அதிக இரத்தம் குடித்துவிட்டோமா? IMF

Neoliberalism: அதிக இரத்தம் குடித்துவிட்டோமா? IMF

Neoliberalism: Oversold?
FINANCE & DEVELOPMENT, June 2016, Vol. 53, No. 2

Jonathan D. Ostry, Prakash Loungani, and Davide Furceri

Inside the stock exchange in Santiago, Chile, one of the first countries to adopt a form of neoliberal policies.

Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion Milton Friedman in 1982 hailed Chile as an “economic miracle.” Nearly a decade earlier, Chile had turned to policies that have since been widely emulated across the globe. The
neoliberal agenda—a label used more by critics than by the architects of the policies—rests on two main planks. The first is increased competition—achieved through deregulation and the opening up of domestic markets, including financial markets, to foreign competition. The second is a smaller role for the state, achieved through privatization and limits on the ability of governments to run fiscal deficits and accumulate debt.­

There has been a strong and widespread global trend toward neoliberalism since the 1980s, according to a composite index that measures the extent to which countries introduced competition in various spheres of economic activity to foster economic growth. As shown in the left panel of Chart 1, Chile’s push started a decade or so earlier than 1982, with subsequent policy changes bringing it ever closer to the United States. Other countries have also steadily implemented neoliberal policies (see Chart 1, right panel).­

There is much to cheer in the neoliberal agenda. The expansion of global trade has rescued millions from abject poverty. Foreign direct investment has often been a way to transfer technology and know-how to developing economies. Privatization of state-owned enterprises has in many instances led to more efficient provision of services and lowered the fiscal burden on governments.­

However, there are aspects of the neoliberal agenda that have not delivered as expected. Our assessment of the agenda is confined to the effects of two policies: removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, sometimes called “austerity,” which is shorthand for policies to reduce fiscal deficits and debt levels. An assessment of these specific policies (rather than the broad neoliberal agenda) reaches three disquieting conclusions:

•The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries.­

•The costs in terms of increased inequality are prominent. Such costs epitomize the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.­

•Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.­

Open and shut?

As Maurice Obstfeld (1998) has noted, “economic theory leaves no doubt about the potential advantages” of capital account liberalization, which is also sometimes called financial
openness. It can allow the international capital market to channel world savings to their most productive uses across the globe. Developing economies with little capital can borrow
to finance investment, thereby promoting their economic growth without requiring sharp increases in their own saving. But Obstfeld also pointed to the “genuine hazards” of openness to foreign financial flows and concluded that “this duality of benefits and risks is inescapable in the real world.”

This indeed turns out to be the case. The link between financial openness and economic growth is complex. Some capital inflows, such as foreign direct investment—which may include a transfer of technology or human capital—do seem to boost long-term growth. But the impact of other flows—such as portfolio investment and banking and especially hot, or speculative, debt inflows—seem neither to boost growth nor allow the country to better share risks with its trading partners (Dell’Ariccia and others, 2008; Ostry, Prati, and Spilimbergo, 2009). This suggests that the growth and risk-sharing benefits of capital flows depend on which type of flow is being considered; it may also depend on the nature of supporting institutions and policies.­

Although growth benefits are uncertain, costs in terms of increased economic volatility and crisis frequency seem more evident. Since 1980, there have been about 150 episodes of surges in capital inflows in more than 50 emerging market economies; as shown in the left panel of Chart 2, about 20 percent of the time, these episodes end in a financial crisis, and many of these crises are associated with large output declines (Ghosh, Ostry, and Qureshi, 2016).­

The pervasiveness of booms and busts gives credence to the claim by Harvard economist Dani Rodrik that these “are hardly a sideshow or a minor blemish in international capital flows; they are the main story.” While there are many drivers, increased capital account openness consistently figures as a risk factor in these cycles. In addition to raising the odds of a crash, financial openness has distributional effects, appreciably raising inequality (see Furceri and Loungani, 2015, for a discussion of the channels through which this operates). Moreover, the effects of openness on inequality are much higher when a crash ensues (Chart 2, right panel).­

The mounting evidence on the high cost-to-benefit ratio of capital account openness, particularly with respect to short-term flows, led the IMF’s former First Deputy Managing Director, Stanley Fischer, now the vice chair of the U.S. Federal Reserve Board, to exclaim recently: “What useful purpose is served by short-term international capital flows?”

Among policymakers today, there is increased acceptance of controls to limit short-term debt flows that are viewed as likely to lead to—or compound—a financial crisis. While not the only tool available—exchange rate and financial policies can also help—capital controls are a viable, and sometimes the only, option when the source of an unsustainable credit boom is direct borrowing from abroad (Ostry and others, 2012).­

Size of the state

Curbing the size of the state is another aspect of the neoliberal agenda. Privatization of some government functions is one way to achieve this. Another is to constrain government spending through limits on the size of fiscal deficits and on the ability of governments to accumulate debt. The economic history of recent decades offers many examples of such curbs, such as the limit of 60 percent of GDP set for countries to join the euro area (one of the so-called Maastricht criteria).­

Economic theory provides little guidance on the optimal public debt target. Some theories justify higher levels of debt (since taxation is distortionary) and others point to lower—or even negative—levels (since adverse shocks call for precautionary saving). In some of its fiscal policy advice, the IMF has been concerned mainly with the pace at which governments reduce deficits and debt levels following the buildup of debt in advanced economies induced by the global financial crisis: too slow would unnerve markets; too fast would derail recovery. But the IMF has also argued for paying down debt ratios in the medium term in a broad mix of advanced and emerging market countries, mainly as insurance against future shocks.­

