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Sunday April 14th, 2024

Controversies Highlight Need For Greater Mindfulness About Repercussions

ECONOMYNEXT – The formulation of the draft 20th Amendment and its unanimous acceptance by the cabinet is indicative of President Gotabaya Rajapaksa’s dominant role in the government. The unanimous cabinet decision to approve amendment uncritically has paved the way for the political embarrassment the government currently faces with no one prepared to accept responsibility for it. It, therefore, took more than a week for the government to reach an agreement to appoint a committee to review the 20th Amendment after strong opposition criticisms highlighted several problems in the draft law. The president’s role stems from both his track record and popularity with the majority who voted for him and what he stands for. The president is seen not only as a leader who is committed to strengthening the country but also as a leader who will get things done with firm resolve.

Among those that the president is impressing are sections of the business community especially those who are seeking to be producers rather than traders. They see the president as being willing to cut through bureaucratic hurdles and provide approval for productive enterprises without getting tied down in problems of getting permits and approvals. Obtaining these permits which have proven to be tedious and discouraging in the past due to both inefficiency and attempts by those playing gatekeeper roles to extract bribes. The government’s prioritization of development as the way forward by expending decision making processes, both to improve the living standards of people and to make conflicts less intractable may explain some of its more controversial actions.

The permission given to engage in developmental activities in environmentally protected spaces is an indicator of the privileged position given to the goal of fostering development. The government is trying to promote import-substitution policies as the country is suffering from a foreign currency deficit in the aftermath of the Covid pandemic. Large loans taken in the past have to be repaid, foreign remittances from migrant workers have fallen and exports are more difficult with the results that imports need to be curtailed. It will be necessary for the government to be mindful of the inter-connections and the repercussions that can follow. A step by step approach might be preferable in reorienting the economy into one in which domestic production is prioritized as many economic outputs require imported inputs.

Natural Environment

Two of the main political debates in the country at the present time concern the 20th Amendment and the issue of environmental degradation that is taking place. There is an element of excess in both of these which need to be considered. An example would be the construction of a road in the protected reserve of the Sinharaja forest. The government’s go-ahead to develop the road was justified on the basis of impoverished village people asking for a wider road that would ease their burdens of transport and access to the markets outside. However, this same incentive would motivate others with much greater resources to come to that area and make use of the road for their own commercial benefit that could lead to greater deforestation. Environmentalists have complained that the road expansion is already causing many disturbances to the forest including illicit felling, removing soil and dumping it on slopes. An option to have considered would have been the relocation of the village rather than harming the forest.

In the aftermath of the new government coming to power, there has been a spate of development activities at the cost of the environment. Lagoons and forest lands are being utilized for development activities in many places. There is a need for Environmental Impact Assessments (EIA) of these activities. EIA is a process of evaluating the likely environmental impacts of a proposed project or development, taking into account inter-related socio-economic, cultural and human-health impacts, both beneficial and adverse. In addition, cost-benefit analysis needs to be done that goes beyond mere finances, but also includes social and long term costs and benefits.

Social cost-benefit analysis is a method to survey all the impacts caused by a development project or other policy measure. It comprises not just financial effects such as investment costs, direct benefits like profits and taxes but all the societal effects such as pollution and the impact on the environment. The main aim of social cost-benefit analysis is to attach a price to as many effects as possible in order to uniformly weigh the above-mentioned heterogeneous effects. As a result, these prices reflect the value society attaches to the caused effects, enabling the decision-maker to form an opinion about the net social welfare effects of a project.

Such a social cost-benefit analysis would incorporate factors such as the affinity of high-end tourists for Sri Lanka’s natural environment and for ethical development. Due to the three decades of war and the many atrocities that occurred during that period, Sri Lanka has gained an unfavourable international image that was being improved in the aftermath of the end of the war and the commencement of the national reconciliation process. However, the government’s withdrawal in February 2020 from the commitments given to the UN Human Rights Council in October 2015 and the failure to replace them with an indigenous model as promised can continue to jeopardise the country’s international image. There is a need for the government to be mindful of the repercussions of what it is doing. Political leadership involves all-round assessments much as a social cost-benefit analysis is needed in development project activities.

