28 May, 2024

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Only A Unified Approach Can Solve The Economic Crisis

By Hema Senanayake – 

Hema Senanayake

Part of economics is politics because suppressive politics and weaker domestic currency can ruin a country. We, the Sri Lankan witnessed this firsthand. President Ranil Wickremesinghe cannot do magic in economics. That is what IMF’s recent review said in their own diplomatic language. In fact, neither Ranil nor Sajith nor Anura can have their own plans to take the country out of this economic mess.

Economic theory or macroeconomic fundamentals tells a different story to the country. Check this with Dr. Nandalal Weerasinghe, the governor the central bank, and other learned economists, if you can. The country needs a theoretically sound unified approach to come out of this economic mess. Let me explain this point.

No country will grow economically if it can’t increase something known as capital allocation and consumption allocation steadily, both of which originate from the country’s total proceeds or total sum of sales or total sellable output (not GDP). This means that the country should expand total sellable output in order to increase both capital allocation and consumption allocation. From where does the total sellable output originate? It is easy. It originates from a single economic activity. Total sellable output of any country originates from entrepreneurial activity. So, if we need to increase total sellable output then a country should have a strategy to expand entrepreneurial base. Even tax, which is a part of consumable allocation, originates from the total sellable output which again means from the increased business activity. So, there is no prudent method of increasing taxes without increasing the country’s total sum of sales or entrepreneurial activity. Ranil forgets this truth, or he ignores it. 

“Business confidence” is the key to expand entrepreneurial activity. Two things can jeopardize business confidence, local and international. One is suppressive politics and secondly a weaker domestic currency. If the government threatens social media, social activists and even the judiciary, it is suppressive politics. This is why I said that part of economics is politics. Then, the currency can be stabilized only by improving the national current account balance. This doesn’t mean that there should be a positive balance in the current account always. However, if there is a moderate deficit in the current account, it should be balanced off from the noncredit based dollar inflows taking place from Foreign Direct Investments (FDIs). The FDIs expand the country’s entrepreneurial base while having positive impact in the current account. This approach is true for all political parties. Even if NPP designs its economic plan targeting a production-based economy, while solving the country’s balance of payment problem, enhanced FDI inflows provide a better strategy. What the country, local entrepreneurs, international entrepreneurs, and international lenders need is the unified vision of all parties based on sound macroeconomic fundamentals.     

This approach is much better than Ranil’s low hanging fruit of tourism. FDIs brings in noncredit based dollars and expands entrepreneurial production base. Foreign investors too need business confidence. They look for stability of domestic currency and political stability. This is why a unified approach is necessary.   

A unified forum of all parties should tell the country and international community that the country is concerned with the stability of currency and political stability. This is the only way out. Other than this Ranil cannot do magic as said earlier. He should agree with the opposition to hold the national elections on time and withdrew all suppressive legislations. Part of economics is politics as we value business confidence. Then only our local entrepreneurs can attract their foreign partners for more FDIs. Additionally, if the united forum or government diplomatically win the hearts of major importing economies like USA, Japan and EU, the FDI inflows will be quick. In regard to China, Deng Xiaoping did a similar thing in 1979 with the U.S. The next year, in 1980 a lot of major companies from the U.S., Japan and Europe flocked to China to take advantages of new opportunities.  

Ranil’s arrogance will not help this country. He is not a good economist or even a good listener. In philosophy, pride is considered singularly a bad thing even if it is authentic. Ranil and his team are immersed in false pride. So can other political party elites. If one positive thing that learned professionals can do for the country is to demand all political parties to have a unified vision for the country based on sound economic theory, at least at this moment of great economic crisis. Such a unified approach based on macro fundamentals is the way forward. 

hemasenanayake@yahoo.com

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Latest comments

  • 8
    2

    It is happening again- Ranil becomes President ( or PM) through trickery , some half-baked middle class chaps cheer him, frustrated diaspora guys see some hope -but before long Ranil loses it, he comes a subject of ridicule-a big joke.

    He has to be , a man basing himself on something that happened in 1977-another era, when people thought highly of big families ,UNP, British degrees ,even Sorbonne. All these things have been proven spurious , only tools in the hands of a meaningless ruling class in this Third World society. I think even Ranil’s wife married a myth, which she now tries to keep alive by subtle means. She drives her own car ! Mahendran came for the Bond investigations in a Indian made Alto ! What super acting !

