Sri Lanka’s High Commissioner to India Milinda Moragoda met with the Chief of the Rashtriya Swayamsevak Sangh (RSS) Shri Mohan Bhagwat. The meeting took place at the Headquarters of the RSS in Nagpur, Maharashtra. The Rashtriya Swyamsevak Sangh, literary meaning the ‘National Volunteer Organization’, is a large and widespread Indian Hindu volunteer organization with a membership of 5-6 million.
The Chief or the Sarsanghchalak of the RSS, Shri Mohan Bhagwat extended a very warm welcome to High Commissioner Milinda Moragoda. During the meeting they discussed a wide range of issues, including the age-old cultural and religious relations between India and Sri Lanka, especially between Buddhism and Hinduism, and sought ways and means through which a dialogue could be established between these two world religions both of which originated in India. The senior office bearers of the organization were also present at the meeting.
The High Commissioner of Sri Lanka gifted two large framed photographs to the organization to mark this occasion. These photographs feature two murals from the Kelaniya Rajamaha Vihara which depict the gift of Buddhism to Sri Lanka by India. Of these photographs, the first depicts a mural of Arahat Mahinda delivering the message of the Buddha to King Devanampiyatissa upon arriving in Sri Lanka while the second depicts the arrival of Theri Sanghamitta to Sri Lanka bearing the right-hand branch sapling of the Sri Maha Bodhi Tree.
Earlier in the day, High Commissioner Moragoda paid a floral tribute to the memorial of the late Dr. Keshav Hedgewar, founder of the Rashtriya Swyamsevak Sangh. There, at the Dr. Hedgewar Smarak Samiti (Hedgewar Memorial Committee) building he also unveiled the two photographs that were gifted, in the presence of the senior officials of the Committee.
Founded by Dr. Keshav Baliram Hedgewar on 27 September 1925 in Nagpur with the intention of creating a Hindu nation, the RSS promotes the ideals of upholding Indian culture and the values of a civil society and spreads the ideology of Hindutva, to strengthen the Hindu community.
Shri Mohan Bhagwat is the 6thSarsanghchalak of the Rashtriya Swayamsevak Sangh. He holds that position since 2009.
The primordial interest of the United States, over which for centuries we have fought wars– the First, the Second and Cold Wars– has been the relationship between Germany and Russia, because united there, they’re the only force that could threaten us. And to make sure that that doesn’t happen.” George Friedman, is now Founder and Chairman of Geopolitical Futures
February 17, 2022: Information Clearing House— “UNZ”— The Ukrainian crisis has nothing to do with Ukraine. It’s about Germany and, in particular, a pipeline that connects Germany to Russia called Nord Stream 2. n. Washington sees the pipeline as a threat to its primacy in Europe and has tried to sabotage the project at every turn. Even so, Nord Stream has pushed ahead and is now fully-operational and ready-to-go. Once German regulators provide the final certification, the gas deliveries will begin. German homeowners and businesses will have a reliable source of clean and inexpensive energy while Russia will see a significant boost to their gas revenues. It’s a win-win situation for both parties.
The US Foreign Policy establishment is not happy about these developments. They don’t want Germany to become more dependent on Russian gas because commerce builds trust and trust leads to the expansion of trade. As relations grow warmer, more trade barriers are lifted, regulations are eased, travel and tourism increase, and a new security architecture evolves.
In a world where Germany and Russia are friends and trading partners, there is no need for US military bases, no need for expensive US-made weapons and missile systems, and no need for NATO.
There’s also no need to transact energy deals in US Dollars or to stockpile US Treasuries to balance accounts. Transactions between business partners can be conducted in their own currencies which is bound to precipitate a sharp decline in the value of the dollar and a dramatic shift in economic power. This is why the Biden administration opposes Nord Stream. It’s not just a pipeline, it’s a window into the future; a future in which Europe and Asia are drawn closer together into a massive free trade zone that increases their mutual power and prosperity while leaving the US on the outside looking in. Warmer relations between Germany and Russia signal an end to the unipolar” world order the US has overseen for the last 75 years. A German-Russo alliance threatens to hasten the decline of the Superpower that is presently inching closer to the abyss. This is why Washington is determined to do everything it can to sabotage Nord Stream and keep Germany within its orbit. It’s a matter of survival.
That’s where Ukraine comes into the picture. Ukraine is Washington’s ‘weapon of choice’ for torpedoing Nord Stream and putting a wedge between Germany and Russia. The strategy is taken from page one of the US Foreign Policy Handbook under the rubric: Divide and Rule. Washington needs to create the perception that Russia poses a security threat to Europe. That’s the goal. They need to show that Putin is a bloodthirsty aggressor with a hair-trigger temper who cannot be trusted. To that end, the media has been given the assignment of reiterating over and over again, Russia is planning to invade Ukraine.” What’s left unsaid is that Russia has not invaded any country since the dissolution of the Soviet Union, and that the US has invaded or toppled regimes in more than 50 countries in the same period of time, and that the US maintains over 800 military bases in countries around the world. None of this is reported by the media, instead the focus is on evil Putin” who has amassed an estimated 100,000 troops along the Ukrainian border threatening to plunge all of Europe into another bloody war.
All of the hysterical war propaganda is created with the intention of manufacturing a crisis that can be used to isolate, demonize and, ultimately, splinter Russia into smaller units. The real target, however, is not Russia, but Germany. Check out this excerpt from an article by Michael Hudson at The Unz Review:
The only way left for U.S. diplomats to block European purchases is to goad Russia into a military response and then claim that avenging this response outweighs any purely national economic interest. As hawkish Under-Secretary of State for Political Affairs, Victoria Nuland, explained in a State Department press briefing on January 27: If Russia invades Ukraine one way or another Nord Stream 2 will not move forward.” (America’s Real Adversaries Are Its European and Other Allies”, The Unz Review)
There it is in black and white. The Biden team wants to goad Russia into a military response” in order to sabotage NordStream. That implies there will be some kind of provocation designed to induce Putin to send his troops across the border to defend the ethnic Russians in the eastern part of the country. If Putin takes the bait, the response would be swift and harsh. The media will excoriate the action as a threat to all of Europe while leaders around the world will denounce Putin as the new Hitler”. This is Washington’s strategy in a nutshell, and the whole production is being orchestrated with one goal in mind; to make it politically impossible for the German Chancellor Olaf Scholz to wave NordStream through the final approval process.
Given what we know about Washington’s opposition to Nord Stream, readers may wonder why earlier in the year the Biden administration lobbied Congress NOT to impose more sanctions on the project. The answer to that question is simple: Domestic politics. Germany is currently decommissioning its nuclear power plants and needs natural gas to make up for the energy shortfall. Also, the threat of economic sanctions is a turn-off” for Germans who see them as a sign of foreign meddling. Why is the United States interfering in our energy decisions,” asks the average German. Washington should mind its own business and stay out of ours.” This is precisely the response one would expect from any reasonable person.
Then, there’s this from Al Jazeera:
Germans in the majority support the project, it is only parts of the elite and media who are against the pipeline…
The more the US talks about sanctioning or criticizes the project, the more it becomes popular in German society,” said Stefan Meister, a Russia and eastern Europe expert at the German Council on Foreign Relations.” (Nord Stream 2: Why Russia’s pipeline to Europe divides the West”, AlJazeera)
So, public opinion is solidly behind Nord Stream which helps to explain why Washington settled on a new approach. Sanctions are not going to work, so Uncle Sam has flipped to Plan B: Create a big enough external threat that Germany will be forced to block the opening of the pipeline. Frankly, the strategy smacks of desperation, but you have to be impressed by Washington’s perseverance. They might be down by 5 runs in the bottom of the 9th, but they haven’t thrown in the towel just yet. They’re going to give it one last shot and see if they can make some headway.