20th Amendment

A similar approach is needed in the case of the controversy that has erupted over the 20th Amendment. This constitutional amendment has been put on hold with a government-appointed committee to go into it and propose further amendments. The main feature of this proposed law is to transfer power away from other institutions and place it with the presidency. Both parliament and the judiciary which, together with the executive, form the three great branches of government, will become subordinate to the presidency if the 20th Amendment is passed into law in its current form. The question is the degree to which the strengthening of the presidency is appropriate in the context of constitutional governance.

The protests against the 20th Amendment have grown stronger with the passage of just a week. Initially, it was only the opposition parties that objected to it and raised their voice against it. But now even sections of the government and state apparatus have become emboldened to speak against the proposed law. The Sri Lanka Audit Inspectors’ Association has sent a letter to the president stating that the proposed 20th Amendment will harm the independence of the Auditor-General and the scope of public audit, and also to the mechanism for the exercise of public financial control. They have pointed out that several government departments and some 120 State-owned companies will be exempt from centralized government audit under the proposed 20th Amendment to the Constitution.

Objections have also begun to be voiced by government parliamentarians themselves. The 20th Amendment gives the president the power to dissolve the parliament after a year of its election and to sack the prime minister and any minister at any time and appoint others in their place. This may not be a problem at the present time when President Gotabaya Rajapaksa’s own elder brother is the prime minister. But this can become a problem in the future when different individuals are in those important positions. For longer-term democracy and political stability different arms of the government should not be subservient to the other but have their values and powers intact for better governance. The key factor to keep in mind is that politics and development are not only about going from one point to another in a straight line or in the shortest possible time. There is a need for greater mindfulness about possible repercussions and assess whether the overall cost-benefit analysis is positive.

Jehan Perera is the Executive Director of the National Peace Council

(Colombo, September 15, 2020)

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Sri Lanka undershoots inflation target in first quarter despite VAT hike

Sri Lanka undershoots inflation target in first quarter despite VAT hike

ECONOMYNEXT – Sri Lanka’s inflation is expected to lower than initially projected in 2024, despite a value added tax hike, Central Bank Governor Nandalal Weerasinghe has said

“When we looked at the last two monetary policy reviews… we had an inflation path a little elevated to what was realized, ” he told reporters following a March 50 basis point rate cut.

“Mainly because our projection factored in the VAT increase in January and some of the short-term food price increases, we have seen in December and January.

But what we have seen the actual inflation realization, is that the impact of VAT has not been that much and also the reduction in electricity prices also has helped, as well as the supply conditions, especially food supplies has been better.

“As a result, inflation outcome has been much lower than we expected.”

Sri Lanka’s central bank has been conducting broadly deflationary policy, except perhaps in December 2024, when a private credit spike appears to have been accommodated by standing facilities on top a seasonal real demand for cash.

The central bank has also allowed the currency to re-appreciate departing inflationist policy generally seen since 1978, analysts say.

“In our projections, we see in the next 12 to 18 months, inflation will remain well below our target range between 4-6. In our expectation it will remain around 4-5 percent in the next 12 to 18 months.

“That is one of the reasons we saw we had some pace to reduce our policy rate.”

The central bank cut its policy corridor 50 basis points to 8.50 and 9.50 percent, and has allowed excess liquidity to build up in money markets from a balance of payments deficit (net dollar purchases) at the current market interest rate structure.

Though money is being injected through various tools allowing some banks to trade without deposits, overall, there is a sell down of its domestic securities holdings.

Sri Lanka has a reserve collecting central bank currently subject to IMF forex reserve targets and domestic asset sell down target (which are essentially complementary), an inflation target of up to 7 percent and an implicit potential output (printing money for growth) target.

The central bank currently providing exceptionally monetary stability not for many years, and cautiously lowering rates, as well as reversing some of the inflation it has created in the past in food prices and energy.

Since September 2022, when deflationary policy started to show up in the balance of payments, the central bank has only created 3.9 percent inflation according to the widely watched Colombo Consumer Price Index.

