Privatise SriLankan - Prof. Samarajiwa
The Government should privatise national carrier SriLankan Airlines and save millions of rupees that is being daily wasted to keep the airline, said founding Chair of LIRNEasia, Prof. Rohan Samarajiwa at the Advocata Institute organized building political consensus for economic reforms event at BMICH on Wednesday.
He said that if the Indian government can privatise their national carrier Air India, the Sri Lanka government too could do it. He however said that like what the Indian government did the Sri Lankan government too would have to shoulder their burden of settling all the debt owed by the airline when it was privatised. “However even after doing this the Sri Lanka government would be able to save millions of rupees that is allocated to ‘up keep’ the airline.
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‘IMF bailout viable option for mounting debt repayment’
Whichever government is in power they would have to face the current dollar crunch, escalating global commodity prices, pandemic and most of the other current issues and one way out of this is to look for a IMF funding Chair of LIRNEasia, Prof. Rohan Samarajiwa at The Advocata Institute organized building political consensus for economic reforms event at BMICH on Wednesday.
He said that no institution has given loans to Sri Lanka by force but now the debt repayment is mounting and one viable option would be to look at the IMF for a bailout. He also said that the budget did have salient features and though not adequate to cut down the fuel allowance of the parliamentarians by 5 liters is a step taken in the right direction giving a positive message that polities too are taking some cost cutting measures. But the one off tax imposed on corporate is not a welcome move.”
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Prof. Samarajiva proposes Sri Lankan divest shares
LIRNEasia Founding Chair and Advocata Institute Advisor Prof. Rohan Samarajiva, during a recent event, suggested that the Government divest SriLankan Airlines on the same lines as Air India.
“The objective is to protect the taxpayers of this country from having to continually cover the losses of this technically bankrupt state-owned company,” he said, highlighting the importance of immediate measures to improve public finances.
The national carrier makes a daily loss of Rs. 129.03 million. In the last four years of operation, it has cost the economy Rs. 137 billion in the form of accumulated losses.
Prof. Samarajiva also stressed the importance of building a national consensus to implement immediate reforms to tackle a wide range of issues ranging from unsustainable debt to shortages of essential items in the country.
“We are no longer talking about a crisis that is about to engulf us. We are now in its midst, though not its depths. The hope that the 2022 Budget would give the right signals has evaporated,” he added.
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National consensus mooted to overcome potential sovereign default
A national consensus backed by a common minimum programme, which should be implemented by an independent team of experts, is mooted for Sri Lanka to overcome a potential sovereign default next year.
“As the Central Bank (CB) will be a focal point in this process, we need to transform the CB into a real independent and responsible entity, which can work with a national government. It should give priority to technical advices in its decision-making and it should not be an entity, which experiments different theories such as Modern Economic theory,” LIRNEasia Founding Chair Prof. Rohan Samarajiva told a forum organised by Colombo-based think tank Advocata Institute, under the theme ‘A National Consensus for Economy?’, in Colombo, on Wednesday.
In taking part in the panel discussion, ruling-collation MPs Prof. Ranjith Bandara and Dr. Suren Raghavan as well as opposition MPs Dr. Harsha de Silva, Patali Champika Ranawaka and Vijitha Herath, identified the need of a national consensus to overcome the looming crisis.
Ranawaka estimated Sri Lanka’s external debt repayment obligations at a minimum of US $ 3 billion, which include International Sovereign Bonds (ISB) and Sri Lanka Development Bonds (SLDB) for the next eight months, with only US $ 1.5 billion usable foreign exchange reserves in hand.
Sri Lanka has a US $ 500 million maturing ISB in January, next year and another US $ 1 billion maturing ISB in July next year.
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Call for consensus on structural reforms to get out of economic crisis
“We are no longer talking about a crisis that is about to engulf us. We are now in its midst, though not its depths. The hope that the 2022 Budget would give the right signals has evaporated,” Prof. Rohan Samarajiva, a leading policy analyst and an advisor of the Advocata Institute, said.
He made these comments at Advocata’s latest event, ‘A National Consensus for Economic Reforms or Arthikayata jathika sammuthiyak?’. Prof. Samarajiva provided a breakdown of severe economic and social challenges facing the country. His keynote speech stressed on the importance of building a national consensus to implement immediate reforms to tackle a wide range of issues ranging from unsustainable debt to shortages of essential items in the country.
The present macroeconomic instability lies in the failure of the state to implement deep structural reforms to the economy for nearly twenty years. The COVID-19 pandemic has exposed Sri Lanka’s fundamental weaknesses that have plagued the economy for a long period of time.
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Defaulting debt repayment can have severe repercussions
Sri Lanka has been running deficits over the decades following the post- independence period when the fiscal deficit was over 10 percent of the GDP.
In 2020 it exceeded 10 percent of the GDP and is likely to deteriorate in 2021. “If the government continues to consume more than it earns or when the domestic private savings are not sufficient to finance the economy it can reflect in our current account deficit. In the absence of domestic saving, the country has to depend on foreign savings to bridge the current deficit,” said Dr. Roshan Perera, Senior Research Fellow of the Advocata Institute at the launch of a publication on “Framework of Sri Lanka’s Economic Recovery at a webinar held this week.
She said in the absence of FDIs coming into the country Sri Lanka had to borrow from abroad. In the 2000 period funds came mostly from bilateral and multilateral sources and concessional financing. But these funds ceased when the country’s rating was elevated to a middle- income country status. When Sri Lanka embarked on infrastructure projects in later years, it had to borrow from private lending agencies and international sovereign bonds with shorter grace periods with higher interest rates. This had an impact on debt service payment which has ballooned over the years. With low foreign inflows coupled with the COVID-19 pandemic, debt servicing has been a challenge, she added.
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Sri Lanka urgently needs ‘National Consensus’ on deepening economic crisis, policy analysts and politicians say
We are no longer talking about a crisis that is about to engulf us. We are now in its midst, though not its depths. The hope that the 2022 Budget would give the right signals, has evaporated, Prof. Rohan Samarajiva, a leading policy analyst and an advisor of the Advocata Institute said, last week.
He made these comments at Advocata’s latest event , “A National Consensus for Economic Reforms or “ආර්ථිකයට ජාතික සම්මුතියක්?”.
Professor Samarajiva provided a breakdown of severe economic and social challenges facing the country. His keynote speech stressed on the importance of building a national consensus to implement immediate reforms to tackle a wide range of issues ranging from unsustainable debt to shortages of essential items in the country.
The present macroeconomic instability lies in the failure of the state to implement deep structural reforms to the economy for nearly twenty years. The COVID-19 pandemic has exposed Sri Lanka’s fundamental weaknesses that have plagued the economy for a long period of time. The event brought together politicians representing the main political parties to discuss the importance of a united course of action, to drive Sri Lanka’s economy towards a path of growth.
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Advocata's event on the need for a broader consensus for economic restructuring | News 1st: Lunch Time English News | (25/11/2021)
