Mawbima News

By Kusal Perera –

Much is talked of in the media about economic growth in Sri Lanka in the course of the previous decade or so. Finance Ministry and Treasury Secretary Dr. Jayasundera whose been there from about 1990, very first as Advisor to the Ministry of Finance is still hopeful of economic development he had not accomplished for the duration of the last 02 decades (In amongst he was for a quick spell, Consultant and then Chairman PERC and absent for 02 years when Charitha Ratwatte held the position during RW’s government) of his powerful and dominating presence in the treasury.

Nivad Cabraal, the other kingpin in this regime who talks company was quoted saying, FDI would reach a high of 20 per cent of GDP by subsequent year (hardly 02 months away in 2015). Explaining the indicators of an emerging economy, he had stated, ads on restaurants, dining, tours and travels, autos, etc are increasing exponentially. “When going by way of the weekend newspapers we can see this,” he was quoted, attributing this as a single indicator of a developing economy which is expanding by 7.five per cent.(Very good Time To Mull Consolidating The Insurance coverage Sector – CB Governor / ST Company Occasions – 09 Nov.2014)

That may be their total understanding of budgeting and business. But for confident, these 3 hundred thousand plus who voted against this regime at the Uva Pc elections last September, wouldn’t know or really feel this financial growth by way of advertisements that Cabral is proud of. I have not been in such company to feel that growth either. For that reason, in spite of what the two large guns in this regime say, this is little pondering on what massive corporate entities and individual enterprise guys and women ought to be undertaking in Sri Lanka, apart from creating earnings. Making income is what companies are meant for is not disputed though.

Compared to pre-Jayawardne era, this unbridled and fenceless open economy because 1978 has offered massive space and freedom for the company and trader community in Sri Lanka to stockpile earnings. This segment in the Sri Lankan economy frequently referred to as the “private sector” is accepted as the “engine of growth”. Wickramesinghe government in 2002 called it so, in “Regaining Sri Lanka”, their economic plan. No present day political leader in government or in the opposition (even the JVP?) would dispute that status of the private sector. Handful of would say, “Yes, but with a lot less corruption”. None would disagree. “Controlled” corruption is the norm. Even in developed 1st globe nations where social awareness and civil responsibility is higher and democratic structures for good governance are in place, corruption and fraud are portion of their life.

Common belief is, if governance can be organised without having politicians, there will be no corruption in society. I totally disagree. Corruption is only attainable if two other partners move into share the “big deal” where politicians can only determine. One, the conniving Ministry Secretary who plays proxy to the politician. The other, the businessman who is prepared to spend for the “deal” in return for huge enterprise. Usually in present day Sri Lanka, it is the businessman who takes the project to the politician. And corruption needs loopholes or bending of the law or both, worked out by ministry Secretaries or a strong administrator.

That holds the private sector company equally accountable as any corrupt politician and no much less. It was proved so in the LMS privatisation and Insurance coverage Corporation sell out. Can I for that reason ask the private sector leaders, “Can the private sector be the engine of development on wheeler dealing?” Can genuine firms thrive in a “Zimbabwian Syndrome”? I firmly think most entrepreneurs, most corporate entities would not want to invest and do enterprise in an uncertain, wholly unpredictable and a heavily corrupt society. Most entrepreneurs would want to minimise danger and that to a excellent extent depend on how stable, how level the playing field is and predictable the future is. How do corporate bosses as a result see this Sri Lankan society and its future ?

This society is an ugly ailing society though firms still make profits. It is not only mega plunder and looting that no a lot more can be referred to as “corruption” that makes this society sick and ugly. Every single arm of the State is putrefying. The whole public administration has turned into a meek collective of spineless political stooges at each level. It is inefficient and with no dignity. Potent officials like Jayasundera who live on unconditional political energy can as a result insult higher officials in public and walkout proud (“Public Lashing of State Officials by PBJ” / ST Organization Instances / 09 Nov.2014). An administration that’s spineless is not one particular that can provide effectively and with independent authority.

Certainly, in such context, State solutions can’t deliver even the fundamentals and the minimum. Modest time but rampant corruption the Bribery Commission highlights as massive achievements are in nearby level service delivery. From Grade I college admissions to traffic offences on the road, from motor car registration to family certificates for migrant housemaid employment the whole society is reeking with politicised inefficiency, selective treatment and corruption, accepted as essential for every day living. Within such erosion of social life, formal education in urban poor and rural society reaching up to universities, have lost their goal and dignity. Well being is no better. Medical persons and their specialist organisations are a disgrace to intellect and ethics needed in a noble service treating human beings.

The judiciary from its pinnacle proper down, is far worse. The best is heavily politicised and acts accordingly. Removal of the 43^rd Chief Justice and appointment of the 44^th proved how subverted the apex Court is. The rut set in from specifically the time of Sarath N. Silva who paved the way for shameless crossovers in parliament. Parliamentary democracy is no far more. He accepted he delivered a judgement for which he now begs a public pardon, again for his personal selfish political reasons. Silva hence accepts intentional misuse of the highest position in the judiciary. A crime against society, against 20 million individuals, he need to be punished for, but is applauded as a hero alternatively. This society has no values and no conscience.