However, analysts have warned that in the past, deeply flawed operational frameworks involving multiple and contradictory anchors have tended to trip up when private credit recovered when rates are cut claiming inflation is low.

Sri Lanka also does not have a penalty rate for standing facilities, unlike countries with tighter operational frameworks, which are less prone to crises. (Colombo/Apr14/2024)

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Sri Lanka eyes on speedy debt resolution at IMF/WB Spring Meetings: State Finmin

ECONOMYNEXT – Sri Lanka is looking forward to have discussions for a speedy debt resolution and restore debt sustainability at the Spring Meetings of the International Monetary Fund (IMF) and World Bank (WB) starting on Monday (15) in Washington, State Finance Minister Shehan Semasinghe said.

Minister Semasinghe is leading the Sri Lankas delegation for this year’s IMF/WB Spring Meetings that includes Central Bank Governor Nandalal Weerasinghe and Treasury Secretary Mahinda Siriwardana.

The island nation expects to conclude the debt restructuring negotiation with its private creditors and sovereign bond holders and formalize the already agreed deal with bilateral creditors by end of the first half of this year, government sources have told EconomyNext.

Sri Lanka also expects to receive the third tranche of the IMF by mid this year after the completion of the second review of a $3 billion loan program last month.

“We expect fruitful engagements that will pave the way for unlocking the next tranche of essential funding and a speedy debt resolution which will enhance economic stability, confidence, sustainable growth, restore debt sustainability and ultimately, improving the welfare of every Sri Lankan citizen,” the Minister said in his X (Twitter) platform.

“Sri Lanka’s journey to its current state of stability and progress is due to the invaluable support provided by the IMF, World Bank and international partners during the most severe economic crisis we faced since 2022. “

“As we navigate the complexities of global economic challenges, we will engage closely with the IMF and aim to contribute to broader international economic cooperation with our partners.”

“Through dialogue, partnership, and concerted efforts, we are confident that we will achieve brighter economic future for Sri Lanka,” Semasinghe said.

The Monday’s Spring Meetings come as President Ranil Wickremesinghe government is facing a presidential election after long delayed local government and provincial polls.

Some government officials have said there could be likely slippages in the IMF targets during the election period as majority of Sri Lankans feel their struggling has risen due the implementation of IMF conditions including increased taxes.

The government has already started to relax some of the tough conditions it has maintained to boost the state revenue amid an increase in the tax revenue.

However, President Wickremesinghe has vowed to continue the IMF-led reforms as they are citing they are the only solution to come out of the current unprecedented economic crisis. (Colombo/April 14/2024)

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LGBTQIA+ Rights: Europe and South Asia See Similar Discriminatory Practices

ECONOMYNEXT – The rights and protections of the LGBTQIA+ community have been fraught with challenges and continue to be so, despite the many gains achieved in recent years.

Nor are those handful of rights universally applied, a recent discussion which looked at the European and South Asian perspectives on same-sex rights and unions revealed. Most developed nations have introduced protections for those identifying as LGBTQIA+, and a view from a distant lens paints a picture of tolerance. Yet, a closer look at the European arena throws up the many gaps that are evident in the application of the law.

In the so-called conservative South Asian nations, changes to legislation are slow to be implemented. That may come as a surprise, for, contrary to popular belief, same-sex relationships were culturally acceptable in the South Asian region and is not a Western concept points out Ruhaan Joshi, a Public Policy Practitioner from India.

Society’s view on same-sex relationships dimmed with the imposition of Western values and the criminalisation of such relationships with the advent of colonial rule.

While the LGBTQIA+ communities in South Asian countries currently battle to have same-sex relationships decriminalised and their unions legally accepted, the irony is that countries that first made such relationships punishable by law have moved on to be more welcoming, though some discriminatory practices continue.

Joshi was part of a discussion themed ‘On Being Queer and LGBTQIA+ in South Asia and Europe, held in Germany on April 9 this year. The discussion which included the release of two papers which examined the rights and protections of the LGBTQIA+ community in Europe and South Asia, respectively, was organised by the Friedrich Naumann Foundation for Freedom.

