By Harsha Gunasena –
Harsha Gunasena
From November 30th last year, the Sri Lankan Rupee is appreciating against the US Dollar gradually. The Rupee value of a dollar on November 30th was Rs. 329 and the same on March 20th was Rs. 304. Sri Lanka is experiencing an appreciation of the Rupee for a second time.
Over decades the value of the Dollar in Rupees increased gradually. During the economic crisis for a short period from March 7th 2022 to May 13th 2022 the value of a Dollar in Rupees increased from Rs. 202 to Rs. 369. For the first time in the history the value of the Dollar in Rupees started decreasing from February 26th 2023 to June 8th, 2023 from Rs. 364 to Rs. 290. This was the result of stabilizing the Rupee shedding the speculative trends.
There are interpretations that the prevalent situation is an indication of the recovery of the economy. There is a truth in that. According to the Central Bank reports there is a positive balance in the Current Account after 1977. Current Account balance is comprising of the trade balance, which is the difference between export income and the import expenditure, remittances by the Sri Lankans working abroad and service income such as income on tourism. In 2023 as usual import expenditure was more than the export income as a result there was a deficit in the Trade Balance. (USD 4.9 billion) However since foreign remittances (USD 6 billion) and service income such as tourism (USD 2.1 billion) increased we could achieve a positive balance in the Current Account.
Graph – Exchange Rate Movement – Rupees per USD
Source:
https://www.cbsl.gov.lk
Finance Account has not shown a progress and the country has received the installments of IMF loan and loans from the World Bank and the Asian Development Bank. Also, there was a net inflow of the transactions of Colombo Stock Exchange and Government Securities. These are the positive signs of the revival of the economy. The other point is that the consumption of imported goods may have dropped due to the affordability. This would reduce the cost of imports.
The inflow of Dollars to the market is more the outflow. Hence there is a surplus of the Dollars in the market. As a result, the value of the Dollar in Rupees drops in the market. In order to control the drop the Central Bank buys Dollars from the market by giving Rupees. At the end of 2023 the Central Bank increased the foreign reserves to the level of USD 4.4 billion. Out of that USD 1.7 billion was net purchases of Dollars from the market.
This is the reason of the appreciation of the Rupee. However, this is not the total picture. Now there is an import control. Some of the goods such as vehicles were not allowed to be imported. Exporters have to convert their receipts in Dollars to Rupees immediately. The country has not yet started to repay all the loans. Therefore, the excess of Dollars in the market is not real since some elements were kept away from the market forcibly. When these elements come into the market there is a possibility that the Rupee will start to depreciate.
Sri Lanka is importing consumer goods, intermediate goods and capital goods. There is no reduction yet of the imported consumer goods in the market in relation to the reduction of the Dollar in Rupees in the market. The cost of oil is also not reduced to reflect the reduction. The reasons may be the slight increase of the oil prices in the international market and the increase of VAT from January.
The notable point here is this. The country will have to increase the level of exports of goods and services. For exporters, when exporting goods and services, the price is determined not only based on the cost of production and the profit margin but also the prices quoted by our competitors supplying the same products to the international markets. Our competitors are countries such as India, Thailand, Indonesia, Bangladesh and Vietnam. The exchange rate in those countries are not in a scenario of appreciating the home currencies continuously. Hence the international prices are not getting increased.
Interest rates were dropped and dropping, and inflation is controlled. These are good signs of a progressing economy. However, the cost of the goods increased during the inflationary period remains. The cost of the goods increased further due to the increase of VAT. If exporters buy good from the VAT registered ventures, the increased VAT is not an expenditure to the exporters which could be claimed from the Inland Revenue Department.
In this scenario if the value of the Dollar comes down to the level around Rs. 280, all export ventures may record losses.
In 2022 when the value of the Dollar increased in a short period to the level of Rs.360, the exporters gained windfall profits. This was a benefit to set off the increased costs of the local goods due to high inflation and high interest rates. This situation was eased later and in June 2023 the value of the Dollar was Rs. 290. Within a short period of time it went up to Rs. 309.
Since there is an influx of tourists the turnover of the tourism industry increased but their profit margins are getting eroded due to the reduction of the Rupee value of the Dollar. The recipients of foreign remittances also are getting lesser amount of Rupees into their hands.
We should pay attention to this sector since the sector would be the savior of recovering the economy. The answer to our economic ailment is to promote exports of goods and services including tourism. Therefore, it is ideal that if the Rupee is kept at the level that it is not overvalued and if so it would be detrimental to the exports and thereby to the economic recovery of the country.
If the appreciation of the Rupee happens in the background of increasing of production and exports of the country, then it is natural. The current situation is a temporary one. In the future when the imports are relaxed further and when the country starts to repay all the loans the situation will be changed, and the value of the Dollar in Rupees will be increased.
There are stories that economic recovery is an illusion, and we will fall back to the same level in time to come. Yes, if not proper policies are not followed. Otherwise not. It is a reality that the tourism industry is developed and the foreign remittances were increased. Promoting the tourism industry is one of the best ways to develop foreign income in the short run.
Management of the economy is a balancing act and the policy makers and implementors cannot go to extremes.
Ruchira / March 20, 2024
“There are stories that economic recovery is an illusion, and we will fall back to the same level in time to come.”
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Why is that?
“Yes, if not proper policies are not followed. Otherwise not.”
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What are the proper policies in that case? And is the government following such proper policies?
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Harsha Gunasena / March 21, 2024
These are the proper policies.
1. Continue to maintain a positive balance of the Primary Account as agreed with IMF. Primary Account is income of the government less expenditure other than interest payments and loan repayments
2. Limit money printing as agreed with IMF
3. Reduce the size of the government. Increase the productivity and pay a decent salary to the remaining.
4. The job of the government is to govern and not to do business. Politicians like to do businesses so that they can employ their henchmen in those institutions. Therefore privatize the government entities in a transparent manner.
5. Allow the private sector to have wealth. From 1956 the government at different stages acquired the wealth of the private sector.
6. Microsoft is an asset of the US. Similarly Sri Lankan multinationals such as Hayleys, Aitkin Spence, Commercial Bank are Sri Lankan assets since they provide employment and contribute to the growth of Sri Lanka. Sri Lanka Airlines is not an asset of Sri Lanka. It is a liability.