On Monday, President Biden held his first joint-press conference with German Chancellor Olaf Scholz at the White House. The ballyhoo surrounding the event was simply unprecedented. Everything was orchestrated to manufacture a crisis atmosphere” that Biden used to pressure the chancellor in the direction of US policy. Earlier in the week, White House spokeswoman Jen Psaki repeatedly said that a Russian invasion was imminent.” Her comments were followed by State Department flak Nick Price opining that the Intel agencies had provided him with details of an alleged Russian-backed false flag” operation they expected to take place in the near future in east Ukraine. Price’s warning was followed on Sunday morning by national security advisor Jake Sullivan claiming that a Russian invasion could happen at any time maybe even tomorrow.” This was just days after Bloomberg News agency had published its sensational and utterly-false headline that Russia Invades Ukraine”.
Can you see the pattern here? Can you see how these baseless claims were all used to apply pressure to the unsuspecting German chancellor who seemed oblivious to the campaign that was aimed at him?
As one might expect, the final blow was delivered by the American president himself. During the press conference Biden stated emphatically that,
If Russia invades … there will no longer [be] a Nord Stream 2.. We will bring an end to it.”
So, now Washington sets policy for Germany???
What insufferable arrogance!
The German chancellor was taken aback by Biden’s comments which clearly were not part of the original script. Even so, Scholz never agreed to cancel Nord Stream and refused to even mention the pipeline by name. If Biden thought he could sandbag the leader of the world’s third biggest economy by cornering him in a public forum, he guessed wrong. Germany remains committed to launching Nord Stream regardless of potential flare-ups in far-flung Ukraine. But that could change at any time. After all, who knows what incitements Washington might be planning in the near future? Who knows how many lives they are prepared to sacrifice in order to put a wedge between Germany and Russia? Who knows what risks Biden is willing to take to slow America’s decline and prevent a new polycentric” world order from emerging? Anything could happen in the weeks ahead. Anything.
For now, Germany is in the catbird seat. It’s up to Scholz to decide how the matter will be settled. Will he implement the policy that best serves the interests of the German people or will he cave in to Biden’s relentless arm twisting? Will he chart a new course that strengthens new alliances in the bustling Eurasian corridor or will he throw his support behind Washington’s crazed geopolitical ambitions? Will he accept Germany’s pivotal role in a new world order— in which many emerging centers of power share equally in global governance and where the leadership remains unflinchingly committed to multilateralism, peaceful development and security for all– or will he try to prop up the tattered post-War system that has clearly outlived its shelf-life?
One thing is certain; whatever Germany decides is bound to affect us all.
Colombo, Feb 25 (DailyMirror) – Public anger has grown in Sri Lanka as the government is struggling to sort the foreign exchange crisis, thereby leading to the massive power and fuel crisis, a halt in imports as well as a soaring cost of living with some terming the daily struggles as ‘unimaginable’.
In fact, public confidence in this government has dipped with the escalating turmoils and people are urging for some relief from the President and Prime Minister to carry on with their daily lives.
The opposition too has failed to play any vital role with statements being limited only to social media and protests being limited to Parliament. In fact, as much as the popularity of the government has dipped, the popularity of the main opposition – the SJB has also dipped with public confidence on almost all parliamentarians now lifted.
Presently Sri Lanka is seeing long queues for fuel, essential food items and even medicines with officials warning this will only deepen further in the coming months if the dollars fail to come in.
For that, the government is stubborn it does not want to go in for an agreement with the IMF, which many economists see as the most ideal solution for immediate relief, and instead hope countries will grant big loans which will help them out of the crisis with the dollars coming in.
Finance Minister Basil Rajapaksa is off to India yet again today, his second visit to New Delhi in two months, to discuss a one billion dollar loan agreement that will facilitate the imports of essential commodities and pharmaceuticals. The agreement is to be signed with an Indian Bank with the intervention of the Indian government.
The Daily Mirror learns that discussions to obtain loans are also ongoing with Saudi Arabia and China in order to increase Sri Lanka’s foreign reserves, while presently Sri Lanka’s foreign reserves stand at US2.3 billion dollars only as of the end of January.
This, however, is not enough. In fact, in order to save dollars, Sri Lanka halted almost all its imports to prevent the dollars from going out. this has led to the country plunging into chaos and lengthy queues for almost every essential need.
FOOD CRISIS IN SRI LANKA WHAT LIES AHEAD?
While food such as rice, milk powder, dhal and sugar are now limited, the prices of these items are also soaring.
Chairman of the National Movement for the Protection of Consumer Rights, Ranjith Vithanage told Daily Mirror that in several areas these items were now not available and there was a limit that each individual could purchase.
He said that items such as rice, sugar, flour and milk powder were being sold at different rates and there were no price controls as the government had cancelled the necessary gazette which made it mandatory for prices to be controlled on essential items. He said initially this was not so.
Prices of these items would only increase in a year or two and that too because of some reason. But now prices were fluctuating daily with no stable prices maintained. He said retailers sold it at much above the market rates and if today the price of a kilo of sugar was Rs.120 then tomorrow it could rise to Rs.240.
There is nobody monitoring this and these items are being sold at exorbitant rates.
Even the locally manufactured items including basic vegetables are being sold at skyrocketing prices,” Vithanage said.
He further alleged that despite people standing in queues for hours to purchase these essential food items, they had received complaints that those who paid much higher prices behind closed doors were handed over the items first and there were no limits for them.
This has severely angered the public but authorities have gone blind to it.
Vithanage also said that with the country having no dollars, essential food items imported into the country remained stuck at the Colombo Port and till such time Sri Lanka’s foreign exchange crisis did not ease, the shortage in all food items would continue and prices would continue to soar.
In fact, this shortage has prompted the Consumer Affairs Authority to act.
A senior official of the Consumer Affairs Authority (CAA) told Daily Mirror that they are going to identify the existing essential goods stocks that are already with the importers as importers usually keep a backup stock that was sufficient for two months. Once they identify this, all these items will be immediately released into the market.
The officials said the government also intends to import critical item stocks from India, and preparations are being made. The CAA will next week meet the importers to get a count of their stocks.
Finance Minister Basil Rajapaksa however said yesterday that based on data available with the Sri Lanka Customs, essential goods that are required for three months have entered the country.
MEDICINE SHORTAGE PANADOL, PANADEINE, PARACETAMOL, INSULIN, SALINE AND OTHER ESSENTIAL DRUGS TO STOP IN THREE MONTHS
The public has complained that essential drugs such as Panadol and even insulin are very limited in the market and whatever socks are available are being purchased by desperate customers.
The Allisland Private Pharmacy Owners’ Association (AIPPOA) said that this was because the ingredients required to manufacture these medicines had been halted due to the ban on imports.
In fact, the situation will worsen so much that in three months most of these essential drugs will not be available in the market with the government presently not having any backup solution.
With the current dollar crisis in the country, the manufacturers and importers cannot manufacture or import the required medicine stocks as they are higher in price. If some of the drugs they import are subjected to a price control imposed on several drugs, they cannot sell them in the local market. Most of the drugs are sold at controlled prices,” officials said.
POWER CRISIS IN SRI LANKA ONLY TO DEEPEN – 10-HOUR POWER CUTS TO BE IMPOSED DAILY FROM MARCH
The Public Utilities Commission of Sri Lanka increased the power cut timings to over five hours today. In a special cabinet meeting held with President Gotabaya Rajapaksa on Tuesday, sources said the President was desperate that monies be released to clear the fuel stocks lying at the Colombo Port to ensure power cuts are limited as much as possible.
Sources within the CEB said the situation however was ‘at its worst’ and will only escalate further.
With the lack of dollars to purchase fuel, these past few months, officials were compelled to switch to hydropower and have now used up the water from its reservoirs.
