{"id":193528,"date":"2018-09-14T23:43:36","date_gmt":"2018-09-14T18:13:36","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=193528"},"modified":"2018-09-20T13:48:46","modified_gmt":"2018-09-20T08:18:46","slug":"a-wake-up-call-an-open-letter-to-state-minister-of-finance-state-minister-of-national-policies-economic-affairs","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/a-wake-up-call-an-open-letter-to-state-minister-of-finance-state-minister-of-national-policies-economic-affairs\/","title":{"rendered":"A Wake Up Call: An Open Letter To State Minister Of Finance & State Minister Of National Policies & Economic Affairs"},"content":{"rendered":"

By Chandra Jayaratne<\/a> –<\/b><\/span><\/p>\n

\"\"<\/a>

Chandra Jayaratne<\/p><\/div>\n

An Open Letter to the State Minister of Finance & <\/b><\/span>State Minister of National Policies and Economic Affairs, Copied to the President, Prime Minister & Finance Minister<\/b><\/span><\/p>\n

Dear Younger, Professional and People\u2019s\/Nation\u2019s Prosperity Committed State Ministers,<\/span><\/p>\n

\u201cA Wake Up Call<\/i><\/span>\u201d: Urgent Need for Change Management Leadership Initiatives to Rebalance Growth Priorities & Expert\/Lobbyist Advice with Political Realities & Expectations of the Marginalized<\/b><\/span><\/p>\n

This appeal is to review this submission, reflecting back on the guiding principles and value commitments that compelled you to enter politics and seek a mandate to be People\u2019s Representatives, instead of continuing with your respective high reward option careers in the private sector.<\/span><\/p>\n

In the above context, please reflect on the following recent statements of acknowledged experts, which you have surely made note of already:<\/span><\/p>\n

<\/i>1.<\/strong> \u201c<\/i>Sri Lanka has to keep on a path of reducing budget deficits, broaden revenues, keep the exchange rate flexible to conserve forex reserves and move towards inflation targeting<\/i><\/b>. Sri Lanka has high debt and low tax revenues which have made previous episodes of global downturns difficult to navigate. Sri Lanka is vulnerable because of its current account deficit, low US dollar reserves position and high debt rollover requirement<\/i><\/span> \u201d -Eteri Kvintradze, IMF Resident Representative Sri Lanka.<\/span><\/p>\n

<\/i>2.<\/strong> \u201cPrepare for the Unexpected R<\/b>isks\u201d- \u201cI don’t think we can stop being vigilant. There are good reasons why people are feeling happier, why the global economy is doing better, but I think on the financial side we’re far from saying we’re in the clear. And <\/i>with the asset prices very heavy, with leverage up, the risks are not small<\/i><\/b>.- December 2017<\/i>– Raghuram Rajan, the former governor of the Reserve Bank of India<\/span>.<\/span><\/p>\n

3.<\/strong> \u201cWorld Unprepared for Next Financial Crisis<\/b>\u201d \u2013\u201cOne of the consequences of the crisis has been completely underestimated, in my opinion: the populism that is appearing everywhere is the direct outcome of the crisis and of the way that it was handled after 2011\/2012, by favouring solutions that were going to increase inequalities. Quantitative easing (by which central banks inject liquidity into the banking system) was useful and welcome. But it is a policy that is basically designed to bail out the financial system, and therefore serves the richest people on the planet. When there’s a fire, firemen intervene and there is water everywhere. But then you need to mop up, which we didn’t do. And because this water flowed into the pockets of some, and not of everyone, there was a surge in inequality<\/i><\/b>.\u201d- Dominique Strauss-Kahn, a former chief of the International Monetary Fund<\/span><\/p>\n

