27 June, 2022


Fallacy Of Economic Growth

By Chanaka Gajanayake

There is no doubt that there was a slowing of economic growth post 2015. Business turnover was down and almost all businessmen started to grumble. This was augmented by constant grumbling of the joint opposition that wanted to drive their popularity among the business community. To add to this the incumbent government was unable to strategise to have an immediate resurgence or even to make it look apparent due to narrow minded autistic thinking process of a leadership that avoided economic processes advocated by young blood in government by making them deputy or state ministers by giving power to apparently ignorant, corrupt or inefficient but “senior” members.

I am no economist nor even remotely connected to international affairs but a desperate citizen who has tried to understand the fallacy in simple ways and try to let people understand the ‘big picture’ very briefly.

During the previous regime I.e. prior to 2015, a lot of money circulated and businessmen were happy. The fact is that we were living in a fantasy world with borrowed money. When a loan is taken from a foreign bank at higher than normal interest, a portion goes to the pocket of a person/s often politicians and “wheeler dealers” who negotiate deals. Then when the contract is awarded to another local sub-contractor again there is oiling of palms for approvals. In this process not only the shark politicians but also high government officials who are often go-between’s also benefit. In fact they were allowed to benefit by the previous regime purposely in their ‘live and let live policy’. This also made themselves popular with this administrative hierarchy thus ‘econo-politicising’ the administration. It still lingers on often by sabotaging systems, using the so called ‘red tape’ in administrative manuals. At the same time the “inefficient” new regime brought in people who were also equally inefficient or petty corrupt opportunists. These factors together with introvert thinking process of the PM who was a sort of a dictator in economic policy dampened any efforts in at least apparent economic success.

When there is foreign money there will be projects for businessmen and although they are making money with inflated projects, there is a trickle down effect on the people below from executives to labourers. Then these projects are ‘visible’ projects such as highways, airports, harbours or coal power projects which will make people content with a false sense of ‘development’, although long term payments of loans is palmed off to the next generation!

Unfortunately the the pseudo economists in the incumbent government burdened with loan instalments attacked the most vulnerable income strategy by imposing huge taxes on almost everything and anything!! They are paranoid on loans and new projects to be shown to the people slowed down. The people were individually affected and thereby animosity developed, while the joint opposition was quick to show their period with a ‘booming’ economy which in fact was in fact a ‘hollow’ economy on thin ground.

Hence it is easy to understand heavy funding  of campaigns by mega businessmen hungry for more projects and many professionals including doctors who will be beneficiaries of such an unaccountable system. Why couldn’t the government make people understand this logic? Simply because of their narrow thinking processes!!

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Latest comments

  • 6

    My friend, debts of US$50 or 60 billion is nothing for a country and economy of the size of Sri Lanka provided if they let the economy to boom. There are many countries whose debt level is more than their total GDP, but doing extremely well for they created the optimum capacity to take care of it and service it. The high and repaid all around growth of the economy would take care the servicing of the debts. We don’t require pundits tell this, even a housewife or a ordinary businessman would say it – cut down wast and leakage of revenue and resources, do better investment with available revenue and resources for highest possible returns . Therefore from where would investment come, state but it’s in desperate situations, our private sector, they too not in such situations where they able to undertake large investments to up lift the economy. Only available option – foreign investments. Take out all hurdles and hindrance for all kinds of investments, foreign or local, and give maximum possible encouragements, assistances and incentives and get the words out for all to see and hear, and that would propel the economy to greater heights, and make people’s too prosperous and happy. In late President Pramedasa’s time, there two wars, LTTE in north and JVP in south, but people had money to spent and invest for his wise and smart policies kept the economy booming. In the developed world the return from the financial markets are very low, and lot of capital is looking to invest in robust economies to maximise their returns, and with appropriate policies we could open a flood gate of investments to up lift the economy, get it going and put it on the maximum highest gear and in turn that would change entire livelihood of the people.

  • 5

    Blah Blah .. I can tell you what you need to see about economic growth or lack thereof. When I was growing up there were beggars everywhere. During the Rajapakshe times after the war this was hard to see, Under yama palanaya all you have to do is just walk around. We are back to status quo.

    • 3

      You must be one of those lucky souls who don’t have to travel by bus. The rest of us know how the beggars have upgraded themselves and operate in buses .

  • 4

    How many Politicians do we have at present who will put the interest of the Nation ahead of self interest? Very few (a handful)! Most current Politicians are corrupt. Bribery, corruption and criminal activities were prevalent at an all time unprecedented level during MR’s (mis) rule. Thus Special, dedicated Commissions needed to be created to investigate and punish all those responsible. The same should be applied to such activities during this Government’s tenure as well (although the levels of such activities appear to have declined).

    What was the need for most of those ‘white elephants’ built during MR’s time other than self-aggrandizement and creation of opportunities to line one’s own pockets (commission and kick backs)? We can now see how much wealth they (MR&Co) have amassed from their level of spending on the current election campaign.

    It’s so disheartening and disappointing this Government failed to indict and punish these alleged criminals (you scratch my back, I scratch your back mentality).

    The Economic growth of the country was somewhat coloured by these mega projects (funded by loans taken at commercial interest rates) and the consequent debt trap where the country’s finances were strained to service these unaffordable Loans.

    Has MR ever explained why he called for an election 2 years in advance? Why don’t journalists question him? Aren’t we owed such an explanation? Voters, please do not empower these criminals and despots (MR/NGR) again!! They had 10 years in power and that was long enough to achieve what they wanted to achieve and we saw their performance. A leopard never changes its spots!

    Voters, please use your franchise judiciously, wisely, aptly and appropriately.

  • 0

    Bangladesh having a period of great prosperity or rapid economic growth. look at the dollar rate Introduction of several dedicated training programmes to get the talent pool ready to deliver value on a global scale, hundreds of thousands displaced by flooding in Bangladesh, outbreaks of infectious diseases in the country of more than 160 million effected this is worst than war and happens every year.

  • 2

    How many of us can genuinely get into a discussion about the state of our
    economy without being politically biased ? Only a handful , let it be experts
    or ordinary ! And the next question is , are we alone in this situation among
    other countries ? The answer is NO ! The fact about the world economy is ,
    the world top economies are struggling to keep in shape ! They are taking
    direct and indirect hits in local and foreign trades and on top of that , internet
    businesses are turning traditional high street businesses upside down
    causing huge job losses at every level . Banks are going into modernisation
    by cutting down on cashier points and replacing them with A T M machines
    and even offering new and more services on mobile phones . Every aspect of
    our life is experiencing unbelievably radical changes and the effects of which
    are hard to describe on a space like this . We too are witnessing these changes
    on a limited scale according to our capacity but ridiculously failing to see the
    bigger picture or we intentionally deceive the people with false promises of a
    a world of fantasy , the poor folk’s dream ! My view is , we need a TOUCH of
    modern world and not the whole lump of imported modernity ! If you want
    full modernity then create it if you are capable of and if it comes like a piece of
    cake !

  • 1

    What an ignorant article. During MRs government foreign debt decreased. In 2014 debt to GDP was 70 percent, in 2012 it was at the lowest point which was at 68 percent. Today it’s 80 percent. What has this government done with the debt? Except give themselves raises they haven’t done anything. At least the previous government did something, although I don’t deny that there was corruption and mismanagement involved, but this government didn’t do any better our corruption index has increased and debt has also increased and industries like the tourism industry collapsed because of the incompetence of this government. Don’t think that all people in Sri Lanka are ignorant.

    • 0

      sandun batagoda

      Could you let us have the source to your points/facts of National Debt and how the computation was done?

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