Now only the rains can save us and a miracle. If not we will be compelled to go in for 10-hour power cuts from March due to the lack of fuel supplies and lack of water,” a senior CEB source said.
The Daily Mirror in its articles on the power crisis published last month had in fact predicted this.
In previous articles, the Daily Mirror had said the power crisis would lead to long power cuts imposed daily and by March, a power supplying time would be released, similar to some African countries.
The CEB is now preparing for the worse and has urged the public to use electricity sparingly.
The Kelanitissa Power Plant has come to a complete halt due to the lack of fuel while other plants are running on a bare minimum.
CEB officials said this however was not the fault of this government alone and even the past government was to blame for failing to take the country towards a self-sustained economy. Only a miracle can now save us from the power cuts,” CEB sources said.
ECONOMIC CRISIS – WHERE DO WE STAND AT THE MOMENT
According to Deshal de Mel, Research Director at, Verité Research, Sri Lanka has had challenging macroeconomic and debt dynamics even prior to the COVID-19 pandemic.
However, the country maintained access to global financial markets until early 2020 and was able to manage its external debt as a result.
However, with the tax policy changes at the end of 2019, Sri Lanka lost access to global financial markets (Fitch revised Sri Lanka’s credit rating to negative on 18th December 2019 citing reversals in tax policy).
Subsequently, Sri Lanka has had to settle maturing debt out of its foreign exchange reserves, resulting in reserves declining rapidly in the last two years from Us$7.6bn at the end of 2019, de Mel said.
He further explained that Sri Lanka’s foreign exchange reserves had declined to US$ 2.3 bn by the end of January 2022, of which US$1.57 bn was a yuan-denominated swap.
There is no clarity as to whether the yuan swap can be used to settle US dollar-denominated liabilities, therefore excluding the yuan swap, usable foreign reserves were at US$ 790 mn as at end January – this is just around half a month of import coverage.
Sri Lanka’s monthly average imports in 2021 were US$ 1.7 bn – that was when oil was a lot cheaper than it is today,” de Mel said.
Sri Lanka has to settle US$ 1.84 billion foreign currency debt liabilities in the months of February and March 2022.
This is excluding current account payments (that is payments for imports of goods and services).
In addition to US$ 6.9 bn liabilities to be settled during 2022, Sri Lanka would also have to finance a current account deficit of around US$ 2.5 to 3 bn for the year.
Given the country’s low reserve position and large near term debt liabilities, Sri Lanka has had to ration the usage of foreign exchange to pay for imports of goods and services, resulting in limited availability of foreign currency to pay for critical imports including fuel. Sri Lanka’s authorities expect to bridge the gap between maturing debt liabilities and limited reserves through bilateral loans and swaps, asset divestments, and tourism inflows. However the gap between near term debt liabilities and reserves is large and time is limited,” de Mel said.
De Mel further said that to emerge from this crisis Sri Lanka’s most pragmatic option would be to enter into negotiations with its foreign creditors with a view to restructuring its external debt.
That could entail delaying capital payments to create some space for Sri Lanka to put in place the necessary fiscal reforms and build up reserves to improve its credit ratings and regain access to global capital markets in order to continue servicing its external liabilities.
An agreement with the IMF would play an important role in providing a credible debt sustainability analysis that will be accepted by all stakeholders, and an IMF programme can unlock additional sources of financing for Sri Lanka whilst it navigates what could be a challenging restructuring process,” de Mel said.
DOLLARS SOLD AT RS.260 IN THE BLACK MARKET AS THE OFFICIAL RATE STANDS AT RS.203
Amidst all these crises, those who are travelling overseas are in for another shock.
With banks giving limited dollars, that too after following some procedures, people were presently dependent only on the black market to purchase their dollars.
Presently one US dollar is available at Rs.260 in the black market when compared to the official rate of Rs.203 sold by the banks. (Jamila Husain)
Sri Lanka is playing a significant role in the food security needs of Qatar amidst steady growth in its local and expatriate population and the imminent influx of millions of tourists for the 2022 FIFA World Cup, according to a top business leader. Qatar’s population is growing and as we come close to hosting the World Cup by the end of this year, LuLu is diversifying the State’s sources of food different nationalities, so from a food security perspective, Sri Lanka is a reliable partner, Dr Mohamed Althaf, director, LuLu Group International, told Gulf Times. Through LuLu’s sourcing facility in the Sri Lankan capital of Colombo, Althaf said Sri Lanka is able to export fresh fruits and vegetables, as well as other food products to Qatar. This is an ideal strategy because Sri Lanka has the same food basket as that of other Southeast Asian countries. Whenever we have supply issues with other countries, Sri Lanka can be a very good support source,” Althaf explained. This was also echoed by Sri Lankan ambassador Mohamed Mafaz Mohideen, who stressed that LuLu’s direct dealings with local suppliers are not only generating employment and business for Sri Lankan farmers, food producers, and SMEs, but giving them access to the Qatari market, thus improving both countries’ bilateral trade exchange. Qatar-Sri Lanka bilateral trade stood at $90mn” in 2021, according to Mohideen, who noted that he expects business relations with Sri Lankan manufacturers and traders to expand across many different sectors. The ambassador emphasised that in terms of food security, the export of Sri Lanka’s vast agricultural products will help stabilise the country’s food market.” He stressed that LuLu and Sri Lanka’s partnership helped guarantee the steady and uninterrupted supply of goods to Qatar from Sri Lankan producers. Althaf said LuLu has started its private label in its sourcing facility in Colombo, as well as contract manufacturing. He said not only is the hypermarket chain able to provide the needs of the Sri Lankan community here, but LuLu also caters to expatriates and citizens’ food and non-food requirements. We are also looking at some lines that people don’t traditionally associate with Sri Lanka, such as large organic varieties of coconuts and organic vegetables and similar items. Through our textile section, LuLu now offers a variety of quality saris and other women’s garments from Sri Lanka. We are also handling skin care products based on organic vegetable oils and other products. The customer response was very good. At least 80% of these products are not aimed only at Sri Lankans; they are meant for the general customer. Once travel abroad picks up and the flight frequencies increase, we hope to have more products from Sri Lanka coming in,” said Althaf. He added: We are busy exporting a wide range of products. Our facility in Colombo is doing a lot of local level coordination there, as well as quality control operational procedures like what we have done in our facilities in other countries. Our target is to expand our sourcing base, so we can make sure that good quality products are available consistently and without any disruptions. Sri Lanka is now adding more items to our customer base in Qatar, such as textiles, handicrafts, and organic skincare items.”
By Uditha Jayasinghe and Devjyot Ghoshal Courtesyinvesting.com
COLOMBO (Reuters) – In late November 2019, after winning Sri Lanka’s presidential election and months ahead of a parliamentary ballot that would again test his popularity, Gotabaya Rajapaksa gathered his cabinet and made good on a campaign promise to slash taxes.
The move, which included a near-halving of value added tax, blindsided some top central bank executives.
“The tax cuts just after the elections came as a surprise,” P. Nandalal Weerasinghe, the Central Bank of Sri Lanka’s (CBSL) Senior Deputy Governor until September 2020, recalled.
“There was not any kind of a consultative process,” added Weerasinghe, who spent 29 years at the CBSL before retiring.
The economic argument for the cuts was simple – to free up spending and boost Sri Lanka’s ailing finances.
A similar move by an administration led by Gotabaya’s older brother Mahinda had helped drive the country’s economic recovery after a decades-long civil war ended in 2009, a ruling party member close to the Rajapaksas said.
“That is why they made this promise … Then, the pandemic came,” said Milinda Rajapaksha.
The case against was that reducing potential revenues when obligations were high was risky and undermined a 2019 debt management plan that hinged on a narrowing fiscal deficit.