But is there really a defensible case for countries like Germany, the United Kingdom, or the United States to pay down the public debt? Two arguments are usually made in support of paying down the debt in countries with ample fiscal space—that is, in countries where there is little real prospect of a fiscal crisis. The first is that, although large adverse shocks such as the Great Depression of the 1930s or the global financial crisis of the past decade occur rarely, when they do, it is helpful to have used the quiet times to pay down the debt. The second argument rests on the notion that high debt is bad for growth—and, therefore, to lay a firm foundation for growth, paying down the debt is essential.­
It is surely the case that many countries (such as those in southern Europe) have little choice but to engage in fiscal consolidation, because markets will not allow them to continue borrowing. But the need for consolidation in some countries does not mean all countries—at least in this case, caution about “one size fits all” seems completely warranted.

Markets generally attach very low probabilities of a debt crisis to countries that have a strong record of being fiscally responsible (Mendoza and Ostry, 2007). Such a track record gives them latitude to decide not to raise taxes or cut productive spending when the debt level is high (Ostry and others, 2010; Ghosh and others, 2013). And for countries with a strong track record, the benefit of debt reduction, in terms of insurance against a future fiscal crisis, turns out to be remarkably small, even at very high levels of debt to GDP. For example, moving from a debt ratio of 120 percent of GDP to 100 percent of GDP over a few years buys the country very little in terms of reduced crisis risk (Baldacci and others, 2011).­

But even if the insurance benefit is small, it may still be worth incurring if the cost is sufficiently low. It turns out, however, that the cost could be large—much larger than the benefit. The reason is that, to get to a lower debt level, taxes that distort economic behavior need to be raised temporarily or productive spending needs to be cut—or both. The costs of the tax increases or expenditure cuts required to bring down the debt may be much larger than the reduced crisis risk engendered by the lower debt (Ostry, Ghosh, and Espinoza, 2015). This is not to deny that high debt is bad for growth and welfare. It is. But the key point is that the welfare cost from the higher debt (the so-called burden of the debt) is one that has already been incurred and cannot be recovered; it is a sunk cost. Faced with a choice between living with the higher debt—allowing the debt ratio to decline organically through growth—or deliberately running budgetary surpluses to reduce the debt, governments with ample fiscal space will do better by living with the debt.


Austerity policies not only generate substantial welfare costs due to supply-side channels, they also hurt demand—and thus worsen employment and unemployment. The notion that fiscal consolidations can be expansionary (that is, raise output and employment), in part by raising private sector confidence and investment, has been championed by, among others, Harvard economist Alberto Alesina in the academic world and by former European Central Bank President Jean-Claude Trichet in the policy arena. However, in practice, episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1 percent of GDP increases the long-term unemployment rate by 0.6 percentage point and raises by 1.5 percent within five years the Gini measure of income inequality (Ball and others, 2013).­

In sum, the benefits of some policies that are an important part of the neoliberal agenda appear to have been somewhat overplayed. In the case of financial openness, some capital flows, such as foreign direct investment, do appear to confer the benefits claimed for them. But for others, particularly short-term capital flows, the benefits to growth are difficult to reap, whereas the risks, in terms of greater volatility and increased risk of crisis, loom large.­

In the case of fiscal consolidation, the short-run costs in terms of lower output and welfare and higher unemployment have been underplayed, and the desirability for countries with ample fiscal space of simply living with high debt and allowing debt ratios to decline organically through growth is underappreciated.

Moreover, since both openness and austerity are associated with increasing income inequality, this distributional effect sets up an adverse feedback loop. The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth (Ostry, Berg, and Tsangarides, 2014).­

The evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are. Of course, apart from redistribution, policies could be designed to mitigate some of the impacts in advance—for instance, through increased spending on education and training, which expands equality of opportunity (so-called predistribution policies). And fiscal consolidation strategies—when they are needed—could be designed to minimize the adverse impact on low-income groups. But in some cases, the untoward distributional consequences will have to be remedied after they occur by using taxes and government spending to redistribute income. Fortunately, the fear that such policies will themselves necessarily hurt growth is unfounded (Ostry, 2014).­

Finding the balance

These findings suggest a need for a more nuanced view of what the neoliberal agenda is likely to be able to achieve. The IMF, which oversees the international monetary system, has been at the forefront of this reconsideration.­

For example, its former chief economist, Olivier Blanchard, said in 2010 that “what is needed in many advanced economies is a credible medium-term fiscal consolidation, not a fiscal noose today.” Three years later, IMF Managing Director Christine Lagarde said the institution believed that the U.S. Congress was right to raise the country’s debt ceiling “because the point is not to contract the economy by slashing spending brutally now as recovery is picking up.” And in 2015 the IMF advised that countries in the euro area “with fiscal space should use it to support investment.”