7. Promote exports of goods and services. Promote trade. We cannot restrict imports and promote exports. Re exports the market id unlimited. Re import substitution market is limited to 22mn. Be offensive rather than being defensive.
8. Remove trade barriers. Enter into free trade agreements with beneficial trade partners. Redefine the trade agreement with India.
9. Ease of doing business index to be improved substantially in order to get FDI
These are some of the policies that came to my mind. Government is moving in this direction. Sometimes the speed is slow.
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Ruchira / March 21, 2024
Thank you for the reply.
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If the government is moving in the right direction albeit slowly like you’ve stated, my concern is why there are ‘stories’ that the economy may not recover?
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As for the Sri Lankan Air, JRJ’s pet project, I think there are no takers even if the government wants to sell it at this moment hence remains a liability.
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I have, I think Rohan Samarajiva, questioning as to why enterprises like Lanka Hospitals are not sold? Which is less complicated than selling Sri Lankan.
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I think the bottle neck is not having enough exports, goods and services, without which the future may look bleak.
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In the 75 years of post independence history garments have been the only accomplishment in terms of significant exports other than the traditional agricultural products. That (garments) too I think succeeded because of external forces worked hard at getting it together.
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To me it looks like none of the current politicians have much of a clue as to how to engage and benefit from the current globalised economy which is now about 30 plus years old.
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What do you think is the single biggest issue standing in the way of progress?
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Harsha Gunasena / March 21, 2024
Ruchira
My comments are given below.
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“If the government is moving in the right direction albeit slowly like you’ve stated, my concern is why there are ‘stories’ that the economy may not recover?”
There are stories since various people think differently. What we are doing now is to debate and to find a common solution if possible
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“As for the Sri Lankan Air, JRJ’s pet project, I think there are no takers even if the government wants to sell it at this moment hence remains a liability.”
That is why the government decided to take over all the liabilities. Then they will be able to find out a buyer. I do not know why such a delay for these things. RW as the PM in his first address to the nation he said SL Airlines was a burden. How many months passed after that statement?
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“I have, I think Rohan Samarajiva, questioning as to why enterprises like Lanka Hospitals are not sold? Which is less complicated than selling Sri Lankan.”
Yes. He said that. I also ask why? People say that profitable institutes should not be sold. Probably Government is afraid of them. Take SLT and Dialog. Or SLIC and Ceylinco Insurance. Who is the market leader and who makes more profits? Inefficient management also a waste.
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“I think the bottle neck is not having enough exports, goods and services, without which the future may look bleak.”
Yes. Government is in this direction. They touched the low hanging fruit tourism first. Others will follow.
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“In the 75 years of post independence history garments have been the only accomplishment in terms of significant exports other than the traditional agricultural products. That (garments) too I think succeeded because of external forces worked hard at getting it together.”
External forces as well as the efforts of Premadasa.
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“To me it looks like none of the current politicians have much of a clue as to how to engage and benefit from the current globalised economy which is now about 30 plus years old.”
Not really. Politicians cannot do everything. They can create the infrastructure. They cannot do businesses. People think that they have to do everything. Our private sector is also not capable. Damro has gone to India but Manchee had to come back. Now they try to go back.
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“What do you think is the single biggest issue standing in the way of progress?”
Attitude. Attitude of the people. They are dependent on the governments. They think that governments should do business on behalf of them. They are prepared to get jobs and not to give jobs. They work to live and not live to work. Buddha did not work to live. He lived to work. Work is not a passion of many.
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Ruchira / March 22, 2024
Harsha Gunasena – Thanks again for the detailed response.
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WRT to promoting exports you’ve said: “Government is in this direction.” What has the government done in this direction other than going for the lowest hanging fruit tourism and what took so long for any government to go in this direction? Couldn’t we have done it without first letting the country fall into an economic abyss?
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I do agree that the private sector too is incapable. Any idea why?
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I’m not sure if the attitude of the people is the only problem though there may be some truth in it. For example you have mentioned and I agree Premadasa’s contribution to the development of the garment industry and it did succeed to some extent.
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TBC
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Ruchira / March 22, 2024
Cont’d…
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For example I’m sure you know Dr. W. A. Wijewardena the ex- deputy governor of CBSL who writes a weekly column to CT, he in one of his books published mentions how it was JRJ who adapted certain economic policies and practices with the establishment of the Central Bank in 1950.
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Basically using the CBSL independence to infuse liquidity to economy by way of printing money to meet the budget deficits created by exorbitant government spending by almost most successive governments without really focusing on real economic growth.
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Basically JRJs motto had been economy should serve poeple, not the other way around.
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TBC
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Ruchira / March 22, 2024
Cont’d…
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He blames the ill disciplined finance ministers for abusing the Central Bank and points out how Singapore decided to stay with its colonial era Currency Board ensuring there’s financial discipline while promoting economic growth. The motto there had been you should earn your living by working hard (what you too have mentioned) in contrast to JRJs one.
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To me it looks like bad policy decisions, lack of financial discipline, foresight to focus on real growth, while going on spending sprees by the policy makers that are at the core of the problem more than the attitude of the people.
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What do you think?
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Ruchira / March 22, 2024
PS: Basically John Exter’s Central Banks established both in the Philippines and in Sri Lanka have been flops, with both countries going banckrupt. According to Dr. WAW, not due to any fault of Exter but because the local policy makers adapted Keynesian policies against the advice of Exeter, who was the architect of the Central Banks in both aforementioned countries.
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Harsha Gunasena / March 22, 2024
Ruchira
I agree with your Post Script
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Ruchira / March 22, 2024
Harsha – Thank you for the acknowledgement. At least it’s good to know that I am not all that off the track in my understanding of the problem.
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Harsha Gunasena / March 22, 2024
Ruchira
I agree with you. Ours being a democracy (which is the best mode of governance), sometimes with strong opposition parties, focusing on the next election, our leaders may have lost sight on the basics you have mentioned. For instance RW when he became the PM in 2001 he stopped recruitment to the government since we had a negative economic growth at that time. His cabinet ministers openly said that they could not win the next election with this policy. But that policy was a real necessity for the economic recovery. What happened. Next election as they predicted Ranil lost. He did not try to implement that type of policy thereafter. Now it is being implemented out of sheer necessity once again. In a way the bankruptcy is a blessing in disguise to our country.
I kike to put the blame on people and I am a part of them rather than putting the blame on politicians.