Correct down to the regional level, the judiciary is corrupt and inefficient as well. I’ve heard of suspects, some even without a trial fixed, kept in remand custody for unending years. I’ve heard of guys with non bailable offences enlarged on bail. I’ve study in the media often occasions, Magistrates nodding approval of killings, when police officers claim it was in self defence. Custodial killings are in no way questioned and investigated. But carried via constantly with the exact same script and approved in Courts with no lawyer wanting to challenge such scripted killings.

Police have been frequently accused as one particular of the most corrupt government departments in this country. They are not only corrupt they are into criminal acts also. From DIG Vas Gunawardne down to SPs, ASPs and OICs, there are many cases and allegations of contract killing, bribery, sexual abuse and political thuggery. At local level, it is widespread now to accept the police to heed the ruling politician ahead of they make decisions. And by now, their behaviour on camera proves they don’t often stick to law and order, even when racist thugs take to the streets.

With the police noticed and understood as a political appendage of the ruling regime, this society is seeing a heavy improve in crimes. Of extortions, abuse and sexual molestation of young children, rape and murder of ladies, drug peddling and murder turning into frequent occurrences in every day life. All crimes, seeping into rural life with neighborhood government bodies stacked with village thugs. They are maintained via several State funded projects and wield State energy. These nearby power wielders abuse their status and are responsible for most youngster abuse situations, rape of girls and possibly drug peddling too.

This break down of social life can be very easily gauged by the truth that this society is a fast decaying society. Ever heard of mothers killing their infants, dumping them at bus halts or jumping into rivers so often, ten years ago ? Ever heard of fathers sexually abusing their personal youngsters and brutally killing them? Ever noticed a citizenry watching a policeman physically maul a lady in broad daylight and then go their way without having a word? Can corporate leaders ignore all this and continue generating income?

Corporate Social Duty (CSR) is beyond funds channelled for isolated neighborhood projects. I firmly think, as a social segment that carves out income from social life, corporate leaders cannot behave like the international corporate who ignored the outbreak of “Ebola”. (quote) In Africa, the infected population is continuing to grow. As a lot of as 21,000 individuals are sick with the virus in Sierra Leone and Liberia, and that quantity could grow to up to 1.four million people by January (2015), according to estimates by the Centers for Illness Manage (unquote – Laura Lorenzett in fortune.com on 02 October, 2014). The enterprise logic in ignoring Ebola was, diseases that have an effect on poor men and women in poor nations aren’t a research priority, for it is unlikely the poor will provide a marketplace with a decent return. But, Ebola was deemed an epidemic when the US was shocked to locate a victim in Dallas who may infect about 80 people. That’s also when the Corporate pharma giants raced to create a remedy.

Sri Lankan Corporate must not behave in such “Ebolitic” manner. It’s to their benefit as well, in carrying out company in a civilised society. But why isn’t Corporate leaders reacting? Why are not they visible and audible in demanding respect for life and stability in society? Is it, they can still earn income, what ever takes place to the minions without a purse to purchase what they dump in shelves and industry for the developing urban rich?  Corporate bosses would have to prove they are a responsible segment in Sri Lanka beyond stockpiling earnings and unaccounted luxury. Prove they are a decent lot and want a civilised society, not just earnings.

By Emil van der Poorten –

The choice of Maithripala Sirisena to throw his hat into the ring has resulted in what should be the most significant sigh of political relief skilled in Sri Lanka in a extended time, not to mention the usual fire-cracker sounds of celebration!

Whilst it is straightforward adequate to see this as an unmitigated blessing to a land that is drowning in a cesspool of corruption, a word of caution is not just required, it is crucial.

Particularly offered the players in this melodrama, 1 wants to bring a lot more than a bit of circumspection to bear here.

Whilst there is probably to be a substantial quantity of speculation as to who specifically had the greatest responsibility for obtaining Sirisena to “turn,” there is little doubt, given her look on the platform from which the announcement was created, standing right by Mr. Sirisena, that Chandrika Kumaratunge played a substantial role, probably calling in her markers from way, way back.

Offered that lady’s track record a single would be properly advised to apply the old adage to an evaluation of Mr Sirisena: “Tell me who your friends are and I’ll inform you who you are.”  And, let’s face it, that wouldn’t put the erstwhile Minister of Well being at the upper level of any band of political angels!

Chandrika Bandaranaike Kumaratunge does not precisely have a sterling record in the matter of not becoming vindictive and vindictiveness is no recipe for a return to excellent governance if Mr. Sirisena is successful in his quest for the Holy Grail. Neither is she, by any stretch, an example of someone who displayed principle and competence at the time she claimed to steer this nation.  Nonetheless, let’s assume that she has noticed the light during her certain journey to a Sri Lankan Damascus. Following all, Saul did end up as Saint Paul, even if that particular religious fact is becoming quoted in this particular instance by an unbeliever!