    Ranil must fail because to distinguish himself he has chosen a role which does not suit him, an intellectual , a massive doer and visionary.Not only the few corrupt Colombo johnnies but Ranil himself has swallowed his own lie.

    Although he has no qualifications in any of these things, has not written anything on these subjects ,Ranil is lecturing even empty halls on every subject- global warming, space, maths, history–in other words an utter fool !

    • 4
      6

      deepthi desperate silva

      Why are you always in despair?
      Cheer up, both cheerful old codger and jolly man nimal fernando could help you.
      Ask them you will be served.
      Ignore SJ, as he feels more despair than you are, even Xi Jinping looks happier than what SJ sounds.

      • 1
        4

        NV,
        .
        I think DS is appearantly dissapeared in LOVE with OC.
        OC should take her serious. May also be possible, shinkflation in UK/london may have sent these people mad. The economic level of UK in Europe is shrinking right at the momemnt with growing numbers of poverty.

        NO matter the topics being addressed by CT authors aside, she chases OC again and again.

        However, OC does not seem even to notice it.

        On and on, leaving all the topics aside, DS while claiming to be a medical doctor by herself, but behave like an isolated person. To my knowledge, there are enough psychotherapists in LONDON/UK, why not she rely on them ?
        I really dont know what she expects us to do. She attacks everyone as if both-side sharpened knife acts at work. She is totally against RW for no good reasons. No good arguments as to why these men and women stand against RW. OOH, they complain the prevalent laws being not enough. Howeber when steps are being taken, they fully criticise them. I am not fully against the media being introduced a code of ethhics , so that any simpleton not allowing abuse airing frequencies. MEDIA FRAUDSTERS should be the ones to have misinterpreted things but in favour of MEDAMUALNA dogs, ruined this nation pushing them from frying pan to fire.

      • 0
        0

        NV,
        That’s because his ‘CHANDRA LAGNA’ IS IN ASTROLGICAL DESPAIR!!!???

  • 8
    0

    The writer has made a very inaccurate assumption about political will. Ranil and his cohort, as well as most others in parliament have a very different set of priorities than developing the country. Most people in both major camps enter politics, not to help with developing the country but to make money while fooling the people. Ranil, sadly, prefers to continue this trend in the face of an unprecedented economic meltdown and staggering new poverty levels that have brought most people in the country down to forgo basic aspects of a comfortable life, not least of all, the right to protest. These bastards don’t care about sellable commodities or increasing national or export production or foreign direct investment etc. Of course if there are bribes to be taken, yes, but not with sincere intent for public good. Corruption is in their blood. So, first we need a new set of individuals who have a genuine interest in making things better for everyone, not just themselves. The people must wake up and take back their country from the vermin that infest it. The time is now.

  • 1
    0

    “They look for stability of domestic currency and political stability.”
    Unstable political stability is the norm and even the author is afraid to tell the truth or ignore it purposely. Having elections or removal of suppressive legislations are not sufficient to bring political stability. What went wrong with the political stability? Is it ony with Easter Bombing? Is it only with LTTE war? Is it only with JVP war? Is it only with July 1983? Is it only with burning of Jaffna library? Is it with 1977? Is it with Standardisation? Is it with 1958? Is it with Sinhala only? Look for answers to these questions! What would you did to come out of these?

  • 1
    0

    Dear LP and other rational thinkers.
    .
    “Corruption is in their blood. So, first we need a new set of individuals who have a genuine interest in making things better for everyone, not just themselves”

    If I may say so clearly, not only politicians, most people ( incl. doctors, engineers, teachers, university dons and all other professionals )er are deeply corrupt in their minds: whether they are mine or yours, most of them are totally corrupt in Sri Lanka. Either they are corrupt, or they support corrupt systems with or without knowledge. They have no active knowledge against injustice and corruption.
    :
    All this became clear to us by the end of 2014. By the end of 2014, Sri Lanka was marginalized by the whole world because of Rajapaksa’s politics. They only had “Swaziland, Belarus, Libya and China by the end of 2014”: hence the delay. Reverend Sobitha wanted more than 50 civil organizations to stand against them and marginalize them forever. However, its people, our own people through biased media crooks never transported to the village level what really needs to be done to get rid of metastasizing corruption as a cancer. The result was that the villagers once again rallied behind the Rajapakses through the direct misdirection and misdirection of the “bald uncles” who were hiding behind the robes, and the robes’ place in Ceylon society.