On capital account liberalization, the IMF’s view has also changed—from one that considered capital controls as almost always counterproductive to greater acceptance of controls to deal with the volatility of capital flows. The IMF also recognizes that full capital flow liberalization is not always an appropriate end-goal, and that further liberalization is more beneficial and less risky if countries have reached certain thresholds of financial and institutional development.­

Chile’s pioneering experience with neoliberalism received high praise from Nobel laureate Friedman, but many economists have now come around to the more nuanced view expressed by Columbia University professor Joseph Stiglitz (himself a Nobel laureate) that Chile “is an example of a success of combining markets with appropriate regulation”

(2002). Stiglitz noted that in the early years of its move to neoliberalism, Chile imposed “controls on the inflows of capital, so they wouldn’t be inundated,” as, for example, the first Asian-crisis country, Thailand, was a decade and a half later. Chile’s experience (the country now eschews capital controls), and that of other countries, suggests that no fixed agenda delivers good outcomes for all countries for all times. Policymakers, and institutions like the IMF that advise them, must be guided not by faith, but by evidence of what has worked.­ ■

ஐயா ஆனாரூனாருக்கு தொண்டர்கள் அஞ்சலி!



ஈழ தேசியப் பிரச்சனையில் நிலப்பிரச்சனை

ஈழதேசியப் பிரச்சனையில் 

நிலப்பிரச்சனை

Retired Land Commissioner of Eastern Province


Karthirgamathamby Kurunathan

ENB Special reports – Floods

இலங்கையில் நாடு தழுவிய பேரனர்த்தம்.

மலைச்சரிவில் மூச்சிழந்தது அரநாயக்காவில் மூன்று கிராமம்!

வெள்ளக்காட்டில் மூழ்கியது கிளிநொச்சி நகரம்!

கூடவே உலகமய கொழும்பு மாநகரம்!

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* Some 53 major reservoirs are spilling while 73 are 82 per cent full.

* From the highlands of Kandy and Nuwara Eliya to the lowlands of Hambantota and Batticaloa, the severe weather conditions left a trail of devastation across 16 of the country’s 25 administrative districts.

*Kegalle, Kalutara, Badulla, Moneragala, Kandy, Ratnapura, Kurunegala Nuwara Eliya and Matale, remain at high risk of landslides, cut slopes and rock falls.

 *Colombo needed a minimum of 1,000 acres of lowland to safely facilitate water retention in order to avert future flooding in the region. “We have, however, just 600 acres,” he said. “In order to secure the region we have to take steps to find 400 more acres of lowland. That will take a minimum of two to three years.”


கிணறுகளின் நீரை பாவிக்க வேண்டாம்

25-05-2016 02:37 AM

கொழும்பு மாவட்டத்தில், வெள்ளநீரினால் அசுத்தமடைந்துள்ள கிணறுகள் மற்றும் குழாய்க் கிணறுகளில் இருந்து பெறப்படும் மாதிரி தண்ணீரைப் பரிசோதனைக்கு உட்படுத்தி, அக்கிணறுகளில் உள்ள தண்ணீரின் சுத்தத்தன்மை தொடர்பில் அறிவிக்கும் வரையிலும், அக்கிணறுகளின் தண்ணீரை எக்காரணத்துக்காகவும் பயன்படுத்தவேண்டாமென, நீர் முகாமைத்துவ சபை, மக்களிடம் கேட்டுக்கொண்டுள்ளது.

நீர் ஊற்றுமூலங்களில் தண்ணீரைப் பரிசோதனைக்கு உட்படுத்தவேண்டுமாயின், அதற்கு தேவையான ஏற்பாடுகள் மேற்கொள்ளப்படும் என்றும். தேவையேற்படின் 0718587628 / 0776528445 / 0718605592 / 0714414681 ஆகிய அலைபேசி இலக்கங்களுக்குத் தொடர்புகளை ஏற்படுத்தி, மேலதிக விவரங்களைப் பெற்றுக்கொள்ள முடியும் என்றும் அச்சபையின் தலைவர் எஸ்.காதர் தெரிவித்தார்.

Special reports – Floods

Kelani crisis largely man-made
By Anushiya Sathisraja

Shrinking open spaces, illegal constructions, the lack of proper waste disposal and inefficient drainage systems contributed to the worst flooding in 27 years in Colombo and its suburbs, a senior official of the Irrigation Department said.

People filling up lowlands for construction and choked stormwater drains and other water conduits deepened the crisis.

Clogged drainage and canals in and around the city are blocking the flow of water to the river and sea, Irrigation Department Acting Director-General T.P. Alwis said. “The reason for this is that the canal beds are much lower than the sea or river level, and as a result, the water does not drain out,” he said.

A major contributory factor to the flooding has been the filling in of marshlands for development purposes.

Mr. Alwis said flooding in Kelaniya worsened this year primarily due to a drop in the city’s ability to absorb water because most of the marsh or wetlands in and around Kelaniya had been filled for building houses or other construction.

The flooding around Colombo had been extraordinarily severe despite the water level of the Kelani River reaching 7.3 feet compared to 7.8 feet during the 1989 floods.

In 1989, more than 60,000 persons were affected in the Colombo district while islandwide 300,000 were displaced and more than 300 killed. Most of the deaths were reported from the Bulathkohupitiya area, which was hit by a landslide, killing 244 people. This time, more than 185,000 people are suffering from flooding in the Colombo district, with three deaths reported.

The water levels of the major tanks are high, the Irrigation Department said.

Aerial view of floods in Sri Lanka - Colombo Aranayaka

Some 53 major reservoirs are spilling while 73 are 82 per cent full. Mr Alwis said the spill gates of 20 big tanks have been opened, and after 2014 this is the first time all irrigation tanks have a large water supply.

