Japan and the European Union. Tensions have been building up in China-Australia relations and has impacted on trade.
Data released by the General Administration of Customs (GAC) showed that, in 2022, bilateral trade between the two countries reached US$220.91 billion, down 3.9 percent year-on-year, with Australia’s exports to China amounting to US$142.09 billion, a decrease of 13.1 percent from 2021. China remains a primary export market for many Australian products, such as coal, iron ore, and wine. However, several of these products lost their market share as domestic businesses looked for substitutes to lessen the risk of interruption amid thawing ties (https://www.china-briefing.com/news/china-australia-trade-relations-growing-stronger/). Besides this, the website also states that quote notwithstanding the scope of market opportunities for China and Australia, bilateral ties have not always been favourable. Over the past five years, tensions have piled up on a range of issues related to technology, politics, and trade. In 2018, invoking concerns for national security, Australia became the first member of the Five Eyes intelligence alliance to prohibit Chinese tech giants Huawei and ZTE telecommunications gear from participating in its telecom infrastructure. In addition, Australia openly supported a number of US-led efforts aimed at containing China’s expanding influence in the Indo-Pacific, including the AUKUS alliance, the Indo-Pacific Economic Framework, the Quadrilateral Security Dialogue, and the Partners in the Blue Pacific. Early in 2020, amid tensions over the nature of COVID-19, bilateral ties took a sudden turn for the worst. China imposed import bans on a variety of Australian exports, including coal, barley, wine, cattle, and seafood. Australia responded by escalating the trade dispute to the World Trade Organization (WTO) and canceling the Belt and Road Initiative (BRI) deal previously agreed to between China and the state of Victoria.
Such occurrences have had a negative impact on trade. Australian exports of wine, barley, lobsters, cattle, and coal were severely impacted, while Chinese companies were subject to increased scrutiny, particularly for transactions involving crucial infrastructure. As a result of escalating diplomatic tensions, several Chinese companies adjusted their coal purchases from Australia to reduce potential risks. Consequently, China imported 66.37 million tons less Australian coal in 2021 than it did in 2020, a decrease of more than 85 percent year-on-year” unquote.
In summary, one cannot be but convinced that Mr Paul Keating is right that the AUKUS military alliance and the submarine deal will have a negative effect on Australia/China relations in the long term and that future generations will face the consequences of this serious mis step in military strategy camouflaged as foreign policy. The question the younger generations should ask themselves is whether Australia should overlook the misdemeanours of the US when it supports countries like Saudi Arabia and other dictatorships and argue that they, the USA, is a protector of democracy, and that they are taking on China because of its undemocratic policies and practices. Not much or in fact anything is said about the rise in living standards in China and the very significant drop in poverty levels in China. Nothing is also said about poverty in the USA, the citadel of democracy, where, according to https://www.census.gov/library/publications/2022/demo/p60-277.html, the official poverty rate in 2021 was 11.6 percent, with 37.9 million people in poverty. In contrast, as estimated by the World Bank, China’s poverty rate had fallen from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms, which still stands in 2022 (https://en.wikipedia.org/wiki/Poverty_in_China).
It does appear that the US is driven by the fear that China will overtake them as the superpower of the world soon and they are garnering support from willing allies like Australia and UK to delay the inevitable as much as possible. The danger for Australia is that they will be like, to quote a pithy Sinhala idiom ‘Girayata ahuwechcha puwak gediya wage (an arecanut caught between the two levers of a giraya, a familiar object in most Sinhala homes, fashioned out of brass, steel, silver or gold and used to slice arecanuts) –a paradoxical situation from which there is hardly any chance of escape. Australia has chosen this path and to be in an Anglo/Indian world, away from South East Asia and China where its prosperity and future lies.
Even a schoolkid who has studied Year 11 Commerce would tell you that the Central Bank must be independent of the government. And that’s how it is around the world. However, Sri Lanka does not follow the rest of the world. Well established norms are questioned, challenged and changed in Sri Lanka to suit politicians and their supporters. What is even more convincing is Independent Ceylon (1948 to 1972) and Sri Lanka (1972 to 1978) had an independent Central Bank.
Historical Independence of CBSL and Economic Stability
Sri Lanka had a great tradition of Central Bank independence until 1978. Its remnants held some traditional value of independence until 2006. As a result, politicians could not indebt the nation (all government long term debt is either taken by the Central Bank or the Central Bank guarantees debt) beyond repayment capacity. Thanks to CBSL independence, the loan profile of the country was managed well; politicians could not borrow as they pleased; money printing was restricted to currency requirement which was tied to economic growth, and reserves of the CBSL were very healthy and were protected from looting, misappropriation and fraud.
Until 1972 Central Bank’s independence was guaranteed by the law as there was no one in a government post who could interfere with the CBSL. There was no executive president then. Sadly things changed since 1978 with the creation of executive presidency. The executive president could interfere with anything. Fortunately, no executive president interfered with the CBSL until 2006 recognizing the need to keep it independent.
The economy was stable. Just two years had negative economic growth rates but bounced back immediately. International lenders and trade creditors trusted the CBSL (as it was independent from the government) and credit ratings held their ground at acceptable levels.
Interference Since 2007 and ISB Debt Trap
Unfortunately, CBSL independence ended in 2006. Politicians appointed another politician to the top post who did not rise through the ranks. A Central Banker who has risen through the ranks would be skilled appropriately to manage it. A top business executive without political affiliation would fair reasonably in the post. However, in 2006 the appointee contested the 1999 provincial council election and was elected and he also contested parliamentary elections thereafter.