  • 2
    0

    I think as we know Sri Lanka with its varied dangers is similar to a “dump”, where it is full of various parasites that are totally dependent on the existence of the dump. As we know such dumps coexist with various living systems. The people who live there can digest the stench, while others find it unbearable. That is what I feela bout my motherland. People are to blame… not only politicians.

    SRILANKEN youtubers really worsen the situation by abusing their rights, that is why I believe some sort of code of ethics should be introduced to them. fREEdom of speech something and abusing it to the core, even more dangerous. Latter is unfortunately the reality in our hell created by MEDAMULANA dogs. Some youtubers are like monkeys that took knives. They spread more sorcery and other myths for their dollar-gains. That is similar to rape the rape victims again and again. That is what we need better systems to allow PEOPLE be fed with facts about the society and other crucial issues.
    :
    In the same way, even if others see the danger bef

  • 2
    0

    China was a unified Communist regime when they sought FDI’s from USA. They eventually became capitalist, but still remained deeply rooted within their Communist ideology. Poor countries need to install greater Communism to get the ball rolling. Our silly country is perpetually upside down on its head…..STILL indulging in all things colonial!

    • 1
      0

      “China was a unified Communist regime when they sought FDI’s from USA”
      Yes, They were well rooted in Communist ideology, until the Megalomaniacal “PITTSBURGH DOCTRINE” came upon them, with their FDI’s!!??
      NOW they have all the dissensions, discord, discontent and HR violations and what Not!!!???

  • 2
    0

    I am not an economist, therefore, unable to comment on improving the economy of SL, which is in dire straits. However, having travelled widely, I can see countries smaller than SL with no natural resources, coping better. Forget Singapore, or even Bangladesh & Vietnam, relatively poor countries now doing much better than SL. Taiwan is a global manufacturer, despite having no industry or a brand name, Malta, a barren rocky land where nothing grows (there are no cows due to lack of grazing land) & water is scarce which has to be imported. Due to this reason, tourism is controlled with only a handful of luxury hotels but earns revenue mainly from its port, an important maritime transfer point for container traffic. Jersey & Guernsey, where you can walk the entire island in a few hours, is a major exporter of Jersey Royal potatoes, apple cider, as well as, an international banking hub. The gap between the rich & the poor is small in these countries but the public services are excellent & the citizens have a decent life style.
    SL is geographically strategic as a maritime hub, fertile with a favorable climate but our own, once famous exports, tea, rubber & coconut are in decline, export potential of spices not developed, instead, we wait for tourists to bring in the Forex, not to mention, our ex-pats. In fact, a friend sent me a clip of a yob politician, I believe Aluthgamage, proposing a tax on ex-pats. Time these yobs pay their fair of taxes before taxing others.

    • 1
      0

      Dear Raj,
      .
      Aluthgamage is claimed to have a house in Central london which costs over 1 billion of BSP ( 394 billions of RPS). Not even a well-paid academic could buy such a house today in LONDON, however, Rajapkashe confidiantes were lucky to do so abusing the TAX payers funds on broad day light. Is not that not magic to RAJAPAKHE supporters ?
      :
      Aluthgamage was proved to be a sales rep for a sales company, 20 years ago, in colombo, not even for a salary of 1500 rps /month. How on earth, these men were blessed with Alandin’s wonder lamp to own that much of wealth, with the monthly salary of a MP/Minister within 2 decades ?

      SRILANKEN auditor generals though spoke high about the frauds of others, however, ALUTHGAMAGAGE’s to have earned that much of weath being close to MEDAMULANA human beasts should have long been investigated, if we had good lawyers and judges in this country. However nothing like that occured in that country, even if JVPrs and SJBers repeatedly advocated on the corurption levels publicly. I wonder, why on earth, if it was comminted by RJAPAKSHE-MAN it always to be ended with exonerated fully? Dont we have the prima-facie evidence that srilanken JUDICIARY is Rajapakshe-biased ?