That said, I will reiterate what I proposed in a piece in Colombo Telegraph a while ago: all the essential preparations have to be made to prosecute, to the full extent of the law, these who have economically raped and pillaged this nation under the protection of the Rajapaksa Regime. I am not suggesting that any of these who did the same under Chandrika Kumaratunga or her predecessors be let off that particular hook, but a start off should be created and it is most sensible to go following these who’ve had the least quantity of time to cover their tracks.  That is a sine qua non in the cleansing and healing method which this country should begin if it is to return to something resembling law, order and good governance. I will, again, situation the challenge I did a although back to the members of such as Friday Forum: you surely have among your number those with the skills to play a top role in this endeavour and I challenge you, once again to emerge from your collective protective cocoon, quit basically issuing statements and do anything good and productive in the national interest.  Even if the current corrupt bunch continue in power after the next Presidential election, the act I am suggesting will not be in vain since it will have established a beachhead of principle that can never ever be regarded wasted.

I don’t know about the logistics of change that are needed and which, broadly speaking, all those involved in the anti-Rajapaksa movement subscribe to. Nonetheless, what they have had to say definitely puts them on the side of the angels in this contest, even if something even vaguely resembling moral or ethical conduct would do so in the present Sri Lankan context!

What I have seen, though, at initial hand is the danger of critical dilution of any effort to return to democratic practice in this nation by the participation of those who’ve given ample proof of their becoming ready to influence choice-makers to equivocate in matters of simple principle and justice.

As someone who witnessed this in miniature and was among those who fought a losing battle to turn that specific tide at a rugby club, I witnessed, at first hand, a wholesale sellout of principle in the rugby arena. I saw how, due to the fact of the need to have to curry favour with “the powers that be” whose progeny were the “stars” of a club purporting to represent the “Senior Service,” even the use of an assault weapon on the field of play was, basically, let slide. Why?  Because of a worry of “upsetting” the most crucial rugby fan in this nation! That there had been enterprise considerations attached to this manipulation of response was patently clear to any witness of what unfolded. I refer to this since it resulted in the selling out of fans, dozens of whom had been hospitalized since of the mayhem unleashed on them right after matches involving those specific protagonists, and witnesses who had placed their employment on the line by submitting signed statements to corroborate video, some of which I nevertheless have in my possession.

Suffice it to say that these “Dinuwath dinuwa, paradunath dinuwa[1]”  businessmen are the really identical enterprise types who play a substantial role on the national political stage by virtue of their connections to each sides of the political equation.  They have to not be permitted to subvert the need to have for justice and fairness and the bringing to book of those who have displayed an unparalleled capacity to rob this country blind. All they have been interested in is their own narrow company interests and they need to not be permitted to influence and impede the course of justice simply because they are driven by the require to preserve the “insurance” they have so effectively maintained via thick and thin, even though a entire nation went to the dogs. That need to not be negotiable in any shape, type or fashion. These sycophants have been a massive portion of the difficulty that has paraded as governance in this country and they have to not be permitted to impede the course of justice once more parading as element of the remedy.

As far as public opinion is concerned, the tide has turned and there is a veritable tsunami of dissatisfaction prepared to express itself against the Rajapaksa Regime. How does 1 harness this most successfully?

In the matter of campaigning, let me make a couple of suggestions from encounter garnered from much more than half a century of political activity, significantly of it in the trenches of electoral combat both here in Sri Lanka (in a more civilized and civil time) and elsewhere, exactly where the kind of violence which is a day-to-day element of political activity of any sort in Sri Lanka was conspicuous by its absence! Even provided that caveat, the three basic suggestions I am about to make are much more than relevant to a national constituency that is much more politically sophisticated than those of several functioning democracies.

1. Prior to election day (E-Day), canvassers require to to knock on each and every door in this nation to persuade each voter to cast his or her ballot on election day. Where attainable this foot-canvassing should be augmented by telephone canvassing with a properly-ready script, by telephone-canvassers who have been trained (specifically not to shed their tempers!)
2. And, on E-day, every work must be made to get every voter to the polls. Trying to exclude these suspected of supporting the present regime from such an effort would be a mug’s game because, with the climate of worry prevailing in this nation and what is going to be the unleashing of violence with no precedent by the incumbent government, extremely few are going to threat showing colours that would be deemed to be opposed to the incumbent.
3. Then comes, possibly the most critical element of E-Day: guaranteeing that the ballot boxes are not tampered with and that the votes are reported as cast. Even if, by some miracle that results in Mahinda Rajapaksa being elected to a third (illegal) term, it will have established a cornerstone of democratic practice that has all but disappeared from this country, thereby generating a considerable contribution to the rebuilding of that political culture at some point in the future.

Yes, dear reader, we do reside in fascinating times, and what we make of them is entirely up to each and every single one of us. Let not future generations say that we have been found wanting at a time when the very destiny of this nation will be determined.