<\/i>4.<\/strong> \u201cDebt vulnerabilities of the country need to be managed with extreme care<\/i>, including re-examining military spending given the \u201csocial changes the country has undergone\u201d <\/i><\/b>since the war ended nine years ago\u201d.\u00a0\u00a0\u201cThere are at least three complementary options that deserve to be considered. First, boosting domestic demand through various channels, including <\/i>progressive tax reforms, expanding social benefits <\/i><\/b>and increasing minimum wages, among other measures; the resulting improvement in GDP growth would increase fiscal revenues. Second, opening the discussion on <\/i>whether the military budget reflects the fundamental changes the country has undergone in the last years, in particular in the fields of peace and economic development<\/i><\/b>. And third, renegotiating the debt with <\/i>creditors in order to expand the fiscal space to boost domestic demand and generate revenues to ensure that nobody is left behind<\/i><\/b>. Fiscal, monetary, economic and social policies need to be fully consistent\u201d
\n<\/i><\/span><\/p>\n

\u201c<\/i>Warning against any cuts in social spending to repay increasing debt<\/i><\/b>, also raised concerns over Sri Lanka\u2019s strategy to stabilize the economy by strengthening the fiscal and external sectors, as recommended by the IMF, <\/i>by rationalizing social security benefits<\/i><\/b>.\u201d\u00a0\u00a0<\/i>\u201cTrying to achieve fiscal adjustment by reducing public expenditure in education, health and social transfers actually hinders long-term development and may have negative effects on social and economic stability,\u201d <\/i><\/b>\u201cIt is my view that such cuts should at least be compensated through cash transfers targeting those in need and ensuring that they reach the beneficiaries in a timely and efficient manner. <\/i>Investments in the rural economy should be directed at supporting the livelihoods of these small-scale producers including technology transfers, market access and physical and natural resources, so they will be resilient against these subsidy reductions<\/i><\/b>.\u201d\u201cIn my view, while maintaining macroeconomic stability is an important concern, this aim should not prevent human rights assessments of these planned reforms, in line with international human rights standards.\u201d\u00a0 \u201cWhile commending the Government on its effort to streamline taxes, he called for further measures to be <\/i>taken to broaden the tax base and curb money laundering.<\/i><\/b> <\/i>He also advocated that the Government close the legal gap that exists to enlist the help of the banking system to curb tax evasion<\/i><\/b>.\u00a0In his preliminary report he also raised concerns over <\/i>increases in VAT noting that \u201cthe cost of such tax is borne by the poorest part of the population<\/i><\/b>.\u201d According to the report in 2017 the Government raised 56.5% more revenue from VAT than it did in 2016.\u201d-\u00a0<\/i>United Nations Independent Expert on Foreign Debt and Human Rights, Juan Pablo Bohoslavsky,<\/span><\/p>\n

5.<\/strong> \u201c<\/i>Government measures to address countrywide indebtedness were insufficient.<\/i><\/b> The Government should establish a proper legal framework to regulate microfinance institutions to cap interest rates and prevent abusive collection practices. The moratorium would prevent vulnerable groups, particularly women, from exploitation and abuse by lenders\u201d. <\/i>UN Independent Expert on Foreign Debt and Human Rights, Juan Pablo Bohoslavsky<\/span><\/p>\n

Please next reflect on the under noted,<\/span> few heart-wrenching stories<\/span> from the <\/span>Gammadda door-to-door campaign:<\/span><\/p>\n

<\/i>1. SRI LANKANS LIVING IN TREES<\/b> HAMBANTHOTA DISTRICT – WALSAPUNAGALA\u00a0<\/span><\/p>\n

The Walsapunagala village is one of the border villages that constantly face the threat from Wild Elephants. In addition, they also face a drinking water problem. Parents claim they fear sending their children to school because of the elephants that come into the village by night destroy property rendering them helpless. Since this village is not protected by an electric fence, wild elephants encroach the village, which has forced villagers to seek refuge in small, unsafe shacks which have been built on tree tops.\u00a0<\/i><\/span><\/p>\n

\u00a0THE MAIN ISSUE HERE SEEMS TO BE ILLEGAL CULTIVATIONS IN PROTECTED FORESTS BY BUSINESSMEN BASED IN COLOMBO, THAT DISPLACES ELEPHANTS FROM THERE NATURAL HABITAT.<\/i><\/span><\/p>\n

\u00a0(RESIDENTS REQUEST AN ELECTRIC FENCE IN ORDER FOR THEM TO LIVE WITHOUT THE FEAR OF WILD ELEPHANT ATTACKS)<\/i><\/span>\u00a0<\/i><\/span><\/p>\n