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Ruchira / March 22, 2024
Harsha – Fair enough. I too do agree with your sentiments, that the economic crisis is a blessing in disguise.
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Harsha Gunasena / March 22, 2024
Yes. Printing money and deficit budgeting started from JRJs time as Finance Minister. In our entire history we have only two years without deficit budgeting. Those two years were 1954 and 1955 where MDH Jayawardene was the Finance Minister.
JRJ’s motto has led us to this situation. Economy served people excessively and beyond the capacity of the economy. Hence the budget deficits one of the two main reasons of bankruptcy. The other being current account deficit.
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Ruchira / March 22, 2024
Harsha – Thanks. Your comments confirm my grasp as a layman of the circumstances both historical and current in relation to the economy.
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Harsha Gunasena / March 22, 2024
Ruchira
Good conversation. Fortunately I am bit free.
Other than promoting tourism what they have done in this direction is to start negotiations with FTAs and one was signed.
Previous governments also promoted tourism and FTAs. Re FTAs there was strong opposition from the country. Thinking of this block is a hinderance to progress. Vietnam is having FTAs with more than 20 countries and their both imports and exports were around 100% of GDP each. Ours were a trading country historically, in the middle of the Indian Ocean.
In 2000 our exports were around 40% of GDP and in 2015 it was around 20% of GDP. Most part of this period main contributor to GDP was construction on borrowed money.
Exports come along with imports. I think we focused on import substitution rather than export promotion in order to find out a solution for balance of payment crisis.
We cannot expect governments to perform miracles if the people are on the other side of the ideology because politicians think of the next election.
Private sector is comprising of the people of this country. They are in politics, the state sector as well as in the private sector. There are exceptional personalities in all three areas. People of this country are happy with what they get. As a personal trait it is wonderful but in the case of developing a country this quality is disastrous.
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Ruchira / March 22, 2024
Harsha – I agree on all points including the one that the conversation is a good one. Thank you for taking the time to respond meaningfully and happy to have been a party to it.
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Harsha Gunasena / March 22, 2024
Ruchira
Thanks.
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Ruchira / March 23, 2024
Harsha – my pleasure.
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old codger / March 22, 2024
Harsha,
“Attitude of the people They are dependent on the governments. They think that governments should do business on behalf of them. They are prepared to get jobs and not to give jobs. They work to live and not live to work. “
You have it in a nutshell. They think the government is there to give them cushy employment, free food, free education…….
“Politicians cannot do everything. They can create the infrastructure. They cannot do business” True. When politicians run businesses like Srilankan or SLT, they make a mess. SLT itself survives nowadays because it is already half Malaysian. As you say, Srilankan is not an asset but a liability.
The state should involve itself more in services like health and public transport, even at a sight loss, and improve them. But how can it do that when all its taxes go to maintain white elephants?
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Mallaiyuran / March 22, 2024
” Not really. Politicians cannot do everything.”
Whitewashing the Sinhala Buddhist politicians’ destructive history of 75 years? How do you dare to write a sentence like that after a country has suffered a lot. Where was the country when Britain was leaving and where is it now? Somalia, Uganda, Myanmar, Haiti ……. doing better. These days Vietnam is the most favored country in the East for investments. When Ceylon was liberated from Britain, Ceylon had that title. How much do Vietnam owe to the IMF?
What do you mean by everything ? Can you list some of the things that those other than politicians could have done and had made the country flourish? You were in the Banking Business. You too might have been in the business of the give and take. To tell that story you can wait in the line as first when Evil starts his TRO. But that doesn’t justify the destruction the politicians did. The current UNP-SLFP Union rascals must go for people to breathe at least after the hellish 75 years of looting, theft, bribing, blackmailing, money laundering, swindling…. all kinds of high financial crimes, in addition to all other crimes.
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Mallaiyuran / March 22, 2024
Why, the chief project officer Peter Brewer did not elaborate to people that the Evil administration is now 2 years behind to secure loan restructuring, which is very important to get FDI, productive-competitive loans, or even to successfully complete deals on Air Lanka, CEB, Petroleum corporation, telecommunication monopolies…….
Why doesn’t he elaborate on the failure of the property tax, which while bringing a new income tax, will bring in billions from those who dodged their income tax in the past. Who is going to pay for Mr. 40% ‘s Malwana Manson’s property tax? Why time after time, in all his visits to Langkang, Peter Brewer running with hares instead of chasing the hound for to be in the people side? Whom did he meet when he went to the North? “Ms. Charles!”. Do you think at least one truth he might have to know about North from Ms. Chales? Appe Aanduwa sent her to North as the Governor because they wanted to reserve the prison hospital bed only for Rowdy Rambo. Could you write below a comment if in your opinion that action tells you any message? I like to see who you are by that comment. Please tell me how the people can correct matters if you don’t want the politicians to stop these utter rascal activities.
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Mallaiyuran / March 22, 2024
This nature of Aanduwa and his actions beg that even if Peter Brewer needs to be referred to the Bribery Commission. You Know what UN office Chief Nambiar did until Britain worked hard to send him out on the Myanmar case. Mr. Ahasi, all those times, justified Langkang’s Royals to the Japanese government. Then what did Japan do on the monorail project? Gave to Bangladesh. Why did it take it away from its most favored country? Only because of Mr. Ahasi’s underhand help to Rowdy Royals to loot.
I tell you something by observing IMF Chief Project officer, that if he stands on the coming EP election against, Evil, Valaiththodam Jr, Rowdy Royals and Anura, he will be the winner because by now he has become the super master in the Aappa Diplomacy game, learning from Appe Aanduwa leaders.
You know what a decent UN High Commissioner, the Jordanian Prince, Zeid did. If you are a police officer, hit or get out, don’t turn into a gangster with whom you are dealing and rob. If this third-party officer is not willing to bring justice, who will be able to bring to the masses, who are subject to Langkang Sinhala Buddhist politicians’ Sinhala Buddhist Jury only verdicts.
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chiv / March 21, 2024
So Harsha, your recommendations are pretty much same as IMF. According to IMF, bankrupt Lankan politicians did not fulfill one third of the recommendations suggested in the first round and eventhen managed to get somewhere. So for now I fully agree with IMF.