By Rajiva Wijesinha –

Enemies of the President’s Promise &#8211 Chapter 2 – Satisfied Component 4

Underlying Basil’s solipsism was his political ambition. He created no bones about the fact that he saw himself as his brother’s successor. Indeed, he had been put into Parliament ahead of the 2010 election, although a resignation of a National List member that was engineered, on the grounds that there had to be a Rajapaksa accessible for appointment as President if anything untoward occurred to the incumbent. And although quickly soon after the election of 2010 Mahinda Rajapaksa introduced a constitutional amendment to get rid of term limits, so that Basil’s hope of becoming observed as necessarily the government candidate in the subsequent election was dashed, the President placed no restrictions on him presenting himself as successfully the principal choice maker in government.

So, in addition to his function in the North, he set about taking handle of developmental projects all over the country. Tourism was brought beneath the Ministry of Financial Development, which allowed him quickly after the government was formed to sell a prime block of land in Colombo to Shangri-La hotels, a crass measure since it created it difficult afterwards to refuse outright ownership to such investors. Fortunately, following a great outcry, the principle that only extended leases need to be permitted was accepted, but again the move was standard of Basil’s propensity to push through bargains speedily, regardless of wider consequences.

While he utilized to the full his position as patron of international ventures, he also tried to take manage of the administration of the country at huge. He did this through the Samurdhi programme, the welfare programme that was in place all more than the nation. Initially began to market entrepreneurship, it had quickly grow to be the primary car of government handouts to selected sections of the population.

Basil decided to use it to expand his empire, with graduates employed in each Division in the nation to affirm the primacy of his Ministry. Certainly I was told that there had even been an try to appoint Samurdhi officials as Grama Niladharis, the office that was the 1st point of interaction among folks and government. The Ministry of Public Administration staved off this effort, but it meant that for several years Grama Niladhari positions that were vacant have been not filled, until finally that Ministry reasserted its control of the position. Certainly a measure of Basil’s unpopularity with his colleagues was the categorical statement, when I told the Minister that he must guard against his responsibilities being encroached upon, that the Ministry of Economic Development was encroaching on everything.

Such encroachment could have been initiated in a civilized manner, because it could be argued that financial development was of the essence in all regions. But clearly with Basil it was power that he sort, rather than coordinated efficiency, for he took no steps to make certain that officials in related fields worked with each other. Therefore there were no clear systems to make certain coordination between the Grama Niladharis and the Samurdhi Improvement officers, and later the Financial Improvement officers, who have been assigned to each GN Division.

Although certainly they worked collectively, they did not have recommendations about ensuring consultation of the neighborhood and liaising with other government departments. Numerous of them told me, for the duration of the Divisional Secretariat Reconciliation meetings I had in the North and East, that they had been collecting data, but what this data was for, they seemed to have no notion. They had received quite small education just before getting appointed, and even though the Ministry of Defence put on a leadership development programme for some of them which was significantly appreciated, they have been not clear about their terms of reference, nor the way in which they could coordinate function with other government agencies. A programme of preparing reports, and making sure follow up for suggestions primarily based on people’s needs as properly as their recommendations, was not place in place, which was a pity considering that this was the first occasion on which the more than-worked Grama Niladharis had been provided qualified help employees to help with developmental work.

A single region in which guidelines have been laid down formally led to issues which had unfortunate consequences for the nation. Amongst the initiatives of Basil’s Ministry was a rural improvement programme referred to as Divineguma for which he introduced an Act which the Supreme Court ruled was in violation of the Constitution, in that it took away from the monetary authority of Parliament. Basil was furious when the judgment was delivered. In truth the Court recommended a basic way of overcoming the constitutional issue, and government realized that the recommendations created sense, and the Act was effortlessly passed as amended. But the bitterness Basil had evinced recommended that he was 1 of the chief factors in the animosity the government felt towards the Chief Justice, which led to her getting impeached.

Given Basil’s undoubted abilities and energy, it was a pity that he saw himself as mainly a politician. Patronage became much more important than development, and he reinforced the concept that politicians need to make a decision on priorities, as when for instance the Ministry asked Members of Parliament to advocate disused fields that ought to be recommissioned. This should far more practically have come by way of consultations at village level, but that would have not won any brownie points, whereas providing economic support to locations chosen by politicians was much more beneficial in terms of escalating political capital.

This element became really preposterous when, in 2014, Basil decided that development projects must be the purview of Members of Parliament. Previously every single member of Parliament, which includes those in the opposition, was allocated what was termed a decentralized price range of Rs 5 million a year. This could be utilised generally at will, although there have been recommendations laid down and approval had to be obtained for proposals from the Ministry of Financial Improvement.

Then it was decided to give another Rs 30 million to selected government Members. The rationale for leaving other individuals out seemed to be that these folks chaired what were termed Divisional Improvement Committees. But in reality, when I brought the matter up at the Consultative Committee on Public Administration Reforms (to the consternation of the Minister, who stated I would get him into trouble) it was noted by a government Member that the point was to give them funds for patronage in the whole District in which they would be contesting. This was a consequence of the absurd electoral technique we had, whereby contestant, even though technically allotted constituencies, had to seek votes all through the District.

