Sarath Fernando said,

April 22, 2008 @ 11:23 am

What Ajit Cabral says at the interview shows very clearly how the top most planners of the economy and those who really direct and decide policies look at things, interpret what is happening and defend what they are doing. What he was basically saying is that the economy in Sri Lanka has achieved many positive results during the last three years in spite of the difficulties of the war. It is unfortunate that these stories are not told to the ordinary poor people in the country and what they have to say about so called successes are not heard at levels that matter.

It is tragic that people look at the war from the point of view of how it affects the potential investors. Should we decide to “continue the war” or to “stop the war” looking at how best we could get more foreign investment into the country. A war destroys life, it creates suffering on people who are innocent and are not part of the war. It creates animosity, anger, mistrust and division among people. However, profit makers look at it from the point of view of how it will affect the possibilities of profit making.

It is morally incorrect to discuss the issue of war looking at whether investors would like it or not.

What Nivaard Cabraal said about other achievements in the economy also raises similar questions about the validity of those indicators to measure economic achievements.

When the interviewer asked whether Sri Lanka can afford to spend as much as US $ 2 billion a year on the war he takes the percentage of the GDP spent on war as 3.8 % and says that that is roughly the percentage of the GDP spent for defense in other countries such as Singapore ( 4.9 % )and so on. How foolish and irrational is this argument? Singapore spending 4.9 % of GDP can not be compared with 3.8 % in Sri Lanka because we have to see who spends this money, who has to take this burden. We have to look at the severe problems of malnutrition and hunger ( with a very large percentage of people in Sri Lanka not having the necessary calorie intake and such high figure of children malnourished and low weight etc )

How many people in Sri Lanka are poor ?

Interviewer says that 45% of the people in Sri Lanka are below poverty line having less than $ 2 /day. Cabraal gives some very strange figures about poverty in Sri Lanka. He says that in 2002 there were 22.7 % below poverty line and now it has come down to 15.2 %. The Samurdhi Movement ( Govt’s poverty alleviation programme ) gives a figure of 2.1 million families receiving less than Rs 1,500 / month = $ 0.5/ day / family. So how does one decide how many people are reallt poor in Sri Lanka. Judging from the daily income in $ oor in Rs. Is inaccurate any way since what matters is how much food and other essential requirements can a person buy with the income she or he gets. This lack of clarity about the level of poverty has been there in Sri Lanka for decades. What is known is that people are finding it more and more difficult to survive. Indications are large malnutrition, hunger, debt and suicides.

Subsidizing foreign investments

Cabraal feels very happy that FDI in Sri Lanka has been the largest in history. It was $ 751 million. But the fact that we are paying a very high interest rate is ignored by saying that other countries do the same. Who pays the price?. The fact is that we are so heavily subsidizing foreign investment, not only paying high interest rates, but are offering the largest tax holidays and also spending such large amounts of borrowed money to provide infrastructure facilities. The estimated expenditure on large infrastructure development projects for the next ten years is Rs.389.9 billion. All this is to make the country more attractive to investors. Since they come on long tax holidays, it is the poor people who have to pay this price too. Foreign investors therefore do not bring in money, but they are subsidized by the poor.

Unemployment figures ?

Strange figures are also given about rates of unemployment in the country. He says it has come down from 7% last year to 5.4 % this year. Where do we see this expansion of employment ?. May be there was some adjustment in the way “unemployment is defined. It may be by considering all house wives working at home for no pay are calculated as employed, which is not incorrect of course. Did the phasing out of the Multifibre Agreement (MFA) result in any garment factories closing down or leaving the country, Garment factories was one of the major sectors that generated employment in the recent years? What are the figures ?

An admission of failure in the market led policies

It is admitted by Ajit Cabraal that the very large increase in inflation and cost of living was caused by the very large price increases in the imports of food , fuel etc. This is an indirect admission that it was a mistake to have gone into very high dependence on imports. Dependence on food imports has been the most painful on the poorer sections of the population. In Sri Lanka the poor people spend 80% of their income on essential foods. This shows that the policies adopted during the last three decades of giving priority to exports rather than to domestic food production was a very costly mistake. While planners are playing with figures and percentages the poor people pay the price with their essential food, nutrition and survival.