According to the latest update onFriday from the Disaster Management Centre (DMC), 64 deaths have been reported islandwide and 131 declared missing from the landslide in Aranayake. More than 425, 000 people belonging to 100,000 families have been displaced with nearly 320,000 people living in shelters due to the devastation caused by floods, landslides and heavy winds in 22 of the districts.

From the highlands of Kandy and Nuwara Eliya to the lowlands of Hambantota and Batticaloa, the severe weather conditions left a trail of devastation across 16 of the country’s 25 administrative districts.

In the Gampaha district some 321, 350 people (75, 035 families) have been hit by the overflowing of the Kelani river.

The DMC also confirmed that 1,900 persons in Aranayake and another 2,221 in Bulathkohupitiya are suffering hardship caused by landslides. In the Kegalle district 28,909 persons are affected (see separate story).

Among the other areas hit are Ratnapura, with 3,858 people needing assistance, Central Province (5,007 people) ,Northern Province (37,001) and Puttalam (24,874).

Kegalle, Kalutara, Badulla, Moneragala, Kandy, Ratnapura, Kurunegala Nuwara Eliya and Matale, remain at high risk of landslides, cut slopes and rock falls.

Similar to the causes leading to the floods, made-made actions were attributed to the increasing landslides and rock falls.

The National Building Research Organisation (NBRO), the organisation focused on minimising landslides, struggles with no powers, a senior NBRO official said.

NBRO Landslide and Research Head R.M.S. Bandara said bad land use practices and water management and non-engineered constructions were the leading man-made causes of landslides.

“There are constructions in landslide-prone areas that lack proper retaining structures, and added to that are cutting failures. Most people in areas of risk are unaware that rainwater management is essential is preventing landslide and related disasters. “It is essential to divert rainwater to the nearest stream or waterway,”, Mr. Bandara emphasised.

Aranayake Landslde Live And Colombo Flood 2016 Sri Lanka. අරනායක නායා යෑම සජීවීව.

Kolonnawa

“Agriculture, road development, local government, environment, railways, education, police, and disaster management authorities should co-ordinate to ensure the safety of the public and prevent landslides.”

Apart from issuing clearance certificates, handing over rain gauges, landslide hazard zone mapping, creating awareness programmes and research, the NBRO has no powers to take legal action against those who do not obtain the NBRO certificate for constructions, carry out haphazard steepening of slopes or fail to follow proper water management and land use.

Mr. Bandara said residents should report to the District Secretary’s offices if they notice any abnormalities such as rock slides, unusual seepage of water and bulges on slopes.

With the increase of landslides and floods worsening experts have called for better methods in minimising landslides.

Sri Lanka floods: worst affected Colombo-most rainfall Kilinochchi

Professor Kapila Dahanayake, a geologist from University of Peradeniya, said a mechanism should also be introduced, with the advice of irrigation officials, to harvest floodwater at higher levels without letting almost 80 per cent of it drain out to the sea.

“Concrete columns should be used so that filling the land is avoided while increasing the number of culverts, both to allow the free flow of water,” Prof. Dahanayake said.

The Meteorology Department’s Director of Forecasting, Sarath Premalal, said that after 13 years this week’s rainfall, measuring 450mm, was the highest recorded in the country since the previous maximum of 700mm.

Strong windy conditions over the country and in the sea areas around the island will continue during next few days due to the meeting of wind feeding to the system. There is a high possibility to sudden increase of rain in the south-western part of the country. Very heavy rainfall of 100-150mm is also expected in some areas.

உலகமய கொழும்பு தலைநகர் வெள்ளத்தில்

Issues of responsibility muddy the waters

By Sandun Jayawardana
Kaduwela

Colombo’s flooding problem is far more complex than an issue of drainage maintainance, says the chairman of the Land Reclamation and Development Corporation, W.M.A.S. Iddawela.

He said it was easy to claim that the floods in Colombo increased in severity due to poor maintenance of drainage systems, as some were alleging.

மண்சரிவின் மடியில் மக்கள்

“The issue is far more complex and must be looked at from a professional level,” he stressed.

For example, Mr. Iddawela said, the Land Reclamation and Development Corporation was in charge of 44km of the canal system in Colombo. Responsibilities regarding much of the drainage system, on the other hand, lay with the Colombo Municipal Council (CMC).

A collective of several agencies – including the Department of Irrigation, Urban Development Authority (UDA) and Coast Conservation Department – must co-operate to maintain the region’s flood management system, he said.

While the Kelani River bursting its banks greatly contributed to the severe flooding, irregular constructions had heaped enormous pressure on the environment, Mr. Iddawela said. The situation had become unsustainable, he argued.

He cited the Werassa Ganga Development Project, which saw the development of the Bellanwila walking track and surrounding region, as an example of good construction. The project had helped put an end to frequent floods in the Kesbewa and Piliyandala areas. “The project is a testament to how sustainable construction can help mitigate flood disasters,” Mr. Iddawela said.

He said under the World Bank-funded Metro Colombo Urban Development Project, a stronger storm drainage system for Kolonnawa, which has experienced some of the worst flooding to hit Colombo, would be built.

Mr. Iddawela revealed Colombo needed a minimum of 1,000 acres of lowland to safely facilitate water retention in order to avert future flooding in the region. “We have, however, just 600 acres,” he said. “In order to secure the region we have to take steps to find 400 more acres of lowland. That will take a minimum of two to three years.”

