The country faces two crises - an economic crisis and a political crisis.The government has lost its public legitimacy but the country’s system of presidentialism makes power sharing with opposition parties difficult resulting in a deadlock. Political dysfunction will delay a coherent response to the economic crisis. Structural reform is complicated by the many vested interests. Many politicians view reforms ...
Link to full report. Key highlights:1. Debt rollover risk is very high. Staff projects FX debt service to reach around US$7 billion in 2022, including the US$1 billion ISBs maturing in July 2022, against critically low gross reserves and the lack of market access.2. Sri Lanka has started experiencing a debt and BoP crisis where sizable and persistent FX inflows ...
I noticed that this has become the subject of discussion so it thought it would be worth explaining what this entails.In an open economy (ie one that has some degree of trade with the outside world), we can summarise the desirable economic goals as being the attainment of internal and external balance. Internal balance means a steady growth of the ...
It is the Navam Full Moon Poya Day today. I saw decorated elephants walking around the park yesterday, in preparation for the ‘Pereheras’ today. Elephants in Yala have also been in the news, jeep drivers have been feeding wild elephants in the park and the elephants have turned aggressive during 'musth'. These are but signs of the times but since ...
This is something that I stumbled across while cleaning out some old folders. It was written sometime in 2012 when the LLRC report was first published. The Jathika Hela Urumaya, a partner of the Government has criticised the Lessons Learned and Reconciliation Committee report, for, amongst other things, exceeding their mandate. While this writer has little sympathy in general with ...
Sri Lanka is now entering the jaws of a debt crisis. The issues were present for decades but started to crystallise over the past two years. Sri Lanka’s debt rating was downgraded several times and commentators warned of the problem but all these were brushed off. Now that some of the symptoms are becoming evident the debate is hotting ...
How does an economic crisis affect ordinary people? It is a difficult question to answer because it depends on many variables including the strength of the financial sector and the state of public finances. While it is difficult to draw exact parallels from other crises because initial conditions may have been different examining some of the broader channels through ...
I have written something before about, 'Why Nations Fail,’ an excellent book by Daron Acemoglu and James A. Robinson. This is another excerpt, this time they try apply their ideas to explain Botswana's success. The story of successful management of natural resources in Botswana is well-known, the question is why did it take place here, but not in, say, Sierra ...
I am in the midst of reading Why Nations Fail, an excellent book on development which attempts to explain why some countries succeed while others do not. Their thesis is that institutions, what economists call the 'rules of the game' the ways in which society is organised make the difference between success and failure. It is a compelling argument but ...
Sri Lanka's has experienced a spike in Covid-19 detections since early October and the authorities have responded with a series of localised curfews, shutting down parts of the country, mostly in the Western province. While the centre of the city is now open some suburbs (eg Dematagoda, Borella) have been under curfew for about three weeks while parts of the ...
I have been wondering whether lockdowns are an appropriate containment measure for the pandemic in poorer countries. A recent paper (that has not been peer reviewed) concludes that they are not. One of the aims of a lockdown is to buy time - to allow the capacity of the health care system to be expanded. The problem in poor countries ...
Sri Lanka’s most recentoutbreaks of Covid arespreadingpanic. The authorities have reactedwith limited curfews and heavy handed isolation; rounding upsuspected contacts and bundling them away intoinhospitable quarantine camps. Activists have complained of a militarised approach to a public healthproblem. Similar storieswere reported fromChina. Arethe authorities are simply following a Chinese model?There is also a lot of iredirected towards Brandix, where the ...
Started reading about leadership and personality cults, found an interesting paper by Sarah Gail Hunter on the subject. The author argues that the failure of institutions (or the loss of public faith in institutions) can open the way to personality cults. Some excerpts from the paper follow."failure of institutions is a necessary precondition for personality cult formation. If institutions were ...
I have been trying to understand the ideology of the new regime and can make no sense of it. I have tried to observe the actions (much more important than statements) but since many of them are situational-reacting to various issues it is a little hard to discern any longer term philosophy from short-term reactions. Exchange controls for example ...
The draft of the 20th amendment to the constitution has been published. It contains no surprises, the main thrust is to centralise power in the Presidency, The only surprise really is that the term limit has been retained - something that is possibly due the problem of primogeniture.We are also informed that a new constitution is also in the ...
Sri Lanka seems set to return to policies of import substituting production. I started reading Dr Eamonn Butler's primer on Adam Smith this morning and the opening paragraphs describe perfectly the current thinking in Sri Lanka: "The old view of economicsSo much did Smith change our ideas, indeed, that it is hard even to describe the economic system that prevailed ...
My friend Sven Gerst sent me some interesting thoughts on totalitarianism that I thought were worth sharing. He says that when he teaches populism he also includes some aspects of totalitarianism because he thinks there is much to learn from totalitarianism.The politics of Sri Lanka are convoluted, one dynamic being a conflict between the older feudalism of society and ...
The election is over and although the results are not yet clear, victory for the SLPP is certain. The only matter in doubt is the size of majority and whether the necessary numbers to muster the two-thirds of seats needed to amend the constitution can be obtained.What then should the opposition do? Should it view its role as simply to ...
In the chapter on Freedom and Security in the Road to Serfdom, Hayek observes:"the policies which are now followed everywhere, which hand out the privilege of security, now to this group and now to that, are nevertheless rapidly creating conditions in which the striving for security tends to become stronger than the love of freedom. The reason for this is ...
I have been reading John Richardson's Paradise Poisoned, an excellent book on conflict and development.It uses Sri Lanka as a case study and traces important events in post-independence history to build a model of conflict. One of the most useful aspects is that gives proper weight to the economic problems and the role that they played in the development of ...