People always hope for the best, even in the face of adversity, noted English poet Alexander Pope in his classic An Essay On Man. Almost 300 years later, the people of Sri Lanka are endorsing in full measure the eternal observation of the great English poet as they look forward to what’s in store for them in 2022.
Battered and bruised by the global Covid pandemic and its economic impact for close to two years, the people as a whole had little to cheer for in 2021 and depending on whom you ask, 2022 does not look too promising either. If one were to ask the most optimistic of the lot – no prizes for guessing from which quarter – save for the first few months of the year, the latter half will be overflowing with milk and honey. The not-so-optimistic section of the population is decidedly more realistic and is bracing for a year of unprecedented economic hardship while the more pessimistic segment – no prizes for guessing from which quarter either – is predicting economic doomsday by mid-year. If a data-driven prediction is to be made, 2022 will probably be the toughest year post-independence, for Sri Lanka and her people.
Whatever one’s political inclination, 2022 promises to be a watershed for the people on the one hand and more importantly for the political establishment on the other, for it will decide who out of the two will be calling the shots by the time 2023 arrives. The year ahead will be the one that puts to the test the patience and endurance of a people whose hope for a better tomorrow has routinely been taken for granted by a political establishment long used to preying on their emotions and also the one in which politicians realise that the tables have slowly but surely turned.
It is therefore safe to assume that based on the fate of the economy, 2022 will herald the day of reckoning for a Government that promised to deliver a mountain but has only produced a mouse so far and as far as the Opposition is concerned, its day of reckoning to win over the confidence of an angry electorate as the viable alternative. For either side, non-delivery is not an option. In the face of the growing economic crisis, made worse by an administration attempting to sugar-coat the bitter pill that needs to be urgently administered, it appears that the powers that be are running out of answers and the people are running out of patience while the Opposition is running helter-skelter in search of a cohesive joint strategy.
Be that as it may, things have come to a state where a push will no longer do and what is called for is a mighty shove. That might finally materialise in the form of the much-maligned International Monetary Fund (IMF), with the Cabinet of Ministers likely to make the final call on the matter at the Cabinet meeting tomorrow (3), where the Treasury Secretary, as well as the main stumbling block to taking that route, the Governor of the Central Bank, have been summoned for consultation. The only other fallback option on the table at the moment seems to be the promised but yet to materialise Indian assistance package, the nitty gritty of which is yet to be spelled out by the Finance Ministry.
Still reeling from the fertiliser issue, the agriculture sector has been warning of a food crisis for some time now. Even though the Government has brushed aside such concerns, a new UN report has put Sri Lankan children as the second most underweight in the Asian Sub-Continent region, with India occupying the top spot. It is no secret that the evolving economic crisis has hit the stomachs of many middle class families and malnutrition of children is a likely outcome of it. Therefore, an impending food crisis is likely to make matters worse and the country runs the ignominy of jostling with India for the disreputable title of having the most underweight children. That a food crisis is at hand was predicted by no less a person than the former Secretary to the Ministry of Agriculture just a couple of weeks ago, who stated that Sri Lanka would most likely have to either borrow food from a neighbouring country or run the risk of starvation. The Secretary was subsequently removed from his post, most likely for his forthright observations.
The former Agriculture Secretary’s forewarnings were vindicated last week when the Trade Ministry confirmed it was in negotiation with its Indian counterpart over the possibility of bartering commodities such as rice, dhal, onions, etc. The bottom line is that the forex crisis has now aggravated to a situation where even food supplies are being compromised. Meanwhile the Petroleum Ministry no longer makes any attempt to hide the fact that it has no foreign exchange to import crude oil. In fact, it said just that in announcing the closure of the Sapugaskanda Refinery for a second time in less than a month.
While the Central Bank continues to tighten the rules on expending foreign currency, most notably US dollars, it has steered clear of doing the one thing that will reopen the pipeline for dollar remittances from overseas – allowing a free float of the exchange rate, based on market dynamics. It is estimated that the Government has lost foreign inflows to the tune of nearly $ 1.5 billion in the last six months alone as a result of its artificial peg on the exchange rate. Recourse to the IMF will inevitably result in the status quo being reversed and is one reason for the Government to steer clear of that path.