He said it was essential to identify all low-lying areas where construction has taken place because they were vulnerable to flooding.

“A major problem is the lack of pumping stations along the Kelani River to pump out excess water,” another official working for the corporation said, pointing out that people living along the flood plains and next to canals have been hit hardest by the flooding, precipitated by heavy rains from May 15-16 that caused a sharp rise in water levels of the Kelani River.

“We have called for tenders on setting up several pumping stations and hope they will be completed by late this year or early next year,” the official, a Deputy General Manager (DGM) of the corporation, said.

She said agencies needed to discuss to what extent climate change was causing such destruction.

Colombo Municipal Council (CMC) Commissioner V.K.A. Anura rejected accusations that the drainage systems under CMC control had not been properly maintained.

“The bottom line is that we have not received this much of rain in Colombo since 2002. We were simply overwhelmed by the deluge,” he said. Mr. Anura likened what happened to having a barrel of water poured on the ground at once instead of a tap being turned on.

The Municipal Commissioner conceded the drainage system in Colombo was extremely old and in need of urgent renovation. He said several projects were underway to improve the system but these would take up to two years to complete.

முறிந்த உலகமய சீன நெடுஞ்சாலை

Department of Irrigation Director of Irrigation (Assets Management and Disaster Management) H.M. Junaid said heavy rainfall in areas upstream such as in Deraniyagala, Kithulgala and Hanwella had contributed to the rise in water levels along the Kelani River.

He said the main concern for authorities was that the water level in the river was continuing to fluctuate as heavy rains in these areas continued.

While many of the affected who lived next to the river had been living in illegal constructions, Mr. Junaid said he did not believe that illegal constructions or the dumping of garbage had played a decisive role in this particular flood. “The rains were simply too much,” he said.

The Ministry of Megapolis and Western Development has ambitious plans set out to control flooding in Colombo.

Tenders are to be called soon to construct two underground tunnels to take rainwater to the sea as a long-term solution, Ministry Secretary Nihal Rupasinghe said. He pointed out there were currently only four main outlets to discharge Colombo’s rainwater. These are located at Wellawatta, Dehiwela, Nagalagam Street and Mutwal.

When the water level of the Kelani River rises to this extent, however, these outlets cannot cope with the volume of water. Flooding also forces authorities to stop discharging water from Nagalagam Street, which is an outlet to the Kelani River.

Mr. Rupasinghe estimated it would take roughly another two-and-a-half years for the tunnel system to be put in place to control the rainwater more effectively. He stressed improvements to the drainage system was being done in the meantime in areas such as Kolonnawa and Grandpass.
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Not Just Climate Change And Global Warming
by Emil van der Poorten

As one who believes that climate change driven by man’s insistence on refusing to accept that his behaviour is responsible for global warming, I have little doubt that the catastrophic weather we have experienced and are continuing to experience as I write this could have been avoided, to a significant extent, if we lived up to our boast that we Sri Lankans are more intelligent than the ‘lesser’ mammals!

That said, let’s look at what factors other than willy nilly industrialization, with the attendant indiscriminate use of non-renewable fossil fuels, have contributed to what has been happening in Sri Lanka in the past couple of weeks.

Many in our neck of the woods who are in no danger of being engulfed by floodwaters are living in fear of boulders above their very modest habitations coming loose and burying them in the houses that they occupy. Interestingly, in an area that is extremely rocky, this was never a concern in the past.

Why? Because there was vegetation that would have stopped any errant boulder before it could do any damage. Not only are those ‘guard trees’ gone but the steep hillsides have suffered very serious erosion since the clearing of this land. You might well ask, “How did this come about?”

Well, in the “bad old days of Empire” and for several years after Sri Lanka became independent, the hilltops were ‘Crown reserves,’ if I remember the terminology right.  It was an offence to, in any way whatsoever, try to change the vegetation there.

The landslide in Aranayake, Kegalle buried three villages – Siripura, Elangapitiya, and Pallebage last week

மூன்று கிராமங்களின் மூச்சை முழுதாக நிறுத்திய மலை-மண் சரிவு- அரநாயக்க

Similarly, the road (now Highway A10 connecting Kandy & Kurunegala), had a ‘Crown road/river reservation’ between it and the Dik-Oya, one of the two source streams of the Deduru Oya. This used to be leased to an adjacent land-holder who could only ‘enjoy’ whatever the leased land produced. On no account was the existing vegetation to be changed and that included an absolute prohibition on any type of construction. This prohibition has, seemingly, disappeared because there is a string of habitations and an even more substantial number of eating houses (“hotels”), inclusive of one locally- famous establishment which straddles the Oya concerned! Now isn’t that a “first:” being able to sit down to a meal with a river running under one?!

You would be hard put to find even one of these establishments that has waste disposal of any description. Why should they bother because guess where garbage goes? As for toilets and human-wastes a little vignette might be appropriate at this point.When the A10 was being carpeted around what is now the 17th Km marker, one enterprising local took advantage of what was intended to be the temporary removal of a large cement direction sign, by the Road Development Authority (RDA). On completion of carpeting of that particular section of the highway, when they sought to place the sign where it used to be, they found the space occupied by a Petti Kadey, a small kiosk. When they and those concerned about the sign being removed sought to put it back where it was, the owner of the Petti Kadey established ‘title’ to it by the simple expedient of having the local Pradeshiya Sabha issue a receipt (back-dated) for ‘payment of acreage tax’ or something to that effect.

