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Tuesday May 30th, 2023

Religious freedom at Sri Lanka schools under spotlight

ECONOMYNEXT- Sri Lanka’s public education system requires reforms to ensure that the freedom to choose and practice one’s religion or belief is protected, a UN Special Rapporteur said.

“The education sector requires reform,” Special Rapporteur on Freedom of Religion or Belief Ahmed Shaheed told reporters in Colombo during a recent visit.

He said that the Sri Lankan government should not be in the business of forcing students to choose one of the four main religions (Buddhism, Islam, Hinduism and Christianity) and study them for 11 years.

Students are forced to sit for one of the four religion papers at the Ordinary Level examinations, the main school qualification given at the end of Grade 11 in Sri Lanka.

Sri Lanka has been wracked by religious and ethnic strife for several decades. The origins of Sri Lanka’s current education system lay in a denominational school system started by the British with partial state funding.

In some schools, especially in rural areas, only one religion followed by the majority community in the region is taught.

Students are also made to take part in religious activities of a religion offered in schools, robbing the freedom to choose and study Judaism, Shintoism, Rastafarianism, Paganism, Scientology or no religion at all.

However, parents or students of such different religions must pay the same taxes as those following the four main religions to fund public schools.

“Indoctrinating into a religious tradition should be voluntary, and there should be no coercion at all on the part of the state,” Shaheed said.

“There’s bad practice here. Having an opt-out system is not as good as having an opt-in system.”

“An opt-out system would be in a class of say thirty students, one person says, ‘I’m an atheist, I’m a rationalist, I’m this, I’m that’ and steps out of the classroom and gets stigmatized by the rest.”

“The opt-in system will be asking ‘which of these classes would you like to take part in?’ and they can choose Islam or whatever class they want.”

“There should be attempts to protect the freedom to choose and the freedom of parents to ensure that their children are raised in a faith of their choosing, and not of the government or schools choosing and also to ensure that they opting out does not stigmatise them in the classroom.”

“The state may of course, in many ways, teach religions, so that students have an understanding of different religions, so they don’t become victim to fear and prejudice that some people might exploit if there was no awareness of different religions.”

Private schools may choose their own form of religious education, he said.

Shaheed said providing an all-round education of various religions would be ideal for a multi-ethnic, multi-religious country such as Sri Lanka.

“Curriculum should include knowledge of other religions taught in a neutral, objective way, so they can get an understanding about different religions, what they are about, so that they understand different ways.”

Shaheed said that there is simmering ethno-religious tensions, fueled by extremist thinking of fear against other religions.

He said that these tensions have been present even before the Easter Sunday attacks. (Colombo/Sep01/2019)

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Sri Lanka rupee at 296.75/297.25 to dollar at open, bond yields steady

ECONOMYNEXT – Sri Lanka’s rupee opened at 297 /297.50 against the US dollar in the spot market on Monday, while bond yields were steady, dealers said.

The rupee closed at 296.75 /297.25 to the US dollar on Monday after opening around 296.50 /297.50 rupees.

A bond maturing on 01.09.2027 was quoted at 26.50/75 percent steady from Friday’s close at 26.50/65 percent.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money. (Colombo/ May 29/2023)

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Sri Lanka rupee appreciation squeezes exporters

ECONOMYNEXT – Sri Lanka’s recent appreciation is starting to squeeze apparel exporters as their domestic costs including wages and energy, were hiked over recent months, when the rupee fell steeply, an industry official said.

Companies had raised salaries and emoluments at rates averaging 25 percent for workers while transport costs have also gone up but not has come down, Yohan Lawrence Director General of the Join Apparel Association Forum said.

Apparel factories in particular also provide transport and some meals for workers.

Electricity prices have also been hiked, based on the rupee which was weaker. A tariff cut is expected from June after the rupee appreciated and imported fuel prices fell.

Sri Lanka’s rupee collapsed in 2022 from 200 to 360 to the US dollar as interest rates were suppressed with liquidity injections and a failed attempt was made to float the rupee with surrender requirement in place.