Since becoming a member of the IMF in 1950, Sri Lanka has sought its assistance on 16 separate instances, the first being in 1965 and last being in 2016, with total assistance amounting to over $ 5 billion to date. Earlier this year Sri Lanka withdrew $ 554 million under its Special Drawing Rights (SDR) programme to strengthen reserves. Given the magnitude of the crisis at hand, that was obviously not too helpful. How we got here is another story. Sri Lanka’s debt commitments grew at its fastest pace during the period between 2004 and 2009 when the total debt burden more than tripled in just five years and has remained high ever since. Having faced a similar forex crisis, albeit under different circumstances, the previous Yahapalanaya administration secured a $ 1.5 billion IMF facility in 2016 to support balance of payment requirements. While it served the intended purpose, it also brought about a degree of fiscal discipline which sadly appears to be lacking these days given the sheer volume of money supply on the part of the Central Bank.
The 2016 facility was obtained through the then administration’s voluntary commitment to an economic and financial policy framework based on six key pillars that included fiscal consolidation, revenue mobilisation, public sector financial reform, state enterprise reform, overhaul of trade and investment framework, tackling of inflation and flotation of the exchange rate. These reforms helped create a balance of payment surplus for the first time in more than 50 years in 2017 and it was repeated in 2018. But a constitutional coup orchestrated by the former President followed by the Easter attacks six months later bucked the trend and the subsequent change of regime resulted in much of the gains being reversed, which in turn has led to the current economic impasse.
Every single government that has come to power in the last couple of decades has done so on the premise of “saving the nation”. People routinely vote for those who promise to “rata godaganna” and “rata hadanna,” meaning basically to rebuild the country. However, five years down the line, it is the turn of the Opposition to repeat the same mantra and secure office. And so, the circus goes on. Let us hope that 2022 will grant the people of this nation the wisdom to choose their leaders wisely, who ultimately are responsible for the economic havoc wreaked on them.Hope springs eternal
01 Jan 2022
Hope springs eternal
01 Jan 2022
People always hope for the best, even in the face of adversity, noted English poet Alexander Pope in his classic An Essay On Man. Almost 300 years later, the people of Sri Lanka are endorsing in full measure the eternal observation of the great English poet as they look forward to what’s in store for them in 2022.
Battered and bruised by the global Covid pandemic and its economic impact for close to two years, the people as a whole had little to cheer for in 2021 and depending on whom you ask, 2022 does not look too promising either. If one were to ask the most optimistic of the lot – no prizes for guessing from which quarter – save for the first few months of the year, the latter half will be overflowing with milk and honey. The not-so-optimistic section of the population is decidedly more realistic and is bracing for a year of unprecedented economic hardship while the more pessimistic segment – no prizes for guessing from which quarter either – is predicting economic doomsday by mid-year. If a data-driven prediction is to be made, 2022 will probably be the toughest year post-independence, for Sri Lanka and her people.
Whatever one’s political inclination, 2022 promises to be a watershed for the people on the one hand and more importantly for the political establishment on the other, for it will decide who out of the two will be calling the shots by the time 2023 arrives. The year ahead will be the one that puts to the test the patience and endurance of a people whose hope for a better tomorrow has routinely been taken for granted by a political establishment long used to preying on their emotions and also the one in which politicians realise that the tables have slowly but surely turned.
It is therefore safe to assume that based on the fate of the economy, 2022 will herald the day of reckoning for a Government that promised to deliver a mountain but has only produced a mouse so far and as far as the Opposition is concerned, its day of reckoning to win over the confidence of an angry electorate as the viable alternative. For either side, non-delivery is not an option. In the face of the growing economic crisis, made worse by an administration attempting to sugar-coat the bitter pill that needs to be urgently administered, it appears that the powers that be are running out of answers and the people are running out of patience while the Opposition is running helter-skelter in search of a cohesive joint strategy.