Do I need to add to that narrative the fact that the most powerful politician in the area was a member of the Cabinet at the time and is still a member of that august body despite an alleged change of government and governing philosophy?Back to where this piece began: guess what happened to the hilltop forest reserves? Particularly, since Land Reform and Mr. Kobbekaduwa’s “emancipation of the Kandyan peasantry?” They became a happy hunting ground for those seeking any wood that could be sold.

Making that situation worse was the fact that, increasingly, because lower and lower grade timber was found acceptable for one use or another, trees that might have escaped the woodsman’s axe were cut down and sawn notwithstanding the fact that those doing so had no legal claim whatsoever to them.

This ‘hilltop invasion’ did not appear in isolation but was part of a larger devastation of the tree cover of the plantation land below. First the Jak (Artocarpus integrifolia) and other hard woods, Sapu (Champaca indica) and Lunumidella (Melia dubia) went, followed by the rubber trees which were felled for lumber (the bottom part of the trunk) and firewood (the rest of the tree). Then came the cocoa trees which also went to someone’s open-hearth fireplace! In a short time one of Sri Lanka’s largest cocoa estates (originally about 1500 acres) did not produce so much as one bean, leave alone thousands of pods of this now-very valuable crop!

கொழும்பு வெள்ளத்தில் மக்கள்

What took its place? To the greatest extent, an invasive grass – ‘Guinea A’ – originally introduced for dairy cattle which even then did not exist in a number that could make a dent in the Guinea A production!  Now however, with the tree cover removed, this grass proceeded to grow to giant proportions, sometimes 2, 3 metres high!

Guinea A, as any one encountering it will vouch, does condition the soil because its roots loosen the top soil enabling the rain water to penetrate deeper than it otherwise would.  The bad news is that if this grass is killed by burning, the now-soft top soil can be easily eroded and in the absence of stone terraces, contour drains and silt-pits which used to be the order of the day in the matter of soil conservation in plantations of this kind, the damage can well be imagined.

Remember also that dry ‘mana,’ the local name for this high grass, burns very brightly and even if an arsonist is not born every day in our neck of the woods, there are enough of them to put a match to the grass every dry season. Another little result of this burning is the fact that the smoke kills off the wild bees in the vicinity. And guess what killing bees that are, by far, the most important pollinating agents on earth, do?

மூன்று கிராமங்களின் மூச்சை முழுதாக நிறுத்திய மலை-மண் சரிவு- அரநாயக்காவின் பாதை

Bad enough? Well, right within sight of our home, one of our neighbours is in the process of cutting down and selling for firewood acres of rubber trees, not replacing them with any other vegetation. How do I know the history of these trees?  Because I was responsible for having the damned things planted about half a century ago!  When I remarked on this fact to the local Grama Niladhari who is only too ready to invoke the law in other circumstances, she wanted me to make a ‘report’ (to the Department of the Environment?) I didn’t want to upset her by suggesting that since she was aware of the devastation and had seen it, firsthand, action to stop this devastation could be initiated by simply contacting one of her fellow bureaucrats!

Yes, we can’t, in little un-industrialised Sri Lanka*, make a dent in global warming or climate change. We can, however, turn back the clock on the wanton destruction of our environment and the dire results of what has already been done by the simple expedient of applying time-tested, practical methods.

The problem is that all of that is dependent on one simple reality: a return to the rule of law and the application of that law without fear or favour.

Given what prevails there lies the “crunch.”

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குறிப்பு: தகவல் ஆதாரங்கள் புகைப்படங்கள் ஓளிநாடாக்கள் அனைத்தும், உள்ளூர் உலக ஊடங்களில் இருந்து எடுத்து தொகுக்கப்பட்டவை, நன்றி இதற்காக உண்மையில் உழைத்தவர்களுக்கு.

வெள்ள விபரம் இன்று 23-05-2016

குறிப்பு: சேதங்களின் ஆழத்தையும் அகலத்தையும் நீளத்தையும் கோலத்தையும் காட்சிகளாகப் பார்க்கையில் கீழ்க்காணும் அதிகார பூர்வ ``ஊடக`` புள்ளி விபரம் கிஞ்சிற்றும் சரியானதாக தோன்றவில்லை. ஒரே ஒரு மலைச்சரிவில் மட்டும் மூன்று கிராமங்கள் மூழ்கின.

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Death toll rises to 82; 118 missing, 145,000 in camps
May 22, 2016, 11:16 pm The Island

By Maheesha Mudugamuwa

The death toll from last week's natural disasters has risen to 82; it is expected to increase within the next few days as rescue operations continue to look for another 118 missing people, according to the Disaster Management Centre (DMC).

Meanwhile, 30 people have been confirmed dead due to the landslide in Aranayake and 114 others are missing. Another part of the same mountain at Aranayake in Kegalle District had crashed on Saturday, but there were no casualties as residents had been evacuated following the first landslides, an official said.

According to the DMC, 34,476 people have been affected by torrential rains widespread floods, landslides, mudslides and high winds in 22 districts during last week with 29 people injured. Over 476 houses have reportedly been destroyed and thousands of others damaged; many of them are still under water.