No surprise that Sri Lanka issued its first ISB (International Sovereign Bond) in 2007 for $500 million. The decision was taken by the government but the CBSL did not have independence to say no. It was a modest amount (though five times that of the Lotus Tower) but it was the first time Sri Lanka went for market borrowings. Previously the CBSL was not interested in foreign market borrowings as they are extremely costly (high and variable interest rates), they must be repaid within 5 years in US dollars, no grace period and no accountability over where it is invested. Thus started Sri Lanka’s loan death trap. Started small but as expected it snowballed out of control. By now about 50% of Sri Lanka’s foreign debt is ISBs.
Further Interference and Hedging
While ISB foreign loans snowballed, lack of CBSL independence led to other undesirables too. State corporations were not only allowed to borrow directly (bypassing CBSL) from foreign loan creditors, they were also allowed to enter in to speculative hedging deals with commercial banks. CBSL never allowed it before but as it lost its independence, it could only be a helpless spectator of this economic calamity. However, the CBSL was compelled to guarantee foreign loans taken directly by corporations. This bankrupted these corporations too as they had no foreign currency earnings. (This was the reason they were not allowed to borrow directly until 2011).
This move achieved a political outcome. Direct foreign borrowings of $9.5 billion by state corporations was kept out of CBSL books. The government boasted a lower than actual foreign loan figure just to hoodwink the public. As a result, even most economists were unable to forecast the impending debt and economic crisis as they traditionally based their analyses only on CBSL annual reports.
Sri Lanka started suffering credit rating downgrades as the CBSL was not guaranteed independence.
CBSL Gold Reserves, Greek Bonds and 2015 Bond Fraud
Other effects of lack of independence were seen in the mismanagement of the nation’s foreign reserves and CBSL gold reserves. Instead of growing these, lack of central bank independence meant they were depleted without replenishment to meet the requirements of politicians and their various visions” (Chinthanaya”). An Independent CBSL would not stand in the way of these visions” just to disrupt them. However, an Independent CBSL would not deplete its reserves and would advise the government how to retain the reserves and implement those plans (or the economic reasons for not implementing those plans). Therefore, any action that depletes national reserves would be blocked by an independent CBSL. Sadly, Sri Lanka was denied this protection due to the absence of a law ensuring independence.
Another first for the CBSL happened during this time. Greece was going through economic turmoil and as a EU member it was widely expected to be bailed out by the EU. Some speculative investors bought Greek bonds cheaply hoping they would fetch higher values after the bail out. However, EU’s austerity measures did not allow anyone to profit at Greece’s expense and those who bought them suffered huge losses. An independent CBSL would never have invested in speculative ventures.
In 2015 the CBSL issued local rupee bonds as it does. But this time it was traded by the son-in-law of the CBSL Governor. Interest paid to these bonds were artificially raised to make the trade profitable for the largest buyer! As a result, interest rates across the banking system went up. Cost of capital (which is an addition to CBSL base rates) naturally went up bankrupting many a business venture.
Further Interference and Bankruptcy
Interference continued as years passed. Politicians blamed the CBSL for not using their tools to extend loans to people. Due to the absence of independence, CBSL was forced to do as instructed. It was also instructed to print currency notes recklessly and to repay ISB loans in 2021 and 2022 when it was obvious such payments would permanently deplete basic reserves any nation must maintain.
As a direct result of these moves, Sri Lanka declared it was unable to repay foreign loans on April 12, 2022. Sri Lanka’s inflation went to unprecedent heights and stayed amongst the worse in the world. Economic growth rate went negative for 3 years which is a world record not just a Sri Lankan record.
People Pay CBSL Salaries to Serve Them, Not Politicians
CBSL must be independent. It owes it to the people who pay their salaries. People benefited when the CBSL was independent and suffered due to lack of it. No one wants a central bank independent from the people which is not possible. What is needed is a central bank independent of politicians. Politicians’ claim that the central bank would be another independent state if it were granted independence is absurd. It has not happened in any country and not in Sri Lanka either before 1978. CBSL salaries are paid by the people and not by politicians so politicians have no right to have anything to do with the central bank. Central Bank policy is the same across the world – economic development and stability through effective monetary policy management. That’s all an independent central bank would do. And that’s exactly what a central bank would be unable to do if it is not given independence. The government should manage the fiscal policy which can follow a political vision to the extent it does not clash with the monetary policy. For ease of understanding, it is like managing money in a household. Money can be spent on needs, wants and dreams but only to the extent the household has (or can reasonably repay if borrowed). No one can spend money to pursue their dreams if it bankrupts the household. That includes genuine desires, gambling and even charity if they cannot be afforded by the household. In a functioning household these will be conservatively managed by the mother who is conscious of future money needs and is not concerned about being popular with the children when it comes to money matters.
Today the stakes are even higher. Sri Lanka is at the mercy of international lenders (IMF, loan creditors and trade creditors), and rating agencies. They only accept an independent central bank. If they don’t come to the party, Sri Lanka collapses. There are no more free lunches.
Sri Lanka is at a crossroads – legally enact and ensure central bank independence and overcome the many economic crises it is in or plunge deeper into manifold crises.
Over the past seventeen years, thousands have been gathering to chant the Tipitaka under the Bodhi Tree from December 2nd-13th. Since then annual chanting ceremonies have spread to all the ancient pilgrimage places of the Buddhadharma. Once again, the sound of the Buddha’s words can be heard all over the land of the Ayradesh.