Joining Joshi in the discussion were lawyer and parliamentarian Premnath C Dolawatte from Sri Lanka, Milosz Hodun, President, Projekt Polska Foundation, Poland, Michael Kauch, a Member of the European Parliament and RENEW Europe Group and Inaya Zarakhel, a Dutch-Pakistani actress and an activist on Queer Rights, who moderated the discussion. The two papers were presented by Hodun and Joshi, respectively.

In his opening remarks, Kauch pointed out that while the view of the liberals is that the rights recognized in one member nation of the EU must be accepted by all member countries, that is not the ground reality, the issue of Rainbow families being a case in point.

In the context of the European Union, though the Court of Justice has ruled on the freedom of movement of those in same-sex partnerships and their families, the ruling is not universally applied by member nations.

In Italy, and some European nations, surrogacy which helps childless couples to become parents is illegal. In other situations where same-sex parents are of different nationalities a child in that union faces restriction of movement or the possibility of being stateless if one parent hails from a country where such parental rights are not recognised.

Hodun meanwhile stated that in Poland transgender persons must first sue their parents for the gender assigned to them at birth, to have their gender marker changed on documents.

Some countries such as Russia and Azerbaijan resort to State-sponsored homophobia, and in many instances politicians and political parties promote such biases to boost their voter base it was pointed out. Even where laws are in place for the protection of LGBTQIA+ rights, there is no political will to implement them.

In Europe where migrants arrive in droves seeking asylum, and are frowned upon by many of those countries, LGBTQIA+ members face even more discrimination Hodun says, both by other refugees and governments, where most often the state ignores the situation despite the guidelines issued by the UN and the European Court of Justice. Hate speech and hate crimes too are on the rise he adds stating that at least 80 per cent go unreported.

Increasingly the LGBTQIA+ community has experienced a diminishing of their safe spaces as right-wing and populist governments are elected across the globe. Taking a dig at feminism, meanwhile, Kauch states that though feminists uphold a woman’s right to opt for an abortion, they take a different approach on the topic of surrogacy.

Dolawatte who waded into unchartered waters when he presented a Private Member’s Bill to decriminalise same-sex relationships through an amendment to section 365 of the Penal Code and the repealing of section 365A in its totality, is hopeful that the Bill will pass its third reading. It’s been an uphill battle he says, referring to the case filed in the Supreme Court against the Bill. The court ruled in his favour.

He had little or no support from his own party members, but says the President of the country, and younger party members are with him on this issue. Apart from making Sri Lanka a safe space, it would encourage foreign nationals identifying as LGBTQIA+ to visit without fear, and thus boost tourism he opines.

As Joshi states society has come a long way from when LGBTQIA+ were made fun of and were subject to violence to the positive portrayal in movies. Such movies are also well-received by society. Transgender identity has a distinct recognition in South Asian religious beliefs. Hijra, Khwaja Sara or Kinnar are some names given to transgender folk and they have, since ancient times been an accepted group in society. On the one hand, there’s Afghanistan and the Maldives which make no allowances for the LGBTQIA+ community, while Nepal became the first South Asian nation in 2023, to register a same-sex marriage, Joshi states. In most South Asian nations, the courts have ruled in favour of relaxing the rules against this community, and, like in Europe, it is the governments that drag their feet.

For governments to change their stance, society must take the lead in fighting for the unconditional dignity of the individual, freedom of movement, and safeguarding the tenets of democracy, he says adding that it must also run parallel with the LGBTQIA+ community looking beyond themselves at issues that impact democratic values, and the societal restrictions non-LGBTIQIA+ groups face, such as opposition to inter-caste marriage and the right to adopt outside their caste systems and equal access to many other privileges.

While the panellists advocated working together across the global divide as a step towards achieving equal rights for all, Dolawatte also called for caution; too much pressure on such issues from Europe he said may not be welcome, and must be handled with care.

With right-wing and populist governments getting elected across the globe, Kauch claims the forthcoming EU elections will prove crucial in deciding how future and current governments ensure tolerance and diversity amongst their citizenry.

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