“That was a mistake,” W.D. Lakshman, the CBSL’s governor between December 2019 and September 2021, said of the cuts, in his first interview since leaving office.
Not long after the move, the pandemic struck, crippling an economy heavily reliant on tourism.
While the hit to Sri Lanka’s coffers was all but inevitable, three former CBSL officials and some analysts said policies before COVID-19 struck and since have exacerbated the problems, leaving the country in a vulnerable financial position.
The government did not respond to a request for comment on the state of the economy and whether policy errors were made.
The CBSL said in a statement that the economy was in better shape than some reports suggested, with the key tourism industry already showing signs of revival and the stock market performing “reasonably well”.
Yet foreign exchange reserves have shrunk almost 70% in two years to $2.36 billion, short of $4 billion or so in debt repayments due in 2022.
Inflation has surged, key imports have been held up at Colombo port due to the lack of cash and the conflict in Ukraine has pushed energy bills higher. There is only enough fuel for a few days; national power cuts have begun.
‘NEVER DAUNTED’
At a time when Sri Lanka badly needed access to international capital markets to keep its debt management programme on track, a series of downgrades by rating agencies in the wake of the pandemic in 2020 effectively locked it out.
In the past when times were tough, Sri Lanka has turned to the International Monetary Fund (IMF) for help.
But potential discussions with the IMF on restructuring Sri Lanka’s foreign debt were effectively shot down by the government and CBSL leadership as early as April 2020, Lakshman said, including by himself as governor.
With the IMF out of play, the government still could have moved towards fiscal consolidation and provided a credible recovery plan, Weerasinghe said, adding that it failed to do so.
“What was presented and in the 2021 budget was completely not consistent with what would have been accepted by international investors or international creditors,” he said.
The budget banked on a strong rebound in economic growth of around 5.5% in 2021, which failed to materialise in part due to the Delta variant that led to island-wide lockdowns.
Sri Lanka overshot its fiscal deficit target by more than two percentage points in 2021, and the trade deficit widened to $8.1 billion in December 2021 from $6 billion a year before.
Foreign workers’ remittances slumped 22.7% to $5.5 billion in 2021.
The government, led by Rajapaksa and his brothers, has raised swaps and credit lines worth $1.9 billion from India, and two more are under negotiation with Pakistan and Australia.
Sri Lanka also received a $1.5 billion Yuan swap in December and the last tranche of a $1.3 billion syndicated loan from China arrived in September 2021.
Finance Minister Basil Rajapaksa – brother of the president and Prime Minister Mahinda Rajapaksa – has struck a bullish tone since taking up the post last July.
“The Rajapaksas have a history of never being daunted by challenges,” he said last November in his first budget speech. The plan envisages a budget deficit of around 8.8% of GDP and raising some taxes.
The CBSL said in its statement that it was committed to meeting all debt obligations and that suggestions Sri Lanka was close to default were wrong.
“The Sri Lankan authorities are pursuing a carefully thought-out plan which will ensure Sri Lanka’s debt sustainability and economic revival.”
FEARS OF DEFAULT
Some analysts and opposition politicians, however, fear Sri Lanka may default this year if it does not restructure its debt in the coming months.
“This prevarication, and somehow imagining there is another solution, I think, is a delay that the country can ill afford,” said Nishan de Mel, Executive Director of the Verité Research think-tank, adding that the 2022 budget did not go far enough.
“Muddling along is the path to failure. Restructuring is the path to success.”
Sri Lanka’s 10-year bond yield stood at 13% on Wednesday, compared with 8.13% on Feb. 23 last year.
Some opposition politicians and economists have urged the government to seek assistance from the IMF and other lenders, a move they say would help it tap capital markets again and ease the debt crunch.
IMF loans are likely to come with conditions, however, including austerity measures potentially unpopular with the population of 22 million to try to balance the books.
Basil Rajapaksa wants to focus on getting the domestic economy up and running again before contemplating loan programmes, aide Milinda Rajapaksha told Reuters this month, and the CBSL said there was no need for an IMF programme.
Masahiro Nozaki, IMF mission chief for Sri Lanka, told Reuters that the body had not received a recent request for financial support from Sri Lanka, but stood ready to discuss options.
In a further challenge, soaring oil prices on any war in Ukraine would “really hurt” Sri Lanka, cabinet spokesman and Plantation Minister Ramesh Pathirana warned on Tuesday.
The Russian invasion has begun and on Thursday crude prices peaked at $105 a barrel for the first time since 2014.
Former Rep. Tulsi Gabbard (D-HI) said she thinks the Biden administration wants Russia to invade Ukraine so that it has an excuse to impose draconian” sanctions.
Russia’s military has amassed along its border with Ukraine for weeks as international leaders have become increasingly concerned that Vladimir Putin will order an invasion. Tensions have escalated to such a point that on Tuesday, National Security Advisor Jake Sullivanurged Americans in Ukraine to leave within 48 hours.
Appearing on Tucker Carlson Tonight, Gabbard declared that President Joe Biden could prevent an invasion simply by assuring Russian President Vladimir Putin that Ukraine will never be a member of NATO.
It’s hard to know what to believe – always – and especially now,” Tucker Carlson said, But let’s stipulate – agree to agree – that it seems likely we could see some conflict between Russia and Ukraine soon. How should we view that?”
First of all, President Biden could end this crisis and prevent a war with Russia by doing something very simple,” Gabbard responded. Guaranteeing that Ukraine will not become a member of NATO – because if Ukraine became a member of NATO, that would put U.S. and NATO troops right on the doorstep of Russia, which, as Putin has laid out, would undermine their national security interests.”
Gabbard said it’s highly, highly unlikely,” Ukraine will ever become a NATO member.
Video: Biden administration warns Russia of severe consequences if it invades Ukraine (FOX News)PauseCurrent Time 0:54/Duration 4:47Loaded: 41.81%HQCaptionsFullscreenMute100Biden administration warns Russia of severe consequences if it invades Ukraine
So the question is, why don’t president Biden and NATO leaders actually just say that and guarantee it?” she asked. Which begs the question of why are we in this position then? If the answer to this and preventing this war from happening is very clear as day. And really, it just points to one conclusion that I can see, which is, they actually want to Russia to invade Ukraine.”
The former congresswoman said that such an invasion would give Biden a pretext to impose harsh sanctions.
Number one, it gives the Biden administration a clear excuse to go and levy draconian sanctions, which are a modern day siege against Russia and the Russian people,” she said. And number two, it cements this Cold War in place. The military-industrial complex is one of the benefits from this. They clearly control the Biden administration. Warmongers on both sides of Washington have drumming up those tensions. If they get Russia to invade Ukraine, then, again, it locks in this new Cold War.”
For years, Russia has been calling on Western nations to investigate cases of human rights abuse, illegal killings, and war crimes committed by the Ukrainian authorities that came to power after the 2014 coup. Moscow pointed out that many of them were committed by neo-Nazis against Russians or Russian-speaking people.When Russian President Vladimir Putin was announcing the start of a special operation to protect the Donetsk and Lugansk People’s Republics (DPR and LPR) on 24 February, he described the goals as “demilitarising and denazifying” Ukraine. His spokesman later elaborated that “denazifying” means that Russia is planning to free Ukraine from neo-Nazis, their supporters, and their ideology.Moscow has repeatedly warned foreign nations about neo-Nazis taking control of Ukraine following the West-backed coup in 2014. However, Western nations chose to ignore the human rights violations committed by the Kiev regime.What were these crimes?
Setting Trade Unions House on Fire…. With People in It
As nationalists and neo-Nazis were illegally seizing power across the country, they faced opposition from the so-called “anti-Maidan” movement, which was against the coup. Clashes between neo-Nazis and anti-Maidan protesters took place across the country, but what happened in Odessa on 2 May 2014 would be remembered as one of the darkest pages in Ukraine’s history.