But evidently 30 million each and every was deemed inadequate, and the next step was to allocate hundreds of millions to pick Members. So in Trincomalee a single Member go over 600 million, and an additional more than 200 million. Some had been offered absolutely nothing, which led to vociferous protests, which led in turn to the Member who felt most difficult completed by becoming created a Deputy Minister, prior to Provincial Council elections in Uva, for which his support seemed crucial.

While some Members did consult the people and feel carefully about how these funds should be spent, other folks simply did what they wanted, and some undoubtedly ensured that they would benefit from commissions on what ever they undertook. Buildings therefore became critical, and little consideration was paid to training wants or business improvement.

But clearly improvement was seen as secondary to political popularity. And to make things worse, given that Basil was in Parliament, and observed as the major political agent of the loved ones, the President entrusted not just development activity to him, but also areas which he did not recognize at all. Therefore, early in the life of Parliament, he presented proposals to adjust the electoral method for neighborhood bodies, which were utterly incoherent. When ideas have been made for improvement, he declared that decisions had currently been created, and the Act would be introduced as drafted. But so numerous amendments were required when the Act came before Parliament, that it had to be withdrawn. When it was lastly reintroduced many months later, it was with a guarantee that it would be amended later to get rid of certain absurd provisions. Amongst these for instance was a clause that a distinct percentage of candidates may possibly be girls or young folks. Lumping each groups together, and then not making their involvement mandatory, was typical of an strategy that did not see principles as an integral element of politics.

With electoral considerations getting his priority, Basil was slow about what was significantly far more crucial, reform of Regional Government structures. This was planned, and a bill was drafted, but it was kept on the back burner. The Secretary to the Ministry, 1 of the brighter government officials, shared the draft with me after the Minister had consulted me about the electoral amendments. I discovered then that the consultation with the grass roots that the President had wanted had been perverted to introduce only nominees to the committees that have been to be established. Ironically this replicated the colonial mindset, where representatives of the folks had been nominated rather than elected. This principle had been opposed by Sri Lankans searching for political reform, so it was sad to see the paternalistic concept getting reintroduced.

There was no alter in this provision in the subsequent draft I saw, although I was gratified to see that some at least of my suggestions seemed to have been taken up. But that meant practically nothing given that the Bill lay forgotten as government moved into election mode with the decision to advance the date of the Presidential election. The Liberal Celebration did create to the President suggesting that he not waste the remaining years of his mandate, but as an alternative move on measures he had promised, and which had been in preparation for a number of years, for instance with regard to Education and Higher Education and Electoral and Local Government Reform. But the appeal fell on deaf years, as Basil began to set up electoral offices, with scant regard for the leadership of the Sri Lanka Freedom Party, which had not been consulted on the matter.

Basil’s wider political role may possibly not be strictly germane to the gradual erosion of the hopes the nation had in the Rajapaksa government to promote peace and prosperity, in particular in the former conflict regions. But it needs to be recorded in view of the possibilities lost because of his lack of concern for national priorities. The failure to strategy coherently for the North, with certain reference to human resource development, was a single of the principal factors for the continuing bitterness of its citizens towards government. And the refusal to seek the advice of the folks was unbelievably callous in the context of a lately concluded conflict. That demanded assurance as to the primacy of the men and women of the area in government planning, but Basil had neither the wisdom nor the commitment to give this.

By Granville Perera –

It is time that all those who think in the ideals of the Sri Lanka Freedom Celebration (SLFP) instantly gather about any opposition candidate who would genuinely perform towards abolishing the executive presidency and save the future of the SLFP.

Those who fail to act now will comprehend that a 3^rd Term for Mahinda Rajapaksa would make certain that Gota will succeed him and the baton would be passed on to Namal and there is no hope for any in the SLFP to climb up the ladder of executive workplace for the subsequent twenty 5 years or far more. What would be the fate of the SLFPers who have toiled all their lives to bring the celebration back in to energy, specially surviving the iron fisted rule set in motion by the late cunning fox – J R Jayewardene and the UNP rule of 17 years that disfranchised Madam Bandaranayike. These days, the old guards of the SLFP are confined to the old peoples home tagged as “Senior Ministers” and their future in politics systematically destroyed.

A notable and possibly the most corrupt soon after the Rajapaksa clan – Nimal Siripala de Silva was removed from his lucrative ministry of health and shoved to Irrigation and Mahaweli development to ensure that he would not be a future presidential competitor with his ill-gotten wealth. Now, when he is settling down to continue his corrupt practices, he has been brought down to earth with the debacle in Uva through the crafty use of Dilan Perera to attack him that ensured his electorate defeat.  The entire blame for the mediocre overall performance in Uva has been placed on Nimal Siripala in private discussions with the president. His file is already at the bribery commission in case of any attempt at defection. This has ensured that Nimal Siripala has been reined in and will not harbor any believed of sleeping with the enemy for worry of losing almost everything.  Maithripala on the other hand is one particular stubborn mule who nevertheless holds on, and a carrot of premiership has been provided, but Maithripala knows better.  Gota will be the next prime minister, ought to Mahinda get his three^rd term. If there is enough numbers that would cross over to the opposition along with Chandrika and Maithripala, the man from Polonnaruwa will turn out to be the obvious option for the frequent candidate. In such a situation, how will the UNPers vote? Would they trust the SLFPer? Much more importantly, will the Sajith clan accept Maithripala? Will Ranil genuinely contemplate supporting? The million dollar query would be – will Maithripala be happy in a non-executive presidency?