Be that as it may, things have come to a state where a push will no longer do and what is called for is a mighty shove. That might finally materialise in the form of the much-maligned International Monetary Fund (IMF), with the Cabinet of Ministers likely to make the final call on the matter at the Cabinet meeting tomorrow (3), where the Treasury Secretary, as well as the main stumbling block to taking that route, the Governor of the Central Bank, have been summoned for consultation. The only other fallback option on the table at the moment seems to be the promised but yet to materialise Indian assistance package, the nitty gritty of which is yet to be spelled out by the Finance Ministry.
Still reeling from the fertiliser issue, the agriculture sector has been warning of a food crisis for some time now. Even though the Government has brushed aside such concerns, a new UN report has put Sri Lankan children as the second most underweight in the Asian Sub-Continent region, with India occupying the top spot. It is no secret that the evolving economic crisis has hit the stomachs of many middle class families and malnutrition of children is a likely outcome of it. Therefore, an impending food crisis is likely to make matters worse and the country runs the ignominy of jostling with India for the disreputable title of having the most underweight children. That a food crisis is at hand was predicted by no less a person than the former Secretary to the Ministry of Agriculture just a couple of weeks ago, who stated that Sri Lanka would most likely have to either borrow food from a neighbouring country or run the risk of starvation. The Secretary was subsequently removed from his post, most likely for his forthright observations.
The former Agriculture Secretary’s forewarnings were vindicated last week when the Trade Ministry confirmed it was in negotiation with its Indian counterpart over the possibility of bartering commodities such as rice, dhal, onions, etc. The bottom line is that the forex crisis has now aggravated to a situation where even food supplies are being compromised. Meanwhile the Petroleum Ministry no longer makes any attempt to hide the fact that it has no foreign exchange to import crude oil. In fact, it said just that in announcing the closure of the Sapugaskanda Refinery for a second time in less than a month.
While the Central Bank continues to tighten the rules on expending foreign currency, most notably US dollars, it has steered clear of doing the one thing that will reopen the pipeline for dollar remittances from overseas – allowing a free float of the exchange rate, based on market dynamics. It is estimated that the Government has lost foreign inflows to the tune of nearly $ 1.5 billion in the last six months alone as a result of its artificial peg on the exchange rate. Recourse to the IMF will inevitably result in the status quo being reversed and is one reason for the Government to steer clear of that path.
Since becoming a member of the IMF in 1950, Sri Lanka has sought its assistance on 16 separate instances, the first being in 1965 and last being in 2016, with total assistance amounting to over $ 5 billion to date. Earlier this year Sri Lanka withdrew $ 554 million under its Special Drawing Rights (SDR) programme to strengthen reserves. Given the magnitude of the crisis at hand, that was obviously not too helpful. How we got here is another story. Sri Lanka’s debt commitments grew at its fastest pace during the period between 2004 and 2009 when the total debt burden more than tripled in just five years and has remained high ever since. Having faced a similar forex crisis, albeit under different circumstances, the previous Yahapalanaya administration secured a $ 1.5 billion IMF facility in 2016 to support balance of payment requirements. While it served the intended purpose, it also brought about a degree of fiscal discipline which sadly appears to be lacking these days given the sheer volume of money supply on the part of the Central Bank.
The 2016 facility was obtained through the then administration’s voluntary commitment to an economic and financial policy framework based on six key pillars that included fiscal consolidation, revenue mobilisation, public sector financial reform, state enterprise reform, overhaul of trade and investment framework, tackling of inflation and flotation of the exchange rate. These reforms helped create a balance of payment surplus for the first time in more than 50 years in 2017 and it was repeated in 2018. But a constitutional coup orchestrated by the former President followed by the Easter attacks six months later bucked the trend and the subsequent change of regime resulted in much of the gains being reversed, which in turn has led to the current economic impasse.
Every single government that has come to power in the last couple of decades has done so on the premise of “saving the nation”. People routinely vote for those who promise to “rata godaganna” and “rata hadanna,” meaning basically to rebuild the country. However, five years down the line, it is the turn of the Opposition to repeat the same mantra and secure office. And so, the circus goes on. Let us hope that 2022 will grant the people of this nation the wisdom to choose their leaders wisely, who ultimately are responsible for the economic havoc wreaked on them.Kapruka
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Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!