{"id":91523,"date":"2019-07-18T15:26:36","date_gmt":"2019-07-18T22:26:36","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=91523"},"modified":"2019-07-18T15:26:36","modified_gmt":"2019-07-18T22:26:36","slug":"millennium-challenges-economic-issues-and-international-politics-in-sr-lanka-part-1","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2019\/07\/18\/millennium-challenges-economic-issues-and-international-politics-in-sr-lanka-part-1\/","title":{"rendered":"MILLENNIUM CHALLENGES, ECONOMIC ISSUES AND INTERNATIONAL POLITICS IN SR LANKA PART 1"},"content":{"rendered":"

BY EDWARD THEOPHILUS<\/em><\/span><\/h2>\n\n\n

Recent political\nanalysis of Mr. C.A Chandraprema in Sunday Island on 14.07.2019 allowed\nunderstanding the truth about the achievement of millennium goals in Sri Lanka\nas it has been quite closed information that most of the population in the\ncountry including politicians have no idea about this test performance.  I associated with university students in\nPacific countries to discuss UN millennium goals after the year 2000, however,\nI didn\u2019t know that Sri Lanka also was a country covered by UN Millennium goals\nas the official statistics published by the Central Bank of Sri Lanka showed\nthat it should not include achieving millennium goals as the economic status of\nthe country was in above level than the targeted level of the united\nnation.  I critically discussed economic\nissues and related social cultural and education issues with students and\nunderstood that skills development was a key factor in achieving millennium\ngoals in developing countries of the Pacific region.  I believed that Sri Lanka was a country with\nreasonably economic achievements and a country where was not expecting economic\nsupports from developed nations to get out of poverty. The analysis of Mr.\nChandraprema changed my assumption and encouraged to rethink about the original\ndiscussion as UN focus on the Millennium Goals and the views of Millennium\nCorporation seem to be contradicting or different from the original UN\ngoals.  The UN discussions on the\nmillennium goals strongly focused on debt reduction in third world countries\nand did Millennium Challenge Corporation support to debt reduction or to write\noff Sri Lanka\u2019s debt to International Financial Organizations is not clear.<\/p>\n\n\n\n

Inflation in Sri Lanka<\/strong><\/p>\n\n\n\n

Theoretically,\ninflation is defined and explained as cost-push or demand-pull, and in early\n1950s Prof Milton Freedman added monetarists view on inflation that the\nincrease in money supply (M1+M2) would impact on the increase in inflation. The\ntraditional instruments of the monetary regulator and the authority, the\nCentral Bank of Sri Lanka is to use interest rate as a controlling measure of inflation  with other controls such as open market\noperations and reserve ratio, however, they are not effective in Sri Lanka as\nthey are working well in developed countries where have a higher level of\naccess to formal financial markets. Sri Lanka is not such a developed financial\nmarket with information and information management. Other credit control\nmeasures such as selective controls used in Sri Lanka, but deregulation of\nfinancial markets had to put them away. Since the late 1980s printing money for\nfiscal purposes badly affected on inflation because treasury bonds issued to\nfind funds for budget purposes were invested by the Central Bank of Sri Lanka\nprinting money.  I don\u2019t really know\nwhether Sri Lanka had passed the test for inflation, but ordinary people\nespecially rural poor states that they are facing economic predicaments because\nprices of goods and services are increasing day by day.  It is seen that the government has failed to\ncontrol inflation and the general price level going up and up every day. <\/p>\n\n\n\n

Inflation is a\nhighly argumentative economic issue in developed countries as well as in\ndeveloping countries. When we were learning macroeconomics in universities, it\nsaid that one person\u2019s spending today would be a revenue of another in tomorrow\nand spending would be supported to increase in aggregate demand and Inflation\nis good for a certain extent. \nTheoretically, it may be true or false, but need to ask poor people as\nthey are practically suffered day by day and engage in never-ending hard work to\ncope with inflation. In this situation, it is quite difficult to believe that\nthe Millennium Challenge Corporation’s view that Sri Lanka has passed the test\nfor inflation. <\/p>\n\n\n\n

In developed\ncountries also produce prices have gone up and the prices of many electronic\nitems have gone down when consider the average situation economists conclude\nthat inflation is lower and successful in the management of the economy.  About to Sri Lanka also it is a truth that\nfrom the point of views of economists\u2019 Sri Lanka may have passed the test of\ninflation, however, practically ordinary people cannot enjoy the pass of the\ntest they cannot see any benefit.<\/p>\n\n\n\n