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Harsha Gunasena / March 21, 2024
chiv
Not really. Probably their thinking is in this line but they have recommended only first two points out of the lot, I think
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chiv / March 22, 2024
Harsha, as told before I’m not an economist , hence my knowledge is limited. I tend to see issues as in medical problems. I fully agree with you and IMF. (I’m sure IMF will agree with all other points you had mentioned ). The current economic scenario is very similar to patients we commonly come across. A person who shows up in the clinic with non healing wound or recurrent UTI is told that he has Diabetes. This patient never checked because he believed there is no reason to check for early Diabetes , when healthy. Fact is that, a person should have high sugar levels for some time to develop such complications. At the end the doctor recommends a medicine ( metformin ) and advises diabetic diet,daily walking and periodic check ups. But patient decided to do it in his own way, thinking it’s of recent onset . So he skips the medicine, doesn’t visit the doctor and follow the rest (diet / exercise ) as per his convenience. After few more years he again shows up but this time with much more problems. Now he is told both his kidneys are damaged and in future, he may end up on dialysis support.
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chiv / March 23, 2024
Harsha, now lets go through the simple facts, keeping in mind the above clinical scenario I mentioned. 1) Mr. W.A.Wijewardena said, he had written more than 100 articles since year 2000, warning of a potential bankruptcy. 2) You say Lankan economic policies were such, there were only 2 years without budget deficit. 3) As LM mentioned this the 17th time Lanka seeking help from IMF. That is almost every 4 years of independent Lanka’s economic history.4) Single biggest hurdle in your opinion is ATTITUDE ” of people ( read patients ) 5) When I apply these facts to above clinical scenario mentioned, , it’s fact and not story, that “Lankan economy will nor recover”.
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Mallaiyuran / March 24, 2024
The IMF is working only to fund the Rapist Army and take them to the Red Sea, South China Sea……. There is nothing for small owners or Minorities. The Mission Chief went to the North and met with only Ms Charles. She was with Karuna on the TMVP until Karuna was dumped by the Rowdy Royals. In the Yahapalanaya government, when one American military came to customs, she tried all her best to pack it and go back. Mangala, after that ditched her from customs. Now they have deposited this trouble maker in the North. Out of all nine provinces, the only anti-people, anti- Tamil governor is Ms Charles, whose governorship is enforced over Northern Tamils under 13A. Under her administration Evil went to the North with a fake program that is re-issuing the Rapist Army occupied lands back to farmers. Out of the 6000 acres occupied, they said 230 will be returned. But the Tamil media wrote that Manalaru plots were given to Sinhalese as freehold. Anything returned to Tamils is still under the rapist Army and they will oversee Tamils farming. Northern Tamils are fighting for, under so many separate draconian acts, to keep praying Veetukku- Nari-Adi-Shivan. Is this worth the plane tickets for the entourage, which have included with him Colombo Elite Cooli Tamil Ladies to do Arathi? Author illusionist is talking about “Good Policies.” Pathetic!
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Lester / March 22, 2024
Regarding 7, to maximize exports, industrialization is necessary. Without industrialization, the government will be running a deficit. As an example, the US outsourced its manufacturing base and is now $34 trillion in debt.
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Harsha Gunasena / March 22, 2024
Lester
“Without industrialization, the government will be running a deficit.”
Not necessarily. We can export services such as ICT, BPO
Our population is aging. I do not know whether we missed the bus. The best time was 1977 with the liberalization but there civil unrests. Reason for US debt is not transferring manufacturing bases. From 1970 USA had budget surpluses only in 4 years.
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Lester / March 23, 2024
Harsha Gunasena,
Take a look at all of the so-called “Tiger economies” in East Asia. They are fully industrialized. Even countries like Japan and S. Korea, with a minimum of natural resources, are major industrial hubs.
ICT services will be largely automated in the future, as AI progresses, There will be little need for call centers. This trend has already begun, but it will continue. A major difference was that in the past, automation took mostly unskilled jobs. In the future, however, it will also take skilled jobs. This is happening in the tech world already, with IT co’s hiring fewer junior dev ops.
Regarding US debt, it increased exponentially after the US outsourced its manufacturing base to China and other low wage nations, beginning in the 80’s. Of course there are other factors, such as prolonged low interest rates, but outsourcing is a critical one.
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Harsha Gunasena / March 24, 2024
Lester
You say that industrialization is necessary. I said not necessarily. It means I do not say that industrialization is not necessary.
Services also are there. Asian tigers – yes but same recipe does not apply everywhere and all the time.
Our population is aging. Therefore it may be too late to concentrate solely on industrialization. We should be linked to the supply chains of various products.
Primary target should be to earn dollars and it should not be limited to industrialization. Then we are narrowing our options.
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Native Vedda / March 23, 2024
Harsha Gunasena
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“The best time was 1977 with the liberalization but there civil unrests. “
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The best time would have been 1950s and 1960s.
The leaders couldn’t see beyond their nose, and believed in crony socialism, parochial nationalism, …… honed their skills for the purpose of creating conflicts one after another, ……………. and by mistake they also lead the people to believe in sovereignty, independence, self sufficiency, …..and made them to believe the people of this island is literate therefore clever, wise, and able.
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Harsha Gunasena / March 24, 2024
Native Vedda
Yes, I agree with you. I was concentrating on the year the economy was liberalized.
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leelagemalli / March 22, 2024
Thank u Harsha@
‘These are some of the policies that came to my mind. Government is moving in this direction. Sometimes the speed is slow”.
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All parties should come together and give it a try to come out of the pit will relieve the masses. Politics should be kept aside at this critical stage of the country.
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Fairytale will only throw the gullible nation from frying pan to fire. Enough is enough collaberation is the only wayout 🫠🫠🫠
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Harsha Gunasena / March 24, 2024
leelagemalli
Yes, every one should get together. During the WWII Churchill and Atlee got together and they fought each other after WWII
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Ruchira / March 21, 2024
Cont’d…
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Out of 23 million people can’t we find a handful that are good at economic policy management? May be its time to train a few, before venturing into teaching AI to all students?
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Harsha Gunasena / March 21, 2024
Ruchira
Can. Some of them are at work I suppose.
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Ruchira / March 22, 2024
That’s good to know. But seeing the way things are done – it doesn’t instill any confidence. Look at what’s happening at COPE for an example.
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Nathan / March 20, 2024
I get a feeling that Harsha Gunasena wrote this article in a hurry!
(If you don’t agree, I won’t try to convince you!)