What ever the decision that the old guard of the SLFP take will make or break the SLFP. Should they support an opposition candidate to defeat Mahinda Rajapaksa, they have the opportunity of constructing a coalition to challenge the UNP in the parliamentary elections that would stick to which could elect a government that would be answerable to the parliament. With the divided UNP, it is the SLFP that stands the most significant chance of forming a effective alliance. The JVP too would be far more inclined to help a SLFP coalition than one led by the UNP whom they nevertheless think about as traitors since of Ranil’s peace procedure with the LTTE.

The only selection left for Ranil is possibly to assistance fielding the most capable common candidate and get him elected so that he has the chance of becoming a strong premier. Never ever in his dreams must he entertain the thought of contesting Mahinda Rajapaksa as he is a brand that can not be marketed. Most would admit that Ranil is greatest suited to steer the nation out of the financial mess that has been the hallmark of the SLFP, but an individual else need to win the election for him.

The crisis with the JHU has exploded beyond the expectations of the Rajapaksa clan. Pavithra is no spring chicken to blurt out corruption charges on Champika Ranawaka out of the blues. It was Basil’s strategy to rein in Champika and the JHU to help the Rajapaksa third term which entirely back-fired due to the amateurish handling of it. What ever kickbacks that came Champika’s way from the contracts was not taken by him, but was taken more than by the JHU which was in deep monetary crisis. This was with the full approval of His Excellency Mahinda Rajapaksa.

The self proclaimed Mr clean who ditched Chandrika and sought refuge in USA claiming her to be the Chaura Rajina (Queen of deceit), Dullas Alahapperuma is almost certainly the schemer for the Rajapaksas. His capability to hold throwing stones at absolutely everyone displaying his huge grip almost certainly has cost Mahinda Rajapaksa his 3rd term. With Maithripala packing his bags and Wasantha Senanayake set to go, the flood gates would soon open, and then it would be as well late for Mahinda to withdraw in to his presidential cocoon. There is no 1 to blame but himself for creating his own down fall.

By W.A Wijewardena –

Driving down CCPI through administrative measures

When the annual enhance in the price of living of typical consumers in Colombo and suburbs declined from three.5% in September to 1.six% in October 2014, the Central Bank could not hide its joy. In its press release on Inflation in October, the Bank has said that ‘inflation has declined significantly in October’ (obtainable at: Inflation declines significantly in October).

In additional elaborating this claim, the Bank has stated that “Inflation, as measured by the change in the Colombo Consumers’ Value Index (CCPI) (2006/07=100), which is computed by the Division of Census and Statistics, decreased from 3.5 per cent recorded in September 2014 to 1.six% in October 2014, on a year-on-year (YoY) basis, which is the lowest considering that November 2009”.

The downward revision of the ‘electricity tariff by 25% supported by comparable reduction in costs of LP gas, petrol and diesel’ by means of administrative decisions by the government in the last two months have been the primary motives for this decline in the price of living, according to the Central Bank. Because the products beneath reference together with rent on homes and water bills have a high weight of 24% in CCPI, even a minor reduction in the costs can result in a substantial fall in the all round CCPI worth in a specific month.

Hence, even though there was a marginal enhance in the food and non-alcoholic beverages in October, such improve could not influence the general index value regardless of it has a share at 41% in the index. Yet, the total expenditure which a customer has to incur in order to get the basket of goods and solutions in CCPI has improved, according to values provided by Division of Census and Statistics or DCS, from Rs. 49,259 a year ago to Rs. 50,070 in October 2014. However, the expenditure on this basket in September 2014 amounted to Rs. 50,881 and therefore there is a slight easing of the cost of living in October 2014.

The reductions in electrical energy tariff and the rates of power are not repeatable each and every month. Therefore, a repeat overall performance of this beneficial outcome in the coming months is unlikely.

Can the Central Bank be pleased about the development?

Ought to the Central Bank be happy about this improvement? For two causes, it ought to be a tiny far more restrained in expressing its happiness. One particular is that it does not go along with the Central Bank’s co-objective of ‘economic and cost stability’. The other is that it portends a larger extended term dilemma now know as ‘lowflation trap’.