      • 1
        0

        LM,
        “Aluthgamage was proved to be a sales rep for a sales company, 20 years ago, in colombo, not even for a salary of 1500 rps /month. How on earth, these men were blessed with Alandin’s wonder lamp to own that much of wealth, with the monthly salary of a MP/Minister within 2 decades?”
        Nothing else, he has wealthy relations!!! and Powerful relatives such as former speaker, PM and those sanction customs clearance for Cannabis and drug Imports to the country from 2nd most powerful position in the country!!!???!!! Cleared all sanctions!!! Now you know how the money came!!!???

      • 2
        0

        Dear LM
        UK property market has been in the forefront of money laundering but now with international agreements, requests from any Government will be investigated & assets frozen if the source of income is not established. Recently, NSW in Australia introduced powers to investigate wealth of individuals on suspicion even if no crime has been committed. As you maybe aware, there is also the Magnitsky Act in the US, supported by many countries, under which human rights abuses & money laundering allegations are investigated & assets frozen. Obviously, there are so many SL politicians & cronies who have laundered their ill gotten wealth, no current politician will ever instigate a request to any govt. to investigate the assets of SL citizens in their country.
        In fact, politicians, even like Harsha, have defended the war heroes from being prosecuted abroad, so it is highly unlikely even the worst culprits would ever be allowed to be investigated in any foreign court.
        Cont.

        • 1
          0

          Cont.
          If the SL Govt. is serious about recovering stolen public funds but does not have the will for an international investigation for some reason, the govt. can at least instruct the IRS or a special investigative team to investigate the wealth of all recent politicians & their immediate family for their sources of wealth. At a time when the treasury is scraping the barrel for funds & taxing the already burdened citizens, this punk is proposing a tax on ex-pats as well which begs the question, how much tax does he pay even if his income is a measly MP’s salary? Is his life style within his official pay scale?
          Hema. the ‘unified approach’ to solve the economic crisis is a joke.

    • 1
      0

      “SL is geographically strategic as a maritime hub, fertile with a favorable climate but our own, once famous exports, tea, rubber & coconut are in decline, export potential of spices not developed, instead, we wait for tourists to bring in the Forex, not to mention, our ex-pats.”
      Unfortunately, Sri Lanka has the worst country with worst political leaders and worst religious leaders, worst judiciary, worst military, worst police and worst administration. Even you cannot get your salaray unless you pay a sum (something) to someone from bottom to top.

      • 0
        0

        Ajith

        I am well aware that palms must be oiled, from the peon up, to get things done in SL & the hassle of wasting days in govt. offices. When I think of how I can get everything done on-line in UK, from getting a new passport to paying tax, without even leaving home, I feel sorry for the average citizen in SL who has to wait in queues for hours. A few years ago, it took me over a week to get all the documents ready to get my SL passport renewed. It would not have been possible if not for the intervention of a high ranking police officer, introduced to me by a friend, who was able to cut through the red tape. That would be the last time I am renewing my SL passport & the last time I visit a govt. dept.

  • 1
    0

    Ranil seems to under the spell of velli thisai in Tamil astrological terms
    if some one is doing very well suddenly – they say – he is under the spell of velli thisai (venus planet)
    my Tamil brethren’s can explain what velli thisai
    ===
    I mean the guy was nothing few years ago – UNP didnt win a single seat including himself.
    ===
    Now he is globe trotting – lecturing the world – on borrowed money from IMF
    The economy, law and order , judiciary, etc etc are collapsing
    =====
    velli thisai for Ranil not for the country
    well I mean its always velli thisai for the politicians….not for the people or the country

    • 1
      0

      Rajash,
      Not only only Ranil but also Ali_Sabry.

  • 0
    0

    Only A Unified Approach Can Solve The Economic Crisis.

    We have one asset, and that’s people. They can imrove the agri sector, pohotuwa did none .

    Nothing so weakens a government as inflation.
    When you increase prices and taxes this system of approach to close down industries to balance art and technique that Government must be smart enough to implement If the parliamentarian has know this, When men are employed they are best contented.

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