Following street fighting with neo-Nazis, the anti-Maidan protesters barricaded themselves in a local trade unions house. Their opponents, backed by the new Ukrainian authorities, encircled the building and set it on fire using petrol bombs.
War Crimes of Nationalist Volunteer Battalions Exposed, Not Prosecuted
Apart from deploying regular troops to shell the cities of the DPR and LPR, the new Kiev leadership attracted several so-called “volunteer battalions” – ragtag groups of people, often nationalists and ex-convicts, funded and equipped by Ukrainian oligarchs and businessmen with connections to the new government. Their members were often involved in various war crimes – ranging from looting to killing civilians and rape. One such battalion, dubbed “Tornado”, was disbanded in December 2014 by Kiev following numerous reports of its crimes, but its members were never prosecuted, with many of them moving to other battalions.The crimes of another notorious voluntary battalion, “Aidar”, were investigated, documented, and exposed by the Amnesty International non-profit. Nonetheless, its horrific deeds would remain unpunished. One of the many crimes was uncovered by the DPR militia near the “Kommunar” mine, where they unearthed the bodies of four women and several men – all of them civilians. They had been tied up, tortured, and either executed by gunshot to the head or beheaded. One of the women was believed to have been raped by the battalion’s fighters.
Illegal Persecution, Incarceration, and Killings of Opposition Members and Journalists
The nationalists and neo-Nazis sitting in the government in Kiev also have a rich history of violating human rights and committing crimes – many of them meticulously gathered in an 80-page-long White Book assembled by the Russian Foreign Ministry. By mid-June 2014 – less than five months after seizing power – the new Ukrainian authorities started infringing on people’s rights to express their opinions and on press freedom, conducting searches and detentions of protesters, journalists, and blocking foreign media members from entering the country.The new Kiev authorities also did not shy away from threatening and kidnapping political opponents – politicians and even lawmakers who opposed the war against the DPR and LPR, and those who objected to the coup. Some of the opposition politicians and independent journalists were also killed, allegedly by the same nationalists and neo-Nazis, with many cases remaining unsolved to this day.The murder of Oles Buzyna, a Ukrainian journalist known for his pro-Russian views, is among the most prominent cases. Buzyna was shot dead outside his home by unidentified individuals in Kiev just a day after the killing of ex-MP Oleg Kalashnikov in his home. The cases were never solved, but they are believed to have been related to the victims’ involvement with the anti-Maidan movement.
Discrimination Against Anything Russia-Related
In addition to allowing war crimes to go unpunished and hunting down their political opponents, the Ukrainian leadership often appeased and encouraged countrywide discrimination against anything related to Russia or the Russian language.This policy revealed itself in various forms: from relatively harmless calls to refrain from buying Russian goods to the firing of Russian academics teaching Russian literature, detention of Russian-speaking travellers without legal grounds, official bans on certain Russian products, drawing of swastikas on memorials to the Second Wold War and victims of the holocaust, and allowing neo-Nazi marches featuring calls to “kill Russians” living in Ukraine.
US President Joe Biden boasted in January he had already sent more than $600 million worth of military aid to Ukraine since taking office a year prior. On Thursday, Congressional Democrats announced plans to send another $600 million.
The Russian military said on Friday it had seized a large cache of Western-supplied weapons inside of Ukraine.
The cache included American-made FGM-148 Javelin and British-made MBT NLAW anti-tank missiles, according to the Russian Ministry of Defense.
The two fire-and-forget missile systems have been a key part of Western aid supplied to Ukraine in recent years, intended to be a soft defense against Russia’s considerable armored forces. Biden said in January that he had already sent $600 million in aid to Ukraine, which was just a drop in the bucket of shipments sent since 2014. However, the NLAWs only arrived last month as part of a rushed shipment amid tense negotiations between Russia and NATO.
NATO said on Friday it would continue to provide “practical assistance” to Ukraine and called on other states to do the same. Secretary-General Jens Stoltenberg said that would include air defense systems.“We condemn in the strongest possible terms Russia’s full-scale invasion of Ukraine, enabled by Belarus. We call on Russia to immediately cease its military assault, to withdraw all its forces from Ukraine and to turn back from the path of aggression it has chosen,” the Brussels-based alliance said. Ukraine is not a member of the alliance, but has cooperated closely with the bloc and was considered a prospective future candidate for membership – one of Russia’s key objections in the security talks prior to the present conflict.
The MoD said on Friday that it had destroyed a total of 211 military infrastructure facilities in Ukraine since the present “neutralization” operation began on Thursday morning. The cities of Konotop and Sumy, in northeastern Ukraine, had also been blockaded by the Russian Army. Other cities near the border have also been blockaded and circumvented by Russian forces, including historic Chernigov.Russian President Vladimir Putin announced the present operation on Thursday morning, saying that Ukraine would be rendered a neutral country and the “Nazi” leadership would be removed. He also said that perpetrators of war crimes against the People’s Republics of Donetsk and Lugansk, which rebelled against Kiev in 2014, would be brought to justice. On Friday, Putin called on the Ukrainian military to overthrow the government of Ukrainian President Volodymyr Zelensky, saying they might be more reasonable to negotiate with. response to the operation, the West has implemented severe economic sanctions targeting Russia’s largest financial institutions, its sovereign debt, key state-owned enterprises, and major export industries.
Ukrainian officials are already discussing terms of potential negotiations with Russia, Kiev claimed
Ukrainian President Volodymyr Zelensky is ready to start negotiating a ceasefire with Russia, his spokesperson has said, claiming that Kiev has been in touch with the Kremlin about a possible venue and the date of the talks. Moscow previously said the Ukrainian leader disappeared” after initially agreeing to negotiations.
I have to refute the claims that we have refused to negotiate,” Zelensky spokesman Sergii Nykyforov wrote in a Facebook post on Saturday.
Ukraine was and remains ready to talk about ceasefire and peace” he said, insisting that currently, the parties are consulting about the place and time of the negotiation process.
Kiev also appeared to confirm reports that the Zelensky government had asked Tel Aviv to serve as a mediator at the talks with the Kremlin.
Ukraine’s Ambassador to Israel Yevgen Korniychuk told the New York Times that Tel Aviv has yet to respond. They didn’t say no. They are trying to figure out where they are in this chess play,” he said, adding We do believe that Israel is the only democratic state in the world that has great relations with both Ukraine and Russia.”
Shortly before Nykyforov released his statement, Russian Foreign Ministry spokeswoman Maria Zakharova claimed that Kiev refused to hold negotiations on Friday, adding that Kiev suggested postponing the discussion of the issue till Saturday.
Zelensky had earlier suggested the Polish capital of Warsaw as a venue for the talks rather than Moscow’s proposal of Minsk, but disappeared” soon after, Kremlin spokesman Dmitry Peskov said earlier on Friday. The Kremlin spokesman also accused nationalist elements” within Ukraine of deploying rockets into residential areas around the same time, warning that could result in civilian casualties.
In a national address early Friday, the Ukrainian president said he is not afraid to talk with Russia,” including about a neutral status” for Ukraine, but demanded third-party guarantees. The Ukrainian leader also claimed that NATO and the European leaders left Ukraine to fend for itself.
Moscow launched a special military operation” in the Donbass early on Thursday morning at the request of the region’s recently recognized Donetsk (DPR) and Lugansk (LPR) People’s Republics, vowing to demilitarize Ukraine and defend the people against Ukranian aggression.” The mission has targeted military sites across Ukraine and Russian forces have since advanced into major cities, reportedly closing in on the capital of Kiev.
Western leaders have reacted with a series of harsh sanctions targeting Russian financial institutions, senior officials, lawmakers and media organizations, including penalties on President Vladimir Putin and Foreign Minister Sergei Lavrov personally.