Central Bank’s new mandate is to have both economic and price stability

Let’s now turn to the initial issue. In an amendment accomplished to the Bank’s governing legislation recognized as the Monetary Law Act in 2002, the Bank’s objective of maintaining a steady common price level in the economy was re-designated as ‘economic and value stability’. This is somewhat peculiar due to the fact in all other central banks, it is just maintaining price stability. Why this was accomplished in the case of the Central Bank of Sri Lanka was explained in detail by this writer in a preceding report in this series beneath title ‘Central Bank’s Mandate is to attain each financial and cost stability’ (offered here ).

The broadening of the mandate to economic and price tag stability was due to the foresight of the then Governor of the Bank, A.S. Jayawardena, popularly identified as AS. When the Globe Bank, IMF and even this writer were opposed to the particular term, AS had a simple but a very cogent explanation. He mentioned that what a central bank must seek to attain is the stability in the general macroeconomy and not a mere price index. Simply because, according to him, a cost index can be manipulated to record a slower development via value controls, subsidies or mere price tag reductions carried out administratively. Such measures will certainly ease the burden of expense of living. But they will not assist a central bank simply because these actions develop imbalances elsewhere creating it difficult for a central bank to attain its objective of maintaining a stable economy.
The purpose of adding the term ‘economic’ is, therefore, to remind the future central bankers that they ought to not be content about a mere decline in the consumers’ price index. They need to be satisfied only when such decreases have come from the monetary policy actions taken by the Bank without generating imbalances elsewhere in the economy.

Reduction of rates of loss makers creates concerns for the fiscal sector

The present reductions in electrical energy tariff and rates of LP gas, petrol and diesel by means of administrative measures do not fall in line with the above financial wisdom. Except LP gas, the other three item supplying companies in Sri Lanka are running at a enormous loss as documented by the Committee on Public Enterprises or COPE in its current reports to Parliament. Accordingly, the cumulative losses of the electricity supplier, CEB, during 2011-13 had amounted to Rs. 47 billion and these of the fuel supplier, CPC, had amounted to Rs. 193 billion.

These losses have to be recouped by the Treasury by raising funds either by means of increased taxation or by borrowing. What the Treasury has done in the past to make good these losses is to situation particular Treasury bonds to these institutions which the public has to repay on a future date by paying much more taxes or foregoing existing public services. Thus, there is already an imbalance in the fiscal sector of the nation. Therefore, the present cost reductions involving loss-creating public enterprises and thereby worsening the fiscal imbalance are not a development about which the Central Bank could be happy if it follows its mandate properly.

Lack of credit development despite inducements

Sri Lanka has knowledgeable a deceleration in the growth of its customer value index, CCPI, from around late 2009. The long term inflation shown by this deceleration became a single digit quantity and that single digit number also started falling over the years. What is shown as 1.six% growth in CCPI in October 2014 for the duration of the final 12-month period is the lowest worth of the single digit number ever recorded in the final five years. Responding to the decline in the single digit number, the Central Bank commenced relaxing its monetary policy with an announced objective of supporting the government’s economic growth initiatives. This was completed in a number of rounds in diverse forms.

Credit expansion in the economy was promoted explicitly by the Central Bank by releasing a substantial amount of money which industrial banks had to keep with the Central Bank as a compulsory reserve – recognized as the Statutory Reserve Requirement or SRR – in July 2013 by lowering the necessary ratio from 8% to 6%. The quantity so released was about Rs. 590 billion which if banks had employed for credit expansion would have generated added loans of Rs. two,950 billion by about December 2014.

But this did not occur. Credit to private sector elevated only by Rs. 21 billion among July 2013 and July 2014. In reality, credit to public corporations declined by Rs. 37 billion more than this period. Even the lending to government by commercial banks did not increase appreciably it improved only by Rs. 53 billion after the changes in government deposits with industrial banks are netted off. Despite the reported high financial growth of over 7% during this period, naturally the private sector did not wish to utilise bank credit for financing their activities.

As a result, in a desperate attempt to push credit to the economy, the Central Bank commenced lowering interest prices by cutting its rate on excess money deposited by commercial banks from 7.5% to 6.5%. Typical fixed deposit prices of industrial banks fell from 12.38% in October 2013 to 8.09% in October 2014. Amongst September 2013 and September 2014, the average lending rates of industrial banks fell from 15.52% to 12.98%. Regardless of the cut in interest prices, industrial bank credit flows to the economy did not improve by the magnitudes by which they ought to have elevated. It just appeared that the fall in lending prices of commercial banks was not a enough inducement for borrowers to raise funds from banks.

A country in a lowflation trap

This predicament evidences that Sri Lanka is caught up in a ‘lowflation trap’, a malaise at present being seasoned by EU countries. When the inflation price comes down sharply and holds at those low levels for some time, there ought to be a faster reduction in lending prices to produce a decline in true lending prices – the necessity for inducing borrowers to use bank credit.