From the second half of 2022, with higher interest rates and negative private credit, the central bank has avoided printing money under conditions which are generally accepted to be difficult, and is broadly running deflationary open market operations, triggering a balance of payments surplus and putting the rupee under upward pressure.

Central bank net credit to government which was 3,302 billion rupees in September in 2022, was down to 3,209 billion rupees by March 2023, part of which was due to rollovers, analysts say.

Market pricing of fuel and electricity by the Ministry of Energy and also spending controls and tax hikes buy have also helped contain domestic credit.

Sri Lanka also has mandatory conversion rules, imposed on exporters, which is a concern for exporters.

“We believe rupee should be at its natural level, but with forced conversions you won’t get the correct picture,” Lawrence said.

Sri Lanka has to release a plan to remove import controls, exchange controls and other restrictions imposed in the period where policy rates were suppressed with liquidity injections (so-called multiple currency practices and capital flow measures) by June under the IMF program.

Apparel exporters have also seen orders fall amid tighter conditions in Western markets.

The central bank has to peg (intervene actively in forex markets and create money) to meet reserve targets under an IMF program and cannot free float (avoid creating money through international operations) the rupee.

The newly created money has generally been absorbed in an overnight liquidity shortage.

There have also been foreign purchases of rupee Treasuries. Amid a contraction in credit, the inflows also do not turn into imports fast as the money if the money is spent.

By making purchases a little below what is allowed by the contraction in domestic credit, the rupee can be allowed to appreciate, analysts say.

The central bank has so far allowed the rupee to appreciate to around 300 to the US dollar from 360 levels under a transparent guidance peg up to February.

Except after the 2008/2009 currency crisis, Sri Lanka’s central bank has not previously allowed to the rupee to appreciate under IMF programs where the first year in particular sees balance of payments surpluses, before private credit and domestic investments picks up again.

One of the considerations used by third world central banks are Real Effective Exchange Rate indices.

The REER of the Sri Lanka rupee based on a basket of currencies calculated by the central bank was 61.12 points in February before the rupee was allowed to appreciate by lifting a surrender rule.

In March the index went up to 69.55 points, but remained steeply below 100. Real effective exchange rates are calculated also taking into account inflation in counterpart trading nations.

Sri Lanka’s inflation index had hardly risen since September amid rupee gains. Falling food prices can help contain pressure for further wage hikes, analysts say. (Colombo/May30/2023)

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Sri Lanka forum to discuss central bank independence vs sound money

ECONOMYNEXT – Central bank independence and sound money will be under discussion at a public event organized by the Sri Lanka chapter of the Bastiat Society today, May 30, as island is recovering from the worst episode of monetary instability since independence.

The forum will feature Lawrence H White, Professor of Economics at George Mason University in the US, and W A Wijewardene, former Deputy Central Bank Governor, of the Central Bank of Sri Lanka.

“The discussion will compare the current system against alternative systems and explore the relationship between such banking systems and sound money,” the organizers said.

White specializes in the theory and history of banking and money. He is the author of “The Clash of Economic Ideas” (2012), “The Theory of Monetary Institutions” (1999), “Free Banking in Britain” (2nd ed., 1995), and “Competition and Currency” (1989).

Wijewardene has been speaking on central bank independence in Sri Lanka long before it became a topic of wider discussion, but also on accountability.

In April, a Central Bank Independence and Other Matters, which includes a collection of his orations on the subject over the years as well a recent development was published.

The discussion comes as independent central banks in the West have created the worst inflation since the 1970s and early 1980s and are apparently unaccountable to parliaments and the public.

The early 1980s also saw the first wave of external debt crises in so-called soft-pegged countries in Latin America and Eastern Europe in particular as the US and UK tightened policy to end the Great Inflation.

The discussion will be held at 7.00 pm at the Lakmahal Community Library and those interested can register online, the organizers said. (Colombo/May30/2023)

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