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SJ / March 21, 2024
I too feel that economic recovery cannot be measured using changes occurring over a few weeks. Changes have to be related to other major economic parameters.
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Harsha Gunasena / March 21, 2024
Yes, agree not in few weeks. But the relevant period is well above just few weeks
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SJ / March 21, 2024
Let us watch the next few weeks before we light crackers.
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leelagemalli / March 22, 2024
HG,
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This is the 17th time with the IMF. Isn’t it time to rethink and look back on why the previous sessions did not work with Sri Lankan economy?
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Conspiracy theory promoters like Wimal Pawansa should be hanged to Udaya Gontadipilata.
These people are like blue flies on stinking garbage heaps.
MEDIA WHORES MISLED PEOPLE FOR THEIR EARNINGS. Youtubers have surpassed it today. Most YouTubers today are stinking rich. They make money by selling people’s sorrows. No matter mother lanka would end up in misery, they make dollars. Youtubers in srilanka are no different to MALE PROSTITUTES in Unawatuna, Hikkaudwa, Negambo and many other places in the country. They are real parasites.
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The IMF sessions ended not because of their ill-treatment, but because our people could not implement them.
Not by recommending themselves, but by not being able to keep up the agreements made with them. is not it ? What reforms have we duly implemented so far?
Law and order?
Educational?
Health sector ?
Economy?
Religious and cultural?
Sports?
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There are no national level policies like in the Indian subcontinent. Everyone is a punidit, but we have not yet national level policies about the future of this country.
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But we are wasting time by not doing anything properly.. or not?
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Harsha Gunasena / March 22, 2024
Leelagemalli
Yes this is the 17th time we went to IMF. Some of the programmes were completed and some were not completed.
The reason was that we did not like the plans agreed with the IMF and subsequently withdrew from the agreement.
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leelagemalli / March 23, 2024
Harsha,
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So who to blame? .
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We are a nation that fails to build concensus to even for national issues.
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So failure lies on us. Is nt it? Elephant is in the room but nobody even dare 😒 to mention our sabotage nature 😒 😑 🙄 😕 😐 😤???
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Harsha Gunasena / March 21, 2024
Bit in a hurry but I think I have done justice to the subject.
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SJ / March 21, 2024
If you say so.
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Mallaiyuran / March 22, 2024
” Why the Sri Lankan Rupee Is Appreciating is the topic this author, banker started to talk about.
There he said.
” There are stories that economic recovery is an illusion, and we will fall back to the same (sorry to insert my opinion within the quotation– “below” is the right word instead same) level in time to come. Yes, if not proper policies are not followed.”
Then a questioner asked what the proper policies are. It is noticeable the questioner did not ask if the UNP hadn’t followed the proper policies so the Exchange was falling so much during Yahapalanaya, and that discussion ended only when CBK answered to a question “If the rupee reflecting the proper exchange rate” as they cannot answer the question because they do not know the answer. Chandrika killed that question, probably until now: “what was the reason during Yahapalanaya time Exchange shot from 130 to 190 rupee” that time. This whopping 1/3 value drop during the good policy following Yahapalanaya time, only induced the above difficult situation. It was Evil who avoided taking loans from the IMF and managing import- exports to generate income to pay for the existing loan, he sold the Hangbangtota harbor. This left the battered industries not fixed. Then, winter (Covid-19) came. Langkang crickets ended up starving, not being able to manage a small shake up in the economy.
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Mallaiyuran / March 22, 2024
So far none of the buffy writers have presented any figures of growth or decline. here, revaluing in the American Dollar as of 2005, before While Elephants and loans. Then only one can see what happened to the country’s economic situation. There are no special developments made to tourism as the essay gimmicks. Only shortcut destruction by selling government’s historical buildings on high value spots to friends and families for commission, improper Visa issuing to Russia, promoting prostitution, and opening extensive alcohol selling and ignoring the unbelievable expansion of narcotics sales. Countries allow only few weeks as visa for a tourist. Many tourists India, China, Russia, Ukraine, and many other countries citizens are in the country and doing the illegal business because of the Appe Aanduwa’s tourism expansion. Indian tourists coming because they lost Maldives. Russian tourists are coming because it is temporary refugee status seeking. 200,000 Russian tourists arrived is a completely cooked up number. Remember some of them have been there for 3 years now. Somebody has to tell the truth behind numbers for the people. This promotion of filth will cause serious trouble for the upcoming government.
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Mallaiyuran / March 22, 2024
The nature of the tourism is explained in Tamil as “When the trees fruit, the birds come there.” When the exchange dipped from 130 in 2015 to 390 in 2022, so many free meals seeking tourists coming and spoiling the country. These free meal seekers will be gone when the exchange rate returns to 130 with its reasonable devaluation from US $.
This Author, Banker has no idea of how business trading works. All trades are competitive. Once the benefits are lost, it must fall back. Competitor will take over that share. Then those tourist birds will be “gone with the wind” if ever exchange returns to normal. The stability of the exchange rate must be maintained by the current account. That is why President Biden wants to spend trillions to bring back the lost industries like the high end chip making from Korea, Taiwan. Tourists are not going to think that there is a lot to see or enjoy when the Archaeological department is chasing the Hindu out of Veddukkunari Malai without any historical importance or true artifacts. Unless another Junius Richard is born within the racist Sinhala Buddhists, Tamils are not going to go as refugees West any more.
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Mallaiyuran / March 22, 2024
If one starts a new airline from scratch, in a few years an image can be built with that. The Air Lanka case is first the buyer has to balance out the negative image and then they have to build the positive image. If the loan was a problem, why are the prospective buyers not deducting the loan from the assets’ value and paying the remaining? That is why the assets- loans are not the net worth of Air Lanka. The image of an abused airline’s value is many times less than that. Everybody knows the truth. Planes can be bought with a loan by anybody, but if an AirLine has developed a route, it is an asset, and prospective buyers will pay for that route. That is where a line has a market value as going on concern. Air Lanka is destroyed as a net sin, flying from Langkang to hell and back, as described many times in CT by commentators. Nobody is willing to give a price even as junkyard scrap materials for the planes. “Reality is these guys are slacking to sell property at negative value. It is not that the author didn’t know that, but he doesn’t want to be the first one to say something bad about the UNP-SLFP union’s Appe Aanduwas’ great deeds.