The Health Ministry says that another 1,286 persons have tested positive for Covid-19 today, as the daily count of new cases continues to rise in the country.
This brings the tally of Covid-19 cases registered in the country thus far to 643,072.
According to official figures, 608,226 positive cases have recovered.
Following the new development, the number of virus-infected people who are undergoing treatment moved to 18,704. Meanwhile, the death toll stands at 16,142.
The Director-General of Health Services has confirmed another 26 coronavirus-related deaths for February 24, pushing the country’s death toll from the pandemic to 16,142.
The deaths reported today include 13 males and 13 females, according to the figures released by the Department of Govt. Information.
Six of the victims are between the ages of 30-59 years. The remaining 20 are in the age group of 60 years and above.
The Health Ministry says that another 1,208 persons have tested positive for Covid-19 today, as the daily count of new cases continues to rise in the country.
This brings the tally of Covid-19 cases registered in the country thus far to 641,786.
According to official figures, 607,912 positive cases have recovered.
Following the new development, the number of virus-infected people who are undergoing treatment moved to 17,758. Meanwhile, the death toll stands at 16,116.
The Director-General of Health Services has confirmed another 30 coronavirus-related deaths for February 23, pushing the country’s death toll from the pandemic to 16,116.
The deaths reported today include 21 males and 09 females, according to the figures released by the Department of Govt. Information.
Seven of the victims are between the ages of 30-59 years. Another one was aged below 30 years and the remaining 22 are in the age group of 60 years and above.
The Italian educator and physician Maria Montessori (1870–1952) is best known for the teaching method that bears her name. She was also a lifelong pacifist, although historians tend to consider her writings on this topic as secondary to her pedagogy. In The Best Weapon for Peace: Maria Montessori, Education, and Children’s Rights .Erica Moretti reframes Montessori’s pacifism as the foundation for her educational activism, emphasizing her vision of the classroom as a gateway to reshaping society. Montessori education offers a child-centered learning environment that cultivates students’ development as peaceful, curious, and resilient adults opposed to war and invested in societal reform.
Using newly discovered primary sources, Moretti examines Montessori’s lifelong pacifist work, including her ultimately unsuccessful push for the creation of the White Cross, a humanitarian organization for war-affected children. Moretti shows that Montessori’s educational theories and practices would come to define children’s rights once adopted by influential international organizations, including the United Nations. She uncovers the significance of Montessori’s evolving philosophy of peace and early childhood education within broader conversations about internationalism and humanitarianism. (Published by the University of Wisconsin press)
Post Script: Montessori schools around the world, unlike those in Sri Lanka educate children from toddlers through high school using the Montessori method. This is mostly prevalent in Europe, South America and North America including such countries as Canada and the United States.
Some famous Montessori students have been the founders of Google: Larry Page and Sergey Brin, the founder of Amazon, Jeff Bezos, Anne Frank the young girl who wrote, The Diary of Anne Frank before the Nazis sent her to a death camp. Others have included the former co-owner of the Washington Post, Katherine Graham and actresses Helen Hunt and Melissa Gilbert.
The country is in the midst of a acute power crisis. If we ignore the immediate problem of dearth dollars to buy fuel the present crisis is mainly due to the Yahapalana government not investing in a single new power generation unit. The dollar crisis will exacerbate with oil prices expected to go over 100 dollars a barrel in the coming weeks. Policy makers seem to concentrate on solar power and wind power. Have we exhausted the conventional hydroelectric power? There is more potential in minor hydro schemes, but the environmental constraints limit further expansion in this area.
A few days back I looked at the RUN OF THE RIVER power production and found that it is a much-utilized source of electricity. I wonder why our power gurus have not thought of this source. Before getting at streams and canals why are we not harnessing our rapids. All our major rivers have rapids which may have the potential to be tapped under this technology. In the Mahaweli there are a few rapids close to Kandy. In the Kalani there is Kitulgala and in Kaluganga there is the Naragala rapids. Naragala is in the same latitude as the Labugama reservoir, and it may be possible to tap Kaluganga at this point to augment Labugama water supply.
I found in the Wikipedia the following examples of existing run of the river projects in different parts of the world with over 1500 MW capacity.
· The following website lists 58 hydroelectric power stations that generate power using the run-of-the-river method. This list includes most power stations that are larger than 100 MW in maximum net capacity, which are currently operational or under construction.
One minute you go to UNO. The next minute you go to the Indian Prime Minister. Now you are asking Tamil Nadu politicians to support your move against the GOSL on Human rights violation.This is never ending agitation. In your old age Sampanthan you must sit down and relax reading the newspaper. Look back at your past. What have you achieved in your campaign against the GOSL? You conducted a campaign with the Tamil Diaspora and the LTTE Terrorists against the GOSL to establish a seperate State in the North and East of Sri Lanka with the blessings and support of Tamil Nadu to the world.. Did you go anywhere with your Tamil people’s aspiration propaganda campaign telling a pack of lies. Did you ever tell the world that GOSL rescued 298,000 Tamils in the North when they were taken hostage by the LTTE to make a human shield?
The GOSL gave you a new lease of life after annihilating the LTTE terrorists menase by not locking you up in a cell for the campaign conducted against the GOSL This is a classic example Sampanthan. You must tell the world the TRUTH. You exported some 250,000 Tamils from North to the west under the guise of Refugees. They are in actual fact BOGUS Tamil REFUGEES who are supporting you financially to topple Rajapakse government.
Sampanthan, you are lucky to be in Sri Lanka. If it is in the western country You are thriving in jail for treason charges.
Sampanthan, tell the truth. You are lucky to be a Sri Lankan.
13A.
75% of Sri Lanka’s population are Sinhalese. Tamils are only 12% of the population. You are demanding privileges not enjoyed by 75% of the total population. These 75% of the population gave 2/3 majority votes in the Rajapakse Government to delete the 13th amendment from the constitution.
My dear Sampanthan, just relax and learn to enjoy your life at this old age of yours. Your bogus claim of Tamil peoples aspiration is a myth. You have no genuine desire to serve the Tamils in Sri Lanka.
Say “thank you Sri Lanka” for the new lease of life after the annihilating LTTE Terrorism.
The Boston University Global Development Policy (GDP) Center
Adum, Kumasi, Ghana. Photo by Reuben Hayfron on Unsplash.
In offering loans to developing countries in exchange for policy reforms, the International Monetary Fund (IMF) typically sets the fiscal parameters within which development occurs. Among the drivers of socio-economic development, a new working paper focuses on an important, yet insufficiently understood, international-level determinant: the spread of austerity policies to the developing world by the IMF.
In a new working paper, Thomas Stubbs, Alexander Kentikelenis, Rebecca Ray and Kevin P. Gallagher use an original dataset of IMF-mandated austerity targets to examine how policy reforms prescribed in IMF programs affect inequality and poverty. Their empirical analyses span a panel of up to 79 countries for the period 2002-2018. Using instrumentation techniques, the authors control for the possibility that these relationships are driven by the IMF imposing harsher austerity measures precisely in countries with more problematic economies.
Their findings show that stricter austerity is associated with greater income inequality for up to two years, and that this effect is driven by concentrating income to the top ten percent of earners, while all other deciles lose out. The authors also found that stricter austerity is associated with higher poverty head-counts and poverty gaps. Taken together, their findings suggest the IMF has neglected the multiple ways its own policy advice contributes to social inequity in the developing world.
In December 2021, this working paper was published as a journal article in the Journal of Globalization and Development.
By Rebecca Ray Courtesy The Boston University Global Development Policy (GDP)
Buenos Aires, Argentina. Photo by Nate Kadlac on Unsplash.
