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 Post subject: The Economy: Who Gives A Damn?
 Post Posted: Fri May 18, 2007 9:02 pm 
The Economy: Who Gives A Damn?

Kapalla, beepalla, jolly karapalla
Heta Marunoth sithata sapai other jolly karala


©The Morming Leader / Wednesday, May 16, 2007
Editorial


Economists at the Central Bank and the Treasury are not needed to say that there is galloping inflation in the country. Any housewife could tell you that the cost of a bundle of mallung, coconut or any other daily requirement of a household has gone through the roof. ‘Ahasata udin gihilla,’ is the exasperating description given.

Government produced statistics will always try to show that everything is rosy in the garden of the Rajapakses. But a recent issue of the prestigious The Economist said that the current rate of inflation in Sri Lanka is around 17 per cent. This is a tremendously high figure for any country at any given time. But President Rajapakse does not seem to be unduly concerned about this state of affairs. He does not seem to be much concerned about the economy at all although he is the Minister of Finance. He does not speak much about it and does not seem to do much about it either. Possibly he does not know the reality because he is maintained at state expense.

So far the government has been able to carry on apparently by printing currency. Massive pay hikes for public servants have been demanded and granted. Agricultural subsidies have been granted although the cry is ‘not enough — far short of what was promised.’ But how long can this economic crisis go on?

The government has two key excuses: External conditions — the world market — and ‘the war.’ The rise in the price of oil has certainly had an impact on our economy but it has been so since the mid ’70s when OPEC almost quadrupled its prices overnight. Today, every country, other than the major oil producing countries is adversely affected but inflation has been kept under 10 per cent or even less, to five percent. India and most South East Asian countries have controlled their rates of inflation. In this country, inflation has almost galloped in the last few months and is having a free rein.

The other excuse is ‘the war’ which too absorbs a considerable amount of state funds. But the Rajapakse administration while verbally committing itself to a negotiated settlement is also galloping to war. The costs are bound to increase many folds.

The acquisition of a few light aircraft by the LTTE has sent alarm bells ringing in the defence establishment and the talk is of purchasing new aircraft to ward off this threat. Death merchants with good ‘contacts’ in government as well as those inside are rubbing their hands with glee. Some even want to purchase top of the range MiG 29 aircraft, it has been said. While a suitable kind of aircraft along with other air defences will be needed to meet this new threat, to go in for super fighter aircraft will be like buying dynamite to kill fleas when tick-powder will do!

If inflation is to be controlled and the printing of currency notes halted, profligate spending has to stop. Of what need was another private airline, Mihin Lanka? It cannot be too ‘private’ in that it was purchased with loans from the EPF and ETF funds — the savings funds of the poor workers! And now another plane was leased out at Rs. 110 million per month. This certainly should not be the attitude of a government whose economy is deteriorating. The government debt ratio is an alarming 93 per cent of GDP while the real wages have fallen in the private sector by 10 per cent and 12 per cent in service industries over the past year.

Elementary economics says that a requirement to curb inflation is to cut down on spending. But do we see that in this country? The amount of new super luxury cars which only dollar millionaires could afford are seen as much as those in any prosperous South East Asian capital. The BOI scheme of duty free vehicles appears to indicate that this country has a surfeit of foreign industrialists and local entrepreneurs. Meanwhile the roads are chock-a-block on dilapidated roads with vehicles of all sorts which a poor country like ours cannot afford.

Meanwhile, with city consumers protesting about the rising price of bread, the farmers in the rice bowl of the country, around Polonnaruwa have for the second year been unable to sell their crop or have sold it for a song!

We seem to have taken to the spirit of the Portuguese conquistadors of yore:

Kapalla, beepalla, jolly karapalla
Heta Marunoth sithata sapai other jolly karala.


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