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Debt-stricken Lanka, its friends and foes - EDITORIAL
Our country is in deep trouble. We have defaulted in repaying our international debts. Have run through reserves in the Central Bank and have no internationally acceptable currency to purchases essentials, ranging from food, to fuel, gas and medicines.
Misguided tax cuts left us with no funds for even wage payments. We therefore keep printing money and inflation keeps rising.
Wage cuts and wage freezes have been in place for nearly two years, but prices of all commodities have risen on an average of nearly 60% or more.
According to UNICEF, malnutrition stares our children in the face. Our national leaders have called for a ‘down grade’ to our economic status to that of ‘Least Developed Category’ from ‘Middle Income Category’ and as if to rub salt on the wound, Lanka has been ranked among the lowest South Asian countries in the Global Hunger Index. To overcome the crisis, our political leaders applied to the International Monetary Fund (IMF) for a debt restructuring facility and have finalized a staff-level agreement.
To extricate the country from this mess, our leaders are relying on the resources of the US and Western Europe, via exchange earnings through export of our main cash crops tea, rubber, coconut, apparels, the earnings of expatriate workers (which brings in by far the largest percentage of foreign earnings) and tourism.
Today, the government is expending major efforts to expand our market-share of exports to Western Europe and the US. Our tourist industry is also involved in a drive to attract tourists from these countries. Yet, these countries too are in the grip of inflation, running short funds to back their stumbling economies as well as stocks of fuel.
France appears to be more resilient than its neighbours, in August 2022, the country’s inflation rate (measured by the consumer price index) was 5.8%, compared with 7.9% in Germany and 9.1% in Italy.
Reuters reported on October 12, Britain looked set to go into recession as data showed its economy unexpectedly shrank in August, while the National Grid Chief Executive Yesterday (October 10) reported that Britons have been told to prepare for 3-4 hour rolling blackouts this winter. Further ahead, Britain’s economy looks set to slow sharply as surging inflation hits households and forces the Bank of England to raise interest rates quickly, even as activity stagnates.
Forbes Advisor’ points out the US entered recession in the summer of 2022 ‘with two consecutive quarters of negative Gross Domestic Product (GDP) growth. It added ‘...inflation was still sky-high and wrecking the purchasing power of everyday Americans’.
The question thus arises as to whether people of Western Europe and the US will have the resources to purchase our export products or be in a position to take advantage of the packages our tourism industry is extending to them.
Again, our political leaders have not grasped the fact, that neither Western Europe nor the US have been particularly friendly toward Lanka. The EU and the US refuse to criticize Israeli application of apartheid against Palestinians. Yet, they accuse Lanka of war crimes for eliminating terrorism in our own country.
It is time for Lankan leaders to recognize friend from foe. The Arab and Islamic states have always stood by Lanka defending her against western interference in domestic affairs.
These countries provide the biggest job markets for our expatriate workers. Yet we do not even have a single friendship association with these countries nor have we established vibrant business councils with them.
Egypt for instance was the first African-Arab country to establish diplomatic relations with our country way back in 1957. In the 1980s, Sri Lanka provided 60% of Egypt’s tea requirements. Today, the quantity of Lankan tea exported to Egypt is negligible. Sadly no big effort is made to regain our position as market leader in his country, according to Egyptian Ambassador Maged Mosleh.
The Middle East is awash with oil and gas, which keeps the economy of the world ticking. The economies of these countries have not been hit by inflation and are stable. Sadly, little efforts are being directed to tap this huge potential market in West Asia (Middle East) in our favour.
Let us also not forget, these countries have staunchly supported us at the United Nations Human Rights Councils and other fora. Western nations however, continue to interfere in our domestic problems.
It’s time to change track. It’s time to recognize friend from foe and direct our attempts to search for markets to states who have continuously supported us through thick and thin and have the resources to do this.
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