For many years, researchers have debated the International Monetary Fund’s (IMF) use of austerity, or required fiscal budget tightening: how common it is, whichborrowers receive such requirements, whether IMF practice has changed after successivefinancialcrises, and what impactssuchausterityhashad.
Two new working papers from the Boston University Global Development Policy Center (GDP Center) pushes these questions further. Using a new dataset that measures the depth of required fiscal adjustment in each agreement from 2001-2018, these papers reveal four main findings.
IMF-required austerity is commonplace and did not diminish in intensity after the 2008/2009 financial crisis.
Borrowing countries are less likely to face required austerity if they are strongly tied to Western Europe, either through trade or diplomatic channels, or if they receive significant aid from non-OECD countries (mostly China).
Borrowing countries are more likely to face austerity if they are host to significant foreign direct investment (FDI), particularly from Western Europe.
IMF-required austerity is significantly associated with rising inequality, by increasing the income share to the top ten percent at the expense of the bottom 80 percent. Unsurprisingly, the impact can also be seen in significantly rising poverty levels in countries facing tighter austerity requirements.
How does the dataset measure the depth of IMF-required fiscal adjustment?
Over the last year, researchers at the GDP Center have created a new dataset on the depth of fiscal adjustment required in IMF agreements. By incorporating this new variable, the researchers pushed beyond explorations of who receives conditionality, to how lenient or harsh each agreement has been. This new data, which the working papers are based on, will be made public upon journal publication.
This dataset includes all IMF agreements since 2001 with binding fiscal adjustment targets (known as quantitative performance criteria, or QPCs) at the end of calendar years. By limiting the sample to end-of-year QPCs, it allows each fiscal adjustment requirement to be measured as a share of calendar-year GDP. These annual measures are then compared across the length of the agreement to produce cumulative, annualized fiscal adjustment, in percentage points of the borrower’s nominal GDP. Positive numbers indicate government budgets that were required to tighten (or become more positive), while negative numbers indicate agreements that allowed government budgets to loosen (or become more negative).
This dataset takes only the final level of each QPC, after any adjustments or revisions, and it ignores any that were waived because of extenuating circumstances. After all of these factors were taken into account, and after removing a few extreme outliers in unusual circumstances (for example, Iraq shortly after the ouster of Saddam Hussein), it resulted in a dataset of 335 QPCs from 154 IMF arrangements across 18 years.
How much fiscal adjustment did the IMF require from 2001-2018?
In the first of the two new working papers, IMF Austerity Since the Global Financial Crisis: New Data, Same Trend, and Similar Determinants,” coauthors Rebecca Ray, Kevin P. Gallagher, and William Kring find a remarkable variability in the fiscal tightening (or loosening) required across IMF agreements. While required fiscal adjustments always averaged between one percent of GDP cut or added to borrowers’ budgets for every year in the sample, Figure 1 below shows that the arrangements include a wide variety of experiences, even after removing the outliers mentioned above.
Figure 1: IMF-imposed Fiscal Adjustment in % of Borrower GDP per year, 2001-2018
Some of this variation is due to the diversity of economic situations faced by IMF borrowers, like the type of arrangement they entered, or their income levels, economic growth, and inflation rates at the time of their IMF arrangement. When considered together with these factors through an ordinary least squares regession model, the IMF agreements coalesce around a narrower range. Figure 2 below shows the predicted fiscal adjustment levels and 95 percent confidence intervals across the dataset, resulting from that process:
Figure 2: Modeled IMF-Imposed Fiscal Adjustment in % of Borrower GDP per year, 2001-2018
These results run counter to recent research on the IMF rhetoric and the text of agreements, which often find that the agreements grew more lenient after the 2008/2009 financial crisis. In fact, Figure 3 below shows no significant trend at all across this time period, in terms of the fiscal adjustment actually required by the agreements. Average predicted fiscal adjustment appears to have dipped in 2008 and 2009 (though not statistically significantly so) before rebounding to its prior levels. In fact, the only year with predicted fiscal adjustment that is statistically significantly greater than zero is the most recent year in the dataset, 2018.
Which countries gets more austere or lenient IMF arrangements?
The same working paper also finds that IMF-required austerity wasn’t evenly distributed among all borrowers, or even all borrowers facing similar economic pressures. Even after taking into account each country’s economic situation, the authors find that countries’ foreign economic and diplomatic relationships mattered in setting the stage for the terms of IMF programs. Figure 3 shows the specific relationships that emerged as significant determinants of IMF austerity. For each variable, it shows the difference in IMF-required austerity that is associated with an increase of one standard deviation in each of the significant variables:
Figure 3: Significant Determinants of IMF-Required Fiscal Adjustment, 2001-2018
As Figure 3 above shows, three of these variables were associated with significantly more lenient (less austere) IMF agreements.
The strongest of these impacts is a country’s diplomatic relationship with Western Europe, measured as its average voting alignment with Germany, the UK, and France at the UN General Assembly (UNGA). An increase of one standard deviation in this variable was associated with IMF agreements that were less austere by a whopping 0.9 percent of GDP per year.
Borrowers’ trade relationship with Western Europe was also associated with significantly less austerity: an increase of one standard deviation in a country’s exports to France, Germany, and the UK (from 1.8 percent to 5.6 percent of GDP) was associated with an average of 0.5 percent of GDP less in required fiscal tightening per year.
Finally, aid (official development assistance, or ODA) received from sources outside of the rich countries that make up the Organization for Economic Co-operation and Development’s Development Assistance Committee (DAC) seems to act as a buffer on countries’ willingness to accept harsh IMF conditionality. An increase on one standard deviation in aid from non-DAC countries (from $25 to $54 per capita) is associated with QPCs that are an average of 0.5 percent of GDP less austere per year. It is worth noting that this non-DAC aid is most likely to come from China. This reinforces another recent GDP Center working paper showing that countries may approach China as an alternative to seeking IMF assistance.
In contrast, two additional variables are associated with greater austerity in IMF agreements: a country’s role as a host for foreign investment, generally, and from Western Europe specifically. An increase by one standard deviation in net FDI inflows (from 3.4 percent to 9.3 percent of GDP) is associated with QPCs that require 0.5 percent of GDP tighter fiscal adjustments: the same impact as an increase by one standard deviation in the FDI in-stocks from Western Europe (from 0.3 percent to 2.2 percent of GDP). These findings bolster the growing literature on tight fiscal policy being associated with the influence of foreigninvestors.
What happens after austerity is enacted?
Austerity often falls on the shoulders of the nation’s most vulnerable people.
With this in mind, an additional GDP Center working paper explores the impact of IMF-imposed fiscal adjustment on inequality and poverty, using the same dataset. In this new paper, Poverty, Inequality, and the International Monetary Fund: How Austerity Hurts the Poor and Widens Inequality,” authors Thomas Stubbs, Alexander Kentikelenis, Rebecca Ray, and Kevin P. Gallagher find that greater IMF-imposed austerity is associated with increased inequality and poverty in borrower countries.
Figure 4 below summarizes the findings of ten separate regression models, showing the impact of IMF austerity on the income share of each income decile (each representing ten percent of the population), from the poorest ten percent (decile one) to the richest ten percent (decile ten).
The results show a statistically significant negative effect of fiscal adjustment on the income share of the bottom 80 percent of the population: income deciles one through eight. For the top ten percent — decile ten — the effect of the IMF adjustment coefficient turns positive and is large relative to the other deciles (coefficient, 0.198).
In other words, IMF-required austerity is significantly associated with the highest earners receiving more at the expense of the bottom 80 percent. The biggest losses are accrued by middle-class earners, in deciles six through eight, plausibly a product of wage, employment, and pension cuts for civil servants.