When the average inflation rate was at 23% in 2008, the typical lending prices of commercial banks were about 20%, yielding a damaging actual lending price in the economy on typical. It is a substantial inducement for borrowers to borrow. But when the inflation rate fell, lending rates of industrial banks did not fall in the identical style. Accordingly, when the typical inflation price was around 7% at end-2013, the average lending rates of commercial banks stood at 15%. The actual interest rates in terms of these numbers had been substantially optimistic at about 8% – certainly not an inducement for borrowers to seek funds from industrial banks. By September 2014, on the insistence of the Central Bank that industrial banks must reduce their lending rates, the typical lending rate fell to about 13% but inflation had fallen much more sharply to 3.5% by that time. Therefore, the actual interest rate had increased to 9.5%.

In October 2014, the situation has turn into a lot much more vital: Inflation rate has fallen further to 1.6% escalating the true lending rates to over 10%. In this situation, banks can not be blamed for not giving loans to clients because consumers have no incentive to seek bank credit at higher true interest prices.

To reduce or not to reduce interest rates?

If inflation rate remains under three% over the next two to 3 years, Sri Lanka can not get out of the lowflation trap unless it cuts its interest rates drastically by about five to 6%. This signifies Central Bank’s standard deposit price need to be about 1%, its common lending rate around two%, 1-year Treasury bill rate around two%, commercial bank deposit prices about three% and industrial bank lending prices about 6%. But that will produce severe imbalances across the economy thereby frustrating Central Bank’s try at attaining each financial and cost stability. It may possibly solve a issue in 1 area but it might generate many far more troubles in other regions. In other words, an artificially driven-down inflation rate will not help the Central Bank to preserve macroeconomic stability across the economy.

A low interest rate regime at around the levels talked about above is not feasible in Sri Lanka due to three factors.

CCPI numbers coming out of a black box

In the first spot, there are issues about the credibility of the inflation numbers released by DCS. Considering that the entire approach of preparing CCPI is not topic to a post-audit verification by a technically competent authority, the numbers are just released by DCS from out of a black box. What is taking place inside the black box is not visible to anyone. For instance, in October 2014, one particular of the reasons adduced for the decline in CCPI has been the so known as reduction in electricity tariff. But the actual electricity bills received by consumers for the month of October did not show such a reduction. In the case of this writer’s monthly electricity bill, per unit tariff for 200 units had enhanced from Rs. 21.25 in September 2014 to Rs. 23.91 in October 2014.

It is not clear no matter whether DCS had taken into account the actual electricity bills paid by the group of buyers represented in CCPI – the very first 80% of the expenditure units in Colombo and suburbs – or just gone by the announcement made by the government. Therefore, the ordinary public appears to be harbouring the belief that the CCPI numbers released by DCS are far from reality.

In such a scenario, the demand for greater wages, salaries, allowances and fees can’t be avoided. A lot of of the reliefs provided to the public in the Price range 2015 – enhance in the salaries of public servants, requesting the private sector do the very same, increase in the Mahapola scholarship allowances, payment of a special subsidy to senior citizens on their savings with banks – have been created in recognition of the elevated cost of living in spite of the deceleration in inflation price as calculated by DCS.

Artificially-low interest rates will worsen the external sector imbalances

Second, if inflation numbers are not realistic, the reduction in interest prices will certainly discourage savings and induce consumption and for that matter, the consumption of imported goods. This is shown by the higher registration of motor vehicles in the current previous, specifically motorbikes where much more than 1,500 motorbikes are registered per working day. Hence, a low interest rate regime is like providing a blank cheque to somebody as far as consumption and imports are concerned. Regardless of the deceleration in the growth of imports and better overall performance in exports, this year’s trade deficit is probably to be around $ 8 billion. Thus, a blank cheque by way of lowered interest prices will worsen the current imbalance in the external sector requiring the nation to borrow more to fill the gap.

Low interest prices not great for foreign hot income

Third, Sri Lanka has relied on foreign hot money to build its foreign reserves by permitting foreigners to invest in higher yielding government paper. Such funds, amounting to $ 3.5 billion as at end October and accounting for about 40% of total official foreign reserves, have been attracted by Sri Lanka primarily by supplying greater yields on government securities when in the home nations of these investors, the maximum yield receivable has been about 1%. This incentive will be narrowed and ultimately be unfavorable if Sri Lanka reduces its interest prices to a low level. In such a scenario, the outflow of these funds can not be avoided worsening the existing imbalance in the external sector. It will put stress on the rupee to further depreciate with adverse consequences on Sri Lanka’s future development plans.

In view of the lowflation trap in which Sri Lanka is now caught, the decline in the price of growth in CCPI is not a development about which the Central Bank can be content at all.

W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected]

A important member of the Opposition United National Party on Friday urged Media Minister Keheliya Rambukwella to unblock Colombo Telegraph, claiming that it offers views of a broad section of society and not news.

UNP MP Dr Harsha de Silva has created this request for the duration of his speech in parliament on the budget. He mentioned that the curb on media freedom has resulted in a number of internet sites being utilised to market news and views.

Earlier in the day, Media Minister Rambukwella denied there were attempts by the government to curb media freedom in Sri Lanka. Another UNP MP Sujeewa Senasinghe mentioned that several journalists have been forced to flee the nation out of fear.

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