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Mallaiyuran / March 22, 2024
Remember the sale of Hangbangtota harbor. The whole bootlicking Colombo media bragged they leased the harbor for $1.1b. It is not just that the 5 villages land was offered to China to take the troubled harbor was hidden, but they are not telling the people that China had not given any profits for the 20% shares Langkang said to be holding. It is either even China, whose massive export market could not make the harbor earn any penny or the lease or 20% shareholding is a complete cook-up for the Modayas. In Hangbangtota the same Colombo Media printed many photos of buildings with Chinese names only. There are Building complexes created to read as “C”,”H”,”I”, “N”, “A ” with their shape. Can somebody here describe what activities going on those buildings or what China did with the five villages land it took with the harbor lease? Leave the five villages’ land aside, but can you raise your hand and tell me you can buy such a modern facility Harbor for 1.1B. They denied so many times that it was not a sale. But the hour now is attached firmly to the BRI route that connects Kyaukphyu with Djibouti port. China has tied Myanmar, Langkang and Etheria with one single leach.
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Mallaiyuran / March 22, 2024
The sales of Hangbangtota only created the Super Power’s rivalry in Lanka. China wants to send its military ship here the way they want. India opposes it. India wants to build its bridge. There are so many actions taking place after the port sales. Taking away the loans due by Air Lanka will not easily satisfy the buyers. He/she will ask for 10 villages’ land in the home base of the Air Line for them to conveniently expand and make the business profitable. Just choking the media’s thought or buying out the editors or murdering the editors will not hide the many secrets sitting behind these delays. We don’t know how many buildings the Arab Emirate wants to have in Negombo to Read “United Arab Emirates”. Just because Appe Aanduwa wanted to take over the Kalal business, Hezbollah built a Jihadi teaching University for 3,000 billion rupees in the East. NPP should not allow Air Lanka to be sold like Hangbangtota harbor, that is paying with land or other goodies to the buyer to buy the property. These invalid bankers should stop playing with the economy without understanding the basics of it.
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Mallaiyuran / March 22, 2024
The Author started to explain the current exchange rate increase. Then to insist on keeping the rate like that, with good policies, he ends up saying “ Reduce the size of the government. Does he know a theory exists and based on that that governments increased their expenditure to get out of the great depression. Did he explain the questionnaire connecting his theory with those circumstances?
Increase productivity.” Did he explain this policy to the governments under which he was a chief Banker. If not, why not? If yes, then why didn’t productivity go up so far? Does he advocate a new phenomenon that nobody heard so far that the UNP-SLFP Union already has implemented systemic change. It was already accepted by all people that unless a systemic change is introduced, the country cannot come up with only one thing, by continuing with the same old crooks. Then why is there a devil as IGP? Why was the 30,000 arrested in the Kuyuthi manner, by Tyran Allies in order to arrest 10 or 15 drug kingpins’ ministers and acolytes?
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Mallaiyuran / March 22, 2024
Elites like this author simply say “the imports are cuts”, without sensing any pain in that dastardly statement. What did they cut? Consumer products. Those who lost the electricity connection for nonpayment cannot buy even Kerosene at the current price. But the playboy minister’s party that took place 6 years ago was paid by another expired minister last year and the reason for his death is unknown! Do they honestly understand that 70% of the people’s lives are affected by these simple import cuts? In the opinion of this author,because of the Import cut, 70% of the people affected are only doing simple things and is it good policy? Are there Some advocates who have the true guts to explain this “good policy” in an election year to the Sinhala Buddhists and then hoping to win the election too?
There is 90 billion dollars of loan outstanding on Langkang name. According to the SLFP MP Dayasiri that the $Billion falling due this year is deferred to 2026, probably with late payment fees added to it. Who the hell works in any bank will brag that the good policy being practiced is to keep $6B in the reserve account, after all any money on that account only depreciates at the inflation rate of the USA. Why couldn’t they pay the $2B dollar loan and save interest and late payments on those loans?
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Mallaiyuran / March 22, 2024
The entire essay tries to imply that the NPP was the one all this time following bad policies and the UNP-SLFP union always followed good policies. Isn’t this Kind of Sinhala Intellectual, coming forward during the election time, the one who betrayed the masses with false hope of UNP-SLFP Evils as now corrected, and made people vote for extremely cropped people for 75 years.But say, now they have corrected themselves and have become angels. But what is wrong if they stay out for five years and make the people sigh “what great souls we have had on the top chairs of the country for the last 75 years!” after one time experiencing the bad policies of the NPP.
The entire essay is concocted. I cannot finish explaining the ill willed twists even by writing a book.
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Harsha Gunasena / March 22, 2024
Mallaiyuran
Your points are not clear. I will respond to a few.
“UNP hadn’t followed the proper policies so the Exchange was falling so much during Yahapalanaya”
No. UNP at that time allowed the market to decide the value of the Rupee to a great extent. Previous government/Central Bank tried to keep the value of the Dollar at certain levels by releasing the country’s dollar reserves to the market. They failed in two instances and the Rupee crashed. Using the dollar reserves to the market to defend the rupee is not a proper policy.
Promoting tourism is good but tourists shouldn’t be allowed to do businesses here or to overstay. Let any body come including backpackers but promotions should be targeted to high spenders.
Sri Lankan Airlines- The business will be valued based on the present value of the future cash flows as well as on the net assets value. Air Asia was sold to the present owner for one Dollar.
Hambantota port was not a sale, it was a long term lease. This issue is generally raised by the USA and its allies. HongKong was transferred back to China in 1997 after a long-term lease of 99 years.
Increasing government expenditure was a solution to the great depression. Our problem is different to that. Therefore same solution cannot be applied here.
I did not say that NPP is following bad policies. I have given the best policies in my view for getting out of this problem. These policies were not followed even by UNP/SLFP governments. They followed those halfheartedly. That was the issue.
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Mallaiyuran / March 23, 2024
” The government crackdown on foreign exchange transactions and holdings comes as an estimated $50 billion has leaked from the country over the past decade, according to sources in Colombo. Global Financial Integrity, the Washington DC-based think tank, has estimated that at least $40 billion leaked from the country between 2009 and 2018 “ – Last year, Thomson Reuters reported.