Figure 4: Impact of IMF-Required Fiscal Adjustment on Income Share to Each Decile, 2001-2018
These results have serious implications for families facing poverty. Figure 5 below shows the results of a model of the impact of IMF-required austerity on the poverty rate at $2.50 per person, per day. This model varies IMF fiscal adjustment and averages the remaining covariates in the sample. It finds IMF-mandated austerity to be significantly associated with higher poverty rates.
For example, fixing IMF fiscal adjustment at five percentage points (requiring government budgets be tightened by five percent of GDP per year), our model would predict a poverty headcount at 27.35 percent of the population, compared to 24.83 percent with no adjustment.
Figure 5: Impact of IMF-Required Fiscal Adjustment on Poverty Rates, 2001-2018
As the IMF holds its annual Spring Meetings the first week of April in Washington, D.C., it faces a changed world.
The COVID-19 pandemic has ravaged economies around the globe, with the poorest regions hit hardest: Sub-Saharan Africa and Latin America and the Caribbean each saw their regional economies shrink by over six percent last year, while emerging Asian economies (excluding China) shrank by eight percent.
Amidst the global economic instability, international investors fled developing economies, before returning after vaccines were announced, creating significant exchange rate instability, which can make a country’s dollar-denominated debt obligations unsustainable, even if they were within a normal range before the pandemic. It can also wreak havoc on a country’s balance of payments, creating just the type of international financial instability the IMF was created to address.
As the IMF responds to these crises, encouraging signs have emerged that the Fund may be treating this crisis with special care. The GDP Center’s IMF COVID-19 Recovery Index shows that IMF arrangements in 2020 and 2021 have begun to directly target maintaining or increasing health spending, for example, though rarely in binding ways.
But as these GDP Center working papers show, broader austerity matters as well. The IMF would be well served to take its recent progress and expand it to apply to austerity generally, or at the very least, work to ensure that required austerity does not worsen inequality and poverty in borrowing nations as they work to recover from the COVID-19 crisis.
The star sapphire cluster weighing 503.2 kg, which was found in the Ratnapura area last year, today received the Guinness World Record as the world’s largest sapphire aggregate.
The ceremony of handing over the certificate for the world’s largest sapphire aggregate was held at the Cinnamon Lakeside Hotel with the patronage of Gem and Jewellery related Industries State Minister Lohan Ratwatte, National Gem and Jewellery Authority Chairman Tilak Weerasinghe, Adjudicator of the Guinness World Records and Founder Swapnil Dangarikar and other officials.
Addressing the event, the chairman said the cluster was registered in the Guinness Book after it was certified as a star sapphire cluster by the Gübelin Gem Lab in Switzerland.
He said the gemstone belonged to the Coronandum genus and was valued at more than Rs. 2,000 million.
The star sapphire cluster was found by workmen digging a well at a home in Ratnapura last year. The Gem and Jewellery Authority is taking measures to put this sapphire cluster on an auction or in a museum.
Meanwhile, the Guinness World Records adjudicator said Sri Lanka has received the new Guinness World Record title for the largest sapphire aggregate, which has been done for the first time in the world. (Chaturanga Samarawickrama)
The Health Ministry says that another 1,281 persons have tested positive for Covid-19 today, as the daily count of new cases continues to rise in the country.
This brings the tally of Covid-19 cases registered in the country thus far to 640,578.
According to official figures, 607,583 positive cases have recovered.
Following the new development, the number of virus-infected people who are undergoing treatment moved to 16,909. Meanwhile, the death toll stands at 16,086.
The Director-General of Health Services has confirmed another 31 coronavirus-related deaths for February 22, pushing the country’s death toll from the pandemic to 16,086.
The deaths reported today include 14 males and 17 females, according to the figures released by the Department of Govt. Information.
Six of the victims are between the ages of 30-59 years. The remaining 25 are in the age group of 60 years and above.
Sri Lanka’s present crises borne of an ill political wind based on detrimental administration and bad choices as it appears are of a severe socio-economic nature that can end in bankruptcy which seems like an impending disaster looming over the horizon.Despite warning signs the Government seems to be unconcerned and act as though it might blow away in the manner of a proverbial ostrich burying its head in the sand where properly targeted drastic action which is the key to resolving it seems to be the furthest thing from the Rajapaksa administration currently dabbling in issues of lesser priority than one imminently at hand and the nation continues its agitation in apprehension and uncertainty which could result in dire ramifications for all concerned which in all probabilities could include themselves..
It precludes the rationality and reason towards the well being of the Nation that the people appear to be completely unaware of the gravity of the situation where post haste remedial action is needed( if not already too late!) to prevent a downward spiral as Sri Lanka teerers on the edge of economic uncertainty as well as issues relative to Covid 19.
A clear plan of action to address this entire situation invariably rests on the nation’s stability both economic and relative to the Covid 19 situation.The enforcement of the health rules should be given equal or higher priority in the total program as well as bolstering the economy which disastrously seems to be slipping out of control for which the Administration seems totally responsible.
Sri Lanka according to knowledgeable world financial analysts is alarmingly rated as being close to bankruptcy and desperately in need of dollar resources where foreign investors cannot be expected to come to her rescue due to the high risk involved and thereby forced to borrow short term loans at high interest from unscrupulous lenders further compunding Sri Lanka’s woes and consequently being subjected to a foreign debt trap as the lenders invariably demand more than a pound of flesh in return.The foreign exchange reserves to buy essentials like food and medicines from abroad appear to be running out. The lack of dollar reserves will lead to a severe shortage of essentials. The result will be racketeering and high prices – a black market. This will send prices up further and a worse case scenario could plunge the country into dire straits all too frightening to apprehend as well as comprehend!!
One report says, quote “Within the country the economic situation is extremely bad and specially people in the villages and the ‘urban slums’ are suffering terribly. Within Sri Lanka 60% of our population is living in poverty. Hunger is widespread and many live on one meal a day. The malnutrition level has gone up to 18.3% (which means that out of five children who are five years of age one is suffering from malnutrition). Not only will the body and mental development of these malnourished children be badly affected, it can have some adverse impact on the entire future generation.
Quoting further and appropriately,” so how do we prevent or minimize these unfortunate trends? The question asked is how long will this
Covid-19 pandemic last. On the basis of experience with past pandemics and epidemics, which have generally existed in epidemic form for two or three years, they have then become milder routine infections like the common cold, or influenza. The appearance and increase of herd immunity contributes to the above change.Hopefully with Covid -19 too this will be the case.
With regard to the repayment of our loans as a country which has been badly hit by the Covid-19 pandemic as well as the global economic crisis we are entitled to re-negotiate and restructure the repayment of our sovereign debt. Accordingly we should ask for a period (say about five years) where we do not re pay our debt to the creditors.
This is to enable us to bring about the requisite changes of the policies that will result in sustainable development. During this period we can ensure that our people obtain their essential needs and their suffering be minimized.
The welfare state (free health, free education, allowances to the needy etc.) must not only be properly implemented during this period but also be sustained in the future. Our dependence on loans can be minimized by ensuring that the haves also take a significant part of the burden. The tax rate in Sri Lanka, both personal (14%) and corporate (18%) is one of the lowest in the world. This must be increased to well above the upper limit of tax charged in countries of Europe (35-40%).
A significant section of the future generation will be mentally deficient, in addition to being short and thin and may behave abnormally. There may be an increase of crime and misbehavior. This trend has already appeared among a significant section of the present younger generation (who have lost their jobs, and become drug addicts as well as part of the underworld) ” end quote.
It is horrendous prediction for the once beautiful and well balanced nation of a once proud and dignified people which hopefully can be averted with timely intervention and the right measures taken.
Points for the Administration to ponder upon before impending disaster takes over the smooth functioning of Sri Lanka even in some small measure as the vultures of the opposition and disgruntled enemies of the state are ready to pounce on the shortcomings of a faltering and what could be, a failed state if the current trend continues..