After a week of massive flooding triggered by heavy rains, deluged capital city Colombo, too, is slowly beginning to dry out.

The Irrigation Department yesterday announced that the water levels of the Kelani River were receding.

Irrigation Department Director of Hydrology P. Hettiarachchi said the water level measured at Nagalagam Street was 5 feet and 6 inches as at 9.00 am yesterday.

The department blamed illegal constructions on the river banks for heavy floods experienced in the Colombo region.

In the Colombo District, over 145,000 people are still at evacuation centres and most of them are from the worst hit areas of Kolonnawa, Thimbirigasyaya, Kaduwela, Seethawaka and Colombo, according to the statistics of the Disaster Management Centre (DMC). More than 147,000 people in Colombo District have been affected by floods.

Relief workers are still trying to gain access to thousands of marooned people in need of food and clean water. The logistics of delivering food and other aid to the displaced had become a critical issue, the DMC said. With roads impassable because of flooding, most efforts will continue to be carried out by boats.

Landslide warning issued to Ratnapura, Kegalle, Kalutara, Kandy, Kurunegala, Nuwara Eliya and Matale has been further extended by the National Building Research Organisation (NBRO) and people living in landslide prone areas have been evacuated to safe locations.

The Meteorology Department yesterday pointed out that the weather was now returning to normal.

Asked whether the Southwest Monsoon was expected this week, the department’s Research, Training and Development Director S. Premalal told The Island that it couldn’t predict the due date of monsoon and it could only give predictions for next 24 hours.

On the second week of this month, the Met Department predicted a one-week delay in Southwest-monsoon reaching Sri Lanka this year due to the strong El Nino conditions that affected the country last year. Duty Meteorologist at the Met Department Janaka Kumara stated that due date for the monsoon was May 25, but this year it would reach the country during the first week of June.

The Met Department yesterday predicted showers in the Western, North-Western, Southern, Central and Sabaragamuwa provinces and strong windy conditions over the country and in the sea areas would continue further particularly over the Southern, Eastern and Northern sea areas.

According to the Secretary to the Disaster Management Ministry, S. S Miyanawala, a task force of security forces personnel and those from the Civil Security Division will launch operations in the coming days to re-settle the displaced people. The government had released Rs. 92 million to District Secretaries and a further Rs. 55 million was on standby, he said.

Meanwhile, the international assistance for victims of floods and landslides started to arrive in the country on Saturday, following an urgent government appeal for foreign aid. India, Australia, Japan the United States, Nepal, China and Pakistan were among the donor countries as at yesterday.

As floods are beginning to recede,

The Health Ministry urged the public to be vigilant about diseases that could spread.

Director General of Health Services Dr. Palitha Mahipala said that with the flood waters receding there was a possibility of diseases such as diarrhoea, jaundice, typhoid, dengue and leptospirosis (rat fever) spreading through food and water.

He said awareness was important to prevent the spread of those diseases.

வெள்ளம் வரு முன் காத்தல்!

Tropical Storm to bring heavy rain and flooding to India and Sri Lanka this week
Eric Leister
By Eric Leister, Meteorologist
May 18, 2016; 8:01 AM ET

The first tropical cyclone of the season in the Bay of Bengal will track near the east coast of India this week, leading to additional flooding and widespread travel delays.

The depression, named BOB 01, currently has sustained winds of 75-92 km/h (45-55 mph). Gradual strengthening is expected over the next 24 hours.

As the cyclone spins near the coast of India, heavy rain will fall in northeastern Tamil Nadu and eastern Andhra Pradesh through at least Thursday.

Due to the close proximity to land, AccuWeather meteorologists think that there is a minimal threat for this low to become a significant tropical cyclone. However, the flood threat will not diminish.
Through Thursday, widespread rainfall of 100-200 mm (4-8 inches) of rain is expected across the region.

The heaviest rain will fall from Chennai to Machilipatnam. These areas could see locally 300 mm (12 inches) of rain.

In Chennai, where the worst flooding in a century brought the city to a stand still in December, the heaviest rain will fall through Wednesday before drier weather returns late in the week. Flooding this week is not expected to be as severe as December's event; however, travel delays are likely. Rainfall has already surpassed

Heavy rain will also fall across Kerala and western Sri Lanka where downpours will continue into Thursday. Drenching rain has caused flooding in these areas and additional downpours will elevate the threat of flooding and mudslides.

The 2015 monsoon brought below-average rainfall to Kerala, so this early-season rainfall is needed across the region, despite the dangers. May is typically when southern India and Sri Lanka have an increase in rain from tropical lows and cyclones, which tend to develop during the leading edge of the monsoon.

At least eleven people were killed in flooding and mudslides, while more than 130,000 have been forced out of their homes, according to The Associated Press.

The depression is expected to turn northeast late this week and into this weekend as the heaviest rain shifts from India into Bangladesh and Myanmar.

Meteorologist Adam Douty contributed content to this story.
=======================
Cyclone Roanu leaves at least 21 people dead in Bangladesh
Kristina Pydynowski
By Kristina Pydynowski, Senior Meteorologist
May 21, 2016; 5:15 PM ET


After causing devastating flooding and mudslides in Sri Lanka earlier in the week, Cyclone Roanu turned deadly again this weekend as it slammed into Bangladesh.