Of the $90B loan estimated as outstanding on Appe Aanduwa, about $47B is said to be from international sources. During Yahapalanaya time, i.e. from 2015 to 2019, the Forex exchange rate fell from 130 to 190 rupees (yearly average Rs 15) . Remember in 1948, it was estimated at 2.3 Rs, and it grew until 2015 to only 130 (average less than Rs 2 ) . When JR floated the currency, it almost doubled that time (I believe it was from Rs 8 to Rs 16, overnight). Why do you call it the best policy when the UNP never seemed to know that there were poor people in the country, and they needed food and importantly medicine from outside? Can you explain in detail why such massive downfalls in foreign exchange took place in Good Policy UNP times only? Rowdy Royals selling the reserves for emergency time of Covid 19 was not necessarily a bad policy. But the wrong thing they did was they stole most of the exchange that went outside.
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Mallaiyuran / March 23, 2024
When Mangala was the foreign Minister, 4 countries told the good policy government minister that the bad policy Old Rowdy Royals had deposited about $19B in foreign Bank accounts. Possibly those 4 members are big Western countries. The deposits might have been in their banks and additionally Dubai, Belarus and Seychelles. Yahapalanayeese never accepted the truth but wanted to make that talk false. So Mangala, to save those deposits, called a press conference and warned Rowdy Royals that the Western Democracies have eyes on their money. He did not stop at that point, when he was demoted as Finance minister for the fault of passing the UNHRC Resolution 30/1, by the good policy Chief the Evil Emperor, Mangala as the finance minister passed a local Act called Foreign Exchange Fraud Amnesty Act 2017 to enable Rowdy Royals to bring their money safely back home. Naganandu Kodithuvaku, a lawyer and a contributor to CT, earlier, has written about a case where he appeared for a trader who brought a massive amount of exchange money through customs and was stopped for not declaring that. Why am I writing here about that launderer case is to show the gargantuan effect of that act (2017).
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Mallaiyuran / March 23, 2024
Naganadu argued that the customs had no right to stop for not just reporting about it, because there was no practical limit set to bring, so the trader had not done anything misdemeanor, by just forgetting to tell how much he was holding in his backpack, sacks, and pockets. Though America didn’t do anything particular on this matter, EU and FATF blacklisted the good policy UNP as money launderers. Only government punished for fraud in Langkang is good policy Yahapalanaya, for money Laundering. Well knowing these secrets, only CB Cabal challenged in the press meeting where Old Rowdy King and Hitler King goofed not knowing if the rupee’s exchange rate was representing the real value of the Rupee, that he will keep the exchange rate under control. America did not do anything about the Foreign Exchange Fraud Amnesty Act, but they complained to Langkang Yahapalanaya about a bad thing happening by bad policy Rowdy Royals. A second-Generation Prince who is holding a decent job with NASA was seen with $20, 000 hard currency in LA airport, two times. Those were declared so without doing anything, America secretly informed to Good Policy Yahapalanaya about that money laundering. Yahapalanaya promptly informed the Royals and made sure the scoundrels protected themselves.
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Mallaiyuran / March 23, 2024
If you are an American national, and if you have had money in your bank account, you have to declare it to the IRS. So under Good Policy Yahapalanaya, it was never found out from where that bad policy thief was getting that kind of currency bills money. That is not all about the Good Policy about Yahapalanaya. During its time, a family member of the White Flag Murderer was demanding a big tribute from an Indian company that wanted to buy the shutdown Kantalai Sugar Corporation. Mr. Modi noted it to Evil. Detective caught them while taking money in a hotel Parking lot. Where is that case now? It was well known that the Yahapalanaya administration employed Mahendran to rob the central Bank and tried to put the blame on him. It did not work. Singapore did not accept the bad policy makers explanations. But they destroyed Aloysius and his company PTL, only because they were Tamils. What happened in the 4/21 Jihadi war, when they bombed 6 Tamil Churches? Judge convicted White Flag Murderer as guilty of negligence. Evil didn’t go to court claiming immunity of EP. That is the crook now creating a TRO bill to tell the truth to Tamils! Is that going to be the truth! Come man, you can’t expect that word from the mouth of the Sinhala Buddhist Politicians.
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Mallaiyuran / March 23, 2024
Which Good policy country can afford to maintain 400, 000 rapist forces? Even one of the world’s biggest armies of Britain doesn’t have the number of Langkang rapist forces. So many Tamil schools are closed in the North East. After forming the Yahapalanaya administration, the Evil Emperor went to the North. In Kilinochchi a principal stood up to make complaints about the problem in his school. The Evil Emperor’s answer was “Shut up and sit down, You better known to whom you are talking”. What a supper super classic good policy is that man! These are the wild Animals decorated in the south as the Guardian Angels of Sinhala Buddhism and promoted by Sinhala intellectuals as Chitanta Government – Yahapalanaya government. Ha ha ha.
Last election fund was allocated in the 2022 Budget. The dictator Finance Minister refused to release the fund arbitrarily. He claimed he was saving that money, beyond the parliament which allocated it. But if that man is not in the plane flying to a strange foreign land any time of the day, he will be in an extravaganza local party. Whose money are they spending like this? Then what happened? Administration Yahapalanaya II threatened to pull judges to parliament for attempting to overrule the legislation making body?
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Mallaiyuran / March 23, 2024
The Good Policy, Good government UNP Yahapalanaya did that much of somersaults not only in financial transaction, but Evil said he was the one won the Genocide war, not, Rowdy Royals, because he was the one saved the Rapist Army by rejecting to agree to obey the Rome accord. To follow the Rome accord they are too proud of their Sovereignty. But ready to lick IMF boots begging for a penny. Why this begging? Because the UNP-SLFP union governments wasted the country’s assets for 75 years.
So, our Banker is explaining signing to IMF conditions to get more indebtedness is a good policy with all their money laundering gimmicks but signing for the Rome Accord to bring the International jurisdiction to serve justice for all clients equally is a bad policy. I honestly ask you a question: where do you see a Good Policy in these issues of the dirty UNP? The UNP-SLFP union is an utterly corrupted rascal. You are attempting to separate somebody (I am not sure who it is) and whitewash them. Could you pick up one of those incidents I have mentioned above and start to analyze why the good policy of the Yahapalanaya failed in those events?
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Mallaiyuran / March 23, 2024
Is your talk about one partner of the two-side coin, UNP-SLFP partnership? Did any time Evil openly proclaimed “if you people are not declaring that you will continue the Good Policy, I set up abolishing the bad policies you all practiced until now, I will not have any more Union relationship in the parliament or in the coming election? Why are you again and again implying that the NPP is going to practice bad policies, but the customary SLFP Unit (The Slap Party) will be following only all the good practices UNP taught them? First make yourself honest and then can you tell from which universe you are inventing this good policy talk; in that you are trying to up hold one side and down hold the other side?
Could you pick up one of those incidents I have mentioned above and start to analyze why the good policy of the Yahapalanaya failed in those incidents?
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Mallaiyuran / March 23, 2024
Air Asia was sold to the present owner for one Dollar. There is a difference between one dollar and a heap of loan load, political influence, pending lawsuits, including the troublesome, negative attitude employees and corrupted managers, distracted on many unwanted activities, i.e. extra employment duties. What do you do when the plane is loaded with full seats of passengers and ready to play, a local minister calling and telling the pilot, “Machang walk out of the plane man, with the crew, this guy didn’t give the plane us to fly our pet, we need to teach him a lesson!” and the pilots and the flight crew take another flight and go home, Langkang, where even the Interpol cannot enter and do Kuyukthi arrests of any ministers’ acolytes? Can you tell me how to value that type of company before I buy it?
“Sri Lankan Airlines- The business will be valued based on the present value of the future cash flows as well as on the net assets value. ” Thank you for enlightening me about the pricing methods of a business. At least, at one instance, within the whole discussion, somebody is showing that they have been walking in & out of banks, whether alive or dead.
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Mallaiyuran / March 23, 2024
There are alternative ways to evaluate a going on company’s worth. True, buyers mix and match the techniques. A man who honestly advocate competition to manage his or her country’s economy will be always conscious that the price of anything is, finally, fixed by the demand and supply. In layman’s terms, if the buyer is in pressing urge, the price is high. If the seller begs to download an ailing, worm, crawling wound on his/her body, the price is low. Appe Aanduwa ministers can take a bribe or give a bribe, but they cannot change the demand and supply rule. It works over and above the commission deal too. That is human nature. That stand above all best, accounting, banking, and engineering pricing techniques. But the stupidity here is mentioning about the method of cash flow the company generating. How do you calculate the discounted cash flow for an institution, which in its whole history, except the few of a Westerner managed time, Appe Aanduwa was pumping borrowed loans, even times at as high as 12%, to keep the lame duck planes float. Isn’t a bank manager should understand, beyond any Yahapalanaya type good policies, that the negative cash flow generates negative discounted present value? Total net assets are negative because of loans in the books.
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Mallaiyuran / March 23, 2024
If you are hoping to get a dollar for the deal as in the Air Aasia, then why is Aanduwa taking over the loans? Some people, during serious discussions, just blubber about all sorts of things just to reserve some time to talk in that discussion. Is that what it is? What can I do with the AirAsia dollar bill?
There is no one employee in that organization the seller can call “the asset of the company” and negotiate for the price. All pilots are drunkards and drug addicts. Flying girls are only pets of politicians. Remember the famous triangle murder case, with one of them Tajuddin and the Royals Prince. There was some other executive action, which I cannot write here with decent words. The whole peacock sari people have to be fired and people who know about the hospitality industry to be appointed. The employees who are acolytes of the ministers are blocking the sales. Then, do you think anyone other than Elon Musk, and a one who had run out of the Angoda Hospital will throw his/her money on this daytime nightmare called “ Air Lanka”.
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Mallaiyuran / March 23, 2024
Readers, you can check the price of a quoted company by using the #3 (see below). Just type the code of the company in google. You will get the share price of the company in the market on that day. Then, somewhere else on that page, it will tell how many shares are open for that company. You just multiply them and the number you get is the company’s market value. “Nursery kids brainy work!”. Normally no buyer will buy a company based on that alone, because the value there is about all that the public knows about the company. A buyer will try to check into all insider information, including auditing the balance sheet’s accuracy. The sad truth is none of the government corporations have any true balance sheet. They all are only cooked up to get more loans from the Minister. You know the Good Policy appointment COPE president has forced about 10 members to leave out of the 15, there. New appointees are refusing to take up the membership. In those conditions, other than Mr. Harsha Gunasena and IMF Mission Chief Peter Brewer, not even a bitch who can’t find a place to lie for a few minutes to sleep, will walk into the Air Lanka Building, at this time.
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Harsha Gunasena / March 24, 2024
Mallaiyuran
You have written another lengthy note. I will respond to comments on exchange rate to which may article was focused.
Policy of foreign exchange of the country should not be aimed to have a low exchange rate in order to protect the poor. There should be some other ways to protect them.
Under any circumstances the exchange rate of a country should not be overvalued because it would be detrimental to the exporters of that country, to the tourism industry and to the recipients of foreign remittances. If this happens exporters would be uncompetitive in the export markets. I have discussed this in the article.
This overvaluation happened at the government prior to the yahapalana government.
I am not trying to defend any government or attack.
This is what happened actually.
Foreign exchange Act of 2017 aimed to liberalize the foreign exchange transactions.
Tax and foreign exchange acts were introduced in Sri Lanka by various governments.
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Mallaiyuran / March 23, 2024
Suck……….Suck……Suck…….they sucked the whole country by bribing each other and granting impunity to each other. In Tamil, they call these guys “Vellai Vetti Kallar”. Those Vellai Verti Kallar are people who walk on the road with white dhoti and white shirts, carrying an umbrella in hand, to create a gentleman appearance. But a deep analysis will reveal, internally, if they are true to the appearance or not.
Few other alternate methods to evaluate a business institution:
1.Book Value. One of the most straightforward methods of valuing a company is to calculate its book value using information from its balance sheet.
2.Discounted Cash Flows. It is useful only if it is not negative. Otherwise, the seller has to give 10 Villages Land in Negombo to the buyer.
3.Market Capitalization. …
4.Enterprise Value. …
5.EBITDA. …
6.Present Value of a Growing Perpetuity Formula.
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SJ / March 23, 2024
“they sucked the whole country by bribing each other and granting impunity to each other.”
bribing each other and granting ‘impunity’
Trying hard to figure out how it could be done.
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Mallaiyuran / March 24, 2024
Cease it, dear friend; you never could understand some logic. When was the last time you successfully did a calculation like 1+1=2, other than washing the dead old SLFPyers. Now, sometimes I wounder if you are secretly washing the UNPERs like Evil or this author.
Best wishes in you life long anti-Tamil endeavor.
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