When talking\nabout inflation it needs keep in mind that declining the exchange value of the\nmonetary unit in Sri Lanka has been contributed to increase in price level of\nSri Lanka. The government has failed to control the declining Rupee value.  It is an internationally concerned issue and\nSri Lanka has no economic power to control it.<\/p>\n\n\n\n

Regulatory Quality<\/strong><\/p>\n\n\n\n

Deregulation was\nthe popular idea since late 1980s and the idea has been accepted by Sri Lanka\nsince the beginning of market economic system in 1978, however, it is\nquestionable whether Sri Lanka has been maintaining a purely deregulated\neconomy or an economic environment with regulatory quality.  The assessment of the quality of regulation\nmanagement is a difficult task and the way of regulation management is also not\nacceptable to everybody.  Sri Lanka has\nappointed authorities for regulation management in various market areas such as\nhealth, education, finance, agriculture, technology and many others. The\ncurrent problem is whether the regulatory authorities discharge the functions\nprudently and independently without political influences.<\/p>\n\n\n\n

There is clear\nweakness in many areas and it seems that regulators have become market\noperators in Sri Lanka.  For example,\nCentral Bank of Sri Lanka is the regulatory authority of the financial markets,\nbut it is performing market operations about to superannuation and rural credit\nmanagement.  I informed the president of\nSri Lanka this late 1990s, the president acknowledged my points, so far nothing\nhas been done.  The Central Bank allowed\nto market economic system and operations without quality regulations in various\nmarkets and it was the major reason for people to make negative criticism on\nthe market economic system, which created many problems in the economic system\nof the country as well as benefits to poor people finding a right price for\ntheir produce.  <\/p>\n\n\n\n

The main purpose\nof the regulator is to protect consumers in the trade or market\noperations.  I have a reasonable\nquestion, has regulatory authorities in various trade areas in Sri Lanka are\nsuccessful in protecting consumers?  When\nI talk with ordinary people in the country the answer of them was that\nregulatory authorities have been unable to protect consumers and market\noperators have taken the power to their hand and consumers became slavers of\nmarket operators.  In this situation how\ncan say Sri Lanka has a regulatory quality in market operations<\/p>\n\n\n\n

This is a macro\nstyle issue and the response of public is that regulatory quality is not up to\nthe expected level.<\/p>\n\n\n\n

Trade Policy<\/strong><\/p>\n\n\n\n

Trade policy\nconcerns with domestic trade policy and international trade policy.  Sri Lanka has no power to successfully make\npolicies for international trade consistent to trends but it can make or adapt\nto trade trends developing responsive trade policies.  When developing trade policies Sri Lanka has\nnot totalitarian style power like America or China has and it should act within\nthe authoritative framework.  Many people\nand politicians in the country have no idea about this and they think that the\ncountry can change trade policy overnight. Domestic trade policies are also not\nopen and the country needs a concrete domestic trade policy which means that\nwhat should do.  I haven’t seen a trade\npolicy manuals and procedures manuals to pass a test for trade policy in Sri\nLanka. What should be the trade policy for the country should be determined by\npractical outcomes and for this purpose, it needs continuous research on trade\npolicy matters. <\/p>\n\n\n\n

Business Start-Up<\/strong><\/p>\n\n\n\n

This is also a\nquite complicated area as an investor has many loop holes to go through to\ninvestment decision and corruptions are main constraints to business start-up.\nFrom the side of Sri Lanka allowing for investments should be made after\ncareful consideration of investment projects, especially after 9\/11 and the\nEaster Sunday attacks Sri Lanka must consider allowing for investment either\ndomestic or foreign investments should be after intelligence analysis and\nsometimes, consultation with several countries. \nInvestments in modern era concern with many issues not just the\nreturns   Honestly speaking I have no\npersonal experience in business start-up, but I heard various complaints from\npotential investors. A significant constraint is investors or business people\nmust go from one place to other compile to regulation and they must face with\ncrooks.<\/p>\n\n\n\n

It is indicated\nthat Sri Lanka has failed the test on fiscal policy, land right and access to\ncredit. These are highly complicated issues as they are involved in politics.\nThe confabulation on three items is vital for policy makers in the country and\nthey are broader area cannot discuss in a short paper. There may be thousands\nof papers written on these matters including thesis of university students.<\/p>\n","protected":false},"excerpt":{"rendered":"

BY EDWARD THEOPHILUS Recent political analysis of Mr. C.A Chandraprema in Sunday Island on 14.07.2019 allowed understanding the truth about the achievement of millennium goals in Sri Lanka as it has been quite closed information that most of the population in the country including politicians have no idea about this test performance.  I associated with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-91523","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/91523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=91523"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/91523\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=91523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=91523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=91523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}