Our economic crisis needs ‘out of the box’ solutions - EDITORIAL

Our country continues to limp through the worst financial crisis which hit it since independence. Our outstanding foreign debt remains well over US$50 billion, with still no final settlement reached with the International Monetary Fund (IMF) as per a financial bailout.

Today, unlike during the worst days of the crisis in May/June earlier this year, basics are available, albeit at prices the majority find difficult to meet. Limited stocks of fuel and gas too are available. However, food prices are way beyond the reach of the ordinary man/woman on the streets. 

Large numbers of families cannot afford more than one meal a day. Worse, the UN statistics reveal that Sri Lanka has the second-highest rate of acute malnutrition among children under 5 years of age in South Asia, while at least 17% of children are suffering from chronic wasting, a disease that carries the highest risk of death. 
One of our chances of recovering from this dire strife ridden situation is tied to receiving an economic bailout from the IMF. We are told that the chances of receiving such a bailout are good, but dependent on political and economic stability needed to repay the outstanding foreign debt on a structured basis.

Given these circumstances, one would expect our diverse political parties to come together to pull the country out of the crisis which they themselves (politicians) created. Unfortunately this is not to be, or so it seems. With the budget coming up, certain members of parliament are threatening to defeat the budget and force the government to resign. The resignation of the government and the resultant turmoil will surely put any chance of receiving an IMF bailout beyond our reach. 

While we agree the current regime in power has many faults, we can only hope politicians will put aside their personal political ambitions to enable the country to receive the much needed IMF bailout. 
Having said this, it does not mean we have to depend entirely on an IMF bailout to overcome the present economic and financial problems. Our export sector has shown growth, despite worldwide recession. Central Bank statistics show an increase in YoY growth in earnings. 

While this is good, we still do not have the required currency to purchase even basics. With financial markets are unwilling to extend credit facilities it’s time to look for other possibilities, like for instance the ‘Rubber-Rice Pact’ with China in 1953.

We also need to explore new markets especially when global trade is in turmoil with import and export of goods and services encountering challenging rules. We need to explore the possibility of once again engaging in the barter of goods, as we do not possess the capital to purchase much needed essentials ranging from medicines to food fuel and fertilizer. 

China like India, has in times of crisis extended a helping hand. In a similar manner we need to look at countries with whom we may not in the past, have close trade ties. The countries of the former Non-Aligned bloc of nations are cases in point. Most of these countries have been supportive of us in good times and in adversity.

Iran for example has ample stocks of fuel. So why do we not discuss with Iranian officials the possibility of purchase Iran’s oil on a barter basis. It is widely known that Iran has been exporting oil to different countries, despite unilateral sanctions imposed by the US. 
We need to look at the possibility to purchase oil from Iran on a barter basis and if possible on concessionary terms on a long-term basis. Such deals would benefit us in the long term as well. 

The Iranian embassy in our country has already indicated its willingness to engage in such a barter system. We should not prevaricate, but grab the opportunity. Iran also produces urea – a fertilizer item in short supply here and badly in need by our farming community. In addition, Iran also produces tar and cement which is also available to Lanka on a barter basis.
At times like this we need to make the best use of all opportunities.

Similarly Egypt, another gulf country and a leader of the former Non-Aligned group of countries is an exporter of petroleum and petroleum products. It also exports raw cotton, cotton yarn, and textiles. 
Should we not approach these countries to reach agreements on a barter of goods basis until we are able to make use of the financial markets, which we are now effectively blocked because of economic meltdown.
A drowning man the proverb goes clutches at even a straw. It is time that we clutch these straws that are within our grasp.