Features
Lanka struggles to get back on track
by G.Kumanayake
Sri Lanka is facing an unprecedented economic crisis. The inefficient, corrupt politicians brought this country to bankruptcy. Now the country depends on credit lines, swaps and foreign aid. Since independence we never had visionary leaders. They were engaged in short-sighted power games and neglected the economic development.
Nevertheless, since 2005, the Rajapaksa family’s contribution to the economic decline cannot be underestimated. Mahinda Rajapaksa’s vanity projects such as the Mattala Airport and the International Conference Hall in Hambantota caused colossal harm to the country’s economy. “Sanda Hiru Seya”, the gigantic dagoba in Anuradhapura is another classic example. Most of the infrastructure projects are not economically productive.
The ‘Yahapalana Government’ which came into power in 2015 continued to obtain foreign loans. Their so-called development projects did not bring substantial benefits to the national economy. No attempt was made to curtail unnecessary expenditure. Instead, that Government imported super luxury vehicles for politicians and bureaucrats several times. For that purpose, supplementary estimates were passed in Parliament. Moreover, that Government failed to introduce the necessary economic reforms.
Total Government Debt (Rs. Million)
Year Amount
2011 5,137,762
2012 6,082,950
2013 6,889,212
2014 7,486,862
2015 8,599,190
2016 9,478,869
2017 10,382,833
2018 12,030,548
2019 13,031,543
2021 15,117,247
2022 17,589,373
Sources: Central Bank Annual Reports
All Governments continued to borrow heavily and repaid at higher interest rates. The foreign exchange reserves virtually dried up. Now the country has defaulted on its debt. Our excessive spending and limited revenue caused Balance of Payment problems. Thus, it is obvious that the current economic crisis is not due to the COVID – 19 pandemic or the War in Ukraine. It is caused by stupid political decisions and purely a man-made disaster. Covid and Ukraine only aggravated our problems. It is true that energy and food prices are escalating at the global level. But Sri Lanka’s main problem is the forex shortage.
Due to the lack of US dollars all sectors are affected. The non-availability of medicine and medical equipment is a grave problem. It has been pointed out that even the local producers are unable to produce drugs as there are no dollars to purchase raw materials.
Sadly, we find it very difficult to unload cargo. Recently a crude oil tanker arrived at the Port of Colombo and demurrage to the tune of US$ 75 million was paid to unload crude oil!
President Gotabaya Rajapaksa recently said that he was not responsible for the crisis. Then he admitted that some of his decisions were wrong. Sri Lanka’s food security is at a perilous state due to the fertiliser fiasco. Gotabaya and his CBSL Governor Cabraal flatly refused to seek the IMF’s assistance. When the Government’s loincloth caught fire, Ali Sabry, the newly-appointed Finance Minister was dispatched to Washington. GR appointed his two brothers Mahinda and Basil as Finance Ministers who were clueless about the economy. His myopic tax cuts weakened the economy. Thus, Gotabaya is primarily responsible for the current pathetic situation.
Now Sri Lanka struggles to get back on track. The focus should be on how to earn forex. The country must expand its FDI and export sectors. Sri Lanka’s FDI in 2020 was mere 548 million. Other Asian countries are far ahead.
US$ billion in 2020
Hong Kong 120
Singapore 28
Indonesia 19
Vietnam 16
Recently a high-ranking officer of the Board of Investment (BOI) took part in a TV programme and said that it was difficult to attract more FDI due to many ‘external factors’. Several other government institutions must perform certain tasks and those are beyond the limits of the BOI. Having functioned for the past 40 years, isn’t it high time to address these issues? Can the BOI come up with such ‘excuses’ for the failure to attract substantial FDI?
Another important sector is tourism. We need a robust plan to attract more tourists. The chairperson of Sri Lanka Tourism tendered her resignation after submitting a strongly worded letter to the new Tourism Minister. A battle went on between the chairperson and the Sri Lanka Association of Inbound Tour Operators. All stakeholders must work hard to revive the tourism sector.
The export sector is showing some progress. However, export crops such as tea and cinnamon face serious problems due to the chemical fertiliser and weedicide shortage. The country needs effective strategies to develop the export sector. High tech exports form only 1.5% of Sri Lanka’s manufactured exports. In Singapore it is high as 57%. In Malaysia and Thailand, it is 55% and 27% respectively.
Corruption hampers economic development. Under all governments corruption flourished. In 2021, Sri Lanka’s corruption index was 102 out of 180 countries! The SLPP successfully used the Central Bank Bond Scam against the previous Government. But we saw many serious corruption cases under the present administration. For example, the Auditor General’s report says that the total loss of the sugar scam is around Rs. 102 million. No genuine efforts are being made to eradicate corruption. The Bribery Commission is impotent.
Another point should be stressed. In our country almost all institutions had failed. For example, has Parliament effectively performed its oversight role? Every rupee that belongs to the Treasury should be controlled by Parliament. Then, how public finances had been allocated for unproductive ventures? The two main watchdog bodies, COPE and COPA, are like toothless tigers. Moreover, the involvement and enthusiasm of the members are not satisfactory. Some of them attend the committee meetings unprepared. Some officers do not follow the directions/ recommendations of the committees. Fiscal Management Responsibility Act No.3 of 2003 has not been able to serve the purpose.
Prime Minister Ranil Wickremasinghe stated that US$ 600 million would be required to ensure adequate supply of fertiliser. However, we wasted valuable forex to purchase substandard fertiliser from India and China. For the Chinese ‘carbonic fertiliser’ ship, which was rejected by the Sri Lankan scientists, US$ 6.9 million was paid. Has anyone been found guilty of the harmful decision? Where is the accountability? Many such irrational decisions are made, and millions of rupees of public funds wasted.
To get back on track, Sri Lanka needs an able leadership. Gotabaya Rajapaksa has failed miserably. He was elected by 6.9 million voters to govern the country democratically. He dashed their hopes. Now his credibility is at the lowest level. Undoubtedly, he is the most inefficient leader of Sri Lanka since Independence. His mandate is no longer valid. Constitutionally he can be the President until his term expires. Nevertheless, he has no moral right to hold the presidency. Thus, the ‘Gota go home’ slogan is valid. The protesters are rightly asking him to step down.
Hobbes, Locke and Rousseau expounded the Social Contract theory. Accordingly, ‘each person agrees to surrender some of his or her rights and freedom to a central authority on the condition that every other person does the same. In exchange, each person receives the benefits that supposedly only such a central authority can provide, including domestic peace. The authority must provide protection to individuals. Maintenance of social order is included.’ At present all Sri Lankans suffer a lot. Especially, the vulnerable segments are badly affected. In May, the overall inflation rate rose to 39.1%. Social unrest is widespread. People have lost confidence in the Government.
When Ranil Wickremesinghe was sworn in as the Prime Minister on May 12, liberal minded and pro-business people expressed their pleasure. They thought that Western countries and the international lending institutions would generously assist Sri Lanka. But the reality is that Ranil or any other individual cannot perform miracles. There is no point in pinning hopes on a ‘saviour’. On May 30 the World Bank reiterated that it does not plan to offer new financing to Sri Lanka until an adequate macroeconomic policy framework is in place. It is obvious that Wickremesinghe came forward to protect the extremely unpopular Gotabaya Rajapaksa regime.
Then a new Cabinet was formed with the same old faces, except for the two SJBers, who were solely interested in Ministerial portfolios. The man who failed to pay his massive electricity bill was awarded a ministererial post. And the person who proudly declared that he saved the Rajapaksas when they faced serious corruption charges is also a Minister. What can the country expect from such a gang?
The country’s future is bleak. The citizens’ agony is immeasurable. They will have to face more formidable challenges in the near future. Ironically, the stupid, arrogant politicians who brought misery to the nation are the least affected! They are unbelievably wealthy!
(The writer retired as chief research officer of Parliament)
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
US sports envoys to Lanka to champion youth development
Rahuman questions sudden cancellation of leave of CEB employees