At least 21 people are dead with many more injured in coastal Bangladesh, according to Reuters.
The deaths occurred amid house collapses, landslides and a storm surge that broke embankments at two spots in Chittagong.

Bangladeshi men pull a loaded cart through a waterlogged street after heavy rainfall in Dhaka, Bangladesh, Saturday, May 21, 2016. Mixing of rain water and toxicwaste from industries has turned water green. (AP Photo/ A.M. Ahad)

Officials told Reuters that some places were inundated by a storm surge that was 0.9 to 1.2 meters (3 to 4 feet) above normal tide height.

The first tropical cyclone of the season in the Bay of Bengal made landfall in Bangladesh, just north of Chittagong, on Saturday.

While interaction with land is causing Roanu to weaken, in terms of damaging winds, the threat for flooding will persist across northeastern India and northern and coastal Myanmar on Sunday.

In northeastern India, this includes Tripura, Mizoram, Manipur, Nagaland and eastern parts of Assam and Arunachal Pradesh.

Widespread rainfall totals of 150-300 mm (6-12 inches) are expected, raising significant concerns for life-threatening flooding and landslides. Some communities could be cut off by damaged or flood-ravaged roads and bridges.


"There will be localized amounts in excess of 300 mm (12 inches)," AccuWeather Meteorologist Rob Richards said. That is especially true in the higher terrain.

While the heaviest rain has departed, Bangladesh will face locally heavy thunderstorms into Sunday, which threatens to renew more flooding and interfere withcleanup operations.

Prior to the cyclone's arrival, Reuters reported that authorities in Bangladesh relocated about 500,000 people into 3,500 homes.

Roanu also turned deadly in Sri Lanka earlier in the week. The Associated Press reports that more than 70 people have been killed in landslides and flooding since Monday. Dozens are missing after mudslides devastated three villages in the central district of Kegalle.

While the rain spread from Sri Lanka, then up the eastern coast of India, intense heat worsened across western India as the circulation around Roanu pulled in dry and warmer air. On Thursday, Phalodi in Rajasthan set the all-time record high for India when temperatures soared to 51 C (123.8 F).

The extreme heat will ease for this weekend, but hot conditions will continue to put a strain on residents throughout western and northern India well into next week.

What are El Niño and La Niña?

What are El Niño and La Niña?

El Niño and La Niña are complex weather patterns resulting from variations in ocean temperatures in the Equatorial Pacific.

Warmer or colder than average ocean temperatures in one part of the world can influence weather around the globe. Watch this Ocean Today video to see how this works.

El Niño and La Niña are opposite phases of what is known as the El Niño-Southern Oscillation (ENSO) cycle. The ENSO cycle is a scientific term that describes the fluctuations in temperature between the ocean and atmosphere in the east-central Equatorial Pacific (approximately between the International Date Line and 120 degrees West).

La Niña is sometimes referred to as the cold phase of ENSO and El Niño as the warm phase of ENSO. These deviations from normal surface temperatures can have large-scale impacts not only on ocean processes, but also on global weather and climate.

El Niño and La Niña episodes typically last nine to 12 months, but some prolonged events may last for years. While their frequency can be quite irregular, El Niño and La Niña events occur on average every two to seven years. Typically, El Niño occurs more frequently than La Niña.

El Niño

El Niño means The Little Boy, or Christ Child in Spanish. El Niño was originally recognized by fishermen off the coast of South America in the 1600s, with the appearance of unusually warm water in the Pacific Ocean. The name was chosen based on the time of year (around December) during which these warm waters events tended to occur.

The term El Niño refers to the large-scale ocean-atmosphere climate interaction linked to a periodic warming in sea surface temperatures across the central and east-central Equatorial Pacific.

Typical El Niño effects are likely to develop over North America during the upcoming winter season. Those include warmer-than-average temperatures over western and central Canada, and over the western and northern United States. Wetter-than-average conditions are likely over portions of the U.S. Gulf Coast and Florida, while drier-than-average conditions can be expected in the Ohio Valley and the Pacific Northwest. The presence of El Niño can significantly influence weather patterns, ocean conditions, and marine fisheries across large portions of the globe for an extended period of time.

La Niña

La Niña means The Little Girl in Spanish. La Niña is also sometimes called El Viejo, anti-El Niño, or simply "a cold event."

La Niña episodes represent periods of below-average sea surface temperatures across the east-central Equatorial Pacific. Global climate La Niña impacts tend to be opposite those of El Niño impacts. In the tropics, ocean temperature variations in La Niña also tend to be opposite those of El Niño.

During a La Niña year, winter temperatures are warmer than normal in the Southeast and cooler than normal in the Northwest.

அறுமுனைப் போட்டியில் அம்மா ஆட்சியில்!

பதிவான வாக்குகளில்

41% வாக்குகள், 58% தொகுதிகள்

அம்மா ``அமோக`` வெற்றி!

தாண்டவத்தைச் சந்திக்க தயாராகு தமிழகமே!!

தமிழக தேர்தல் வாக்கு விகிதம்: அதிமுகவுக்கு 40.8சதவீத வாக்குகள்; திமுகவுக்கு 31.5 சதவீத வாக்குகள்

தமிழக சட்டமன்றத் தேர்தலில் 132 இடங்களைப் பெற்று வெற்றி பெற்றுள்ள அதிமுக, பதிவான மொத்த வாக்குகளில், சுமார் 40.8 சதவீத வாக்குகளைