Features
Should Sri Lanka join the ranks of the “Poorest of the World’s Poor”?
by Thalif Deen
UNITED NATIONS, Jun 13 2022 (IPS) – As one of the world’s foremost international humanitarian organizations, the United Nations has pledged to provide food and medicines to cash-strapped Sri Lanka –a country suffering from a major financial crisis.
As of last week, a UN team, led by the Resident Coordinator in Colombo, Hanaa Singer-Hamdy has appealed to international donors for more than $47 million in “life-saving assistance” to 1.7 million people in a country with a population of over 22 million.
This stands in contrast to the staggering $5.0 billion the government is seeking for the island’s economic survival during the next six months—primarily for food, fuel and fertilizer.
Last month, the UN announced that with a $1.5 million donation from the Government of Japan, the UN’s children’s agency UNICEF will procure medicines for over 1.2 million people, among them 53,000 pregnant mothers and nearly 122,000 children with immediate medical needs.
The World Food Programme (WFP) is expected to receive about $1.5 million from Japan to provide food assistance to children and families in need of support.
In addition, Australia has made available the equivalent of nearly $5 million for food security, essential medicines for women’s health, nutrition data collection and analysis with UN agencies working together, including the Food and Agriculture Organization (FAO), the World Food Programme, the World Health Organization (WHO), the UN Population Fund (UNFPA) and the UN Children’s Fund.
Currently, some of the UN’s biggest aid recipients are either countries embroiled in military conflicts such as Ukraine, Afghanistan and Yemen – or the 46 member states categorized as Least Developed Countries (LDCs), “the poorest of the world’s poor”.
The majority of LDCs are from Africa, including Angola, Rwanda, Zambia, Burkina Faso, Ethiopia, Somalia and the Central African Republic, while the LDCs from Asia include Nepal, Bhutan, Bangladesh, Myanmar and Afghanistan.
https://www.un.org/development/desa/dpad/least-developed-country-category/ldcs-at-a-glance.html
According to published reports, Sri Lanka’s foreign exchange reserves have hit a low of $1.9 billion, equivalent to funds that could finance less than one month’s imports while its debt service repayments amount to about $6.9 billion. Last month, Sri Lanka defaulted on its debt repayments for the first time in history.
An editorial in the Sri Lanka Sunday Times put the problem in its right perspective: “Once called the ‘Granary of the East’, Sri Lanka is also considering tapping the SAARC Food Bank – from the buffer stocks of India, Pakistan and Bangladesh. The country is not only financially bankrupt, it is facing a famine in a few months”.
“From a middle-income country not long ago, it has come to this”, said the editorial. “What an inglorious comedown for the country and humiliating stigma for its people no better personified by the presence of its Foreign Minister and chairman of the ruling party accepting a container of food aid from abroad at the Colombo harbour”.
“Brought about by stupendously irresponsible agricultural policy decision-making at the highest levels of Government, it is now humble-pie that is left to be eaten as Sri Lanka appeals to the world for food in the midst of a global economy facing recession, inflation, and a hurricane of shortages of oil, gas and wheat.”
Should Sri Lanka, long designated by the UN as a “middle-income country,” be heading towards the ranks of the 46 LDCs?
In an interview with IPS, Ambassador Anwarul K. Chowdhury, former Permanent Representative of Bangladesh and the first Under-Secretary-General and UN High Representative for LDCs, Landlocked Developing Countries and Small Island Developing States, responded to questions on the benefits and privileges of being an LDC.
“LDCs benefit from exclusive international support measures (ISMs) in the areas of trade, development cooperation and participation in international organizations and processes.”
Such measures in the area of trade, he pointed out, include preferential market access for goods and services; special treatment under World Trade Organization rules and certain regional trade agreements; and technical assistance and capacity building.
A range of financial and technical assistance provided by multilateral and bilateral partners, such as special programmes and budget allocations at the UN, including the Technology Bank for LDCs and Fund for LDCs, established by the United Nations Framework Convention on Climate Change (UNFCCC). Support for debt cancellation and/or debt rescheduling are also available for LDCs, he added.Other support measures help LDCs participate in international forums, such as caps and discounts on contributions to the budget of the United Nations and financial support for representatives of LDCs to travel to General Assembly and other meetings, said Ambassador Chowdhury, who was also Senior Special Adviser to UN General Assembly President (2011-2012).
Excerpts from the interview:
Q: Do you think that Sri Lanka, which has appealed for humanitarian assistance from the UN, may end up being an international basket case?
A: It is not conceivable that Sri Lanka would become an international basket case. But it needs to steer away from the man-made, to say more directly, the current corruption-driven economy, in the right direction to return to its steady developing socio-economic development of yesteryears.
Among the eight members of SAARC only three are not LDCs, but among the other five LDCs, the Maldives have already “graduated” out of the LDC category and Bhutan, Nepal and Bangladesh are scheduled to graduate by 2026 (as their economies improve).
Being the victim of a catastrophic economic mismanagement should not prompt Sri Lanka to think of seeking an LDC status. The United Nations defines LDCs as countries that have low levels of income and face severe structural impediments to sustainable development.
Q: If the situation continues to deteriorate, what are our chances of joining the 46 LDCs?
A: Joining the LDCs group involve a long process and requires fulfillment of all three criteria to be eligible. According to the UN, those three are:
1. Income: Countries must have an average per capita income (GNI) of below USD$1,018 for inclusion, and above USD$1,222for graduation.[The Gross Domestic Product per capita in Sri Lanka was last recorded at 4052.75 US dollars in 2020.]2. Human Assets: Countries must also have a low score on the Human Assets Index (HAI), a tool that measures health and education outcomes, including under-five mortality rate, maternal mortality, adult literacy rate and gender parity for secondary school enrolment. [Sri Lanka is much above the “60 or below” threshold.]3. Economic and Environmental Vulnerability: Countries must score high on the Economic and Environmental Vulnerability Index (EVI), which measures factors like remoteness, dependence on agriculture and vulnerability to natural disasters.[ Sri Lanka is below “36 or above” threshold. The current economic downturn and challenges faced by Sri Lanka may not fully fit the country’s EVI threshold]
IPS – How does this work? Does Sri Lanka have to apply to the UN for LDC status?
A: The Committee for Development Policy (CDP) reviews the list of LDCs and makes recommendations for inclusion in and graduation from the category every three years.
According to UN guidelines, the time frame of the eligibility procedure includes preliminary finding that the country satisfies inclusion criteria; notifies the country of its findings; prepares a country assessment note; provides a draft to the country; finds the country eligible and formally notifies the country of eligibility conclusion; and the General Assembly finally takes note of the CDP recommendation.
Q: What’s the downside of being an LDC?
A: In reality, there is no downside except the psychological perception of being categorized as one of the poorest countries. Some say that foreign direct investment (FDI) is not forthcoming.
If there is a downside, how come six countries have “graduated” from LDCs over the years since the category was established by the General Assembly in 1971 and ten more are in the pipeline for graduation by 2026.
IPS UN Bureau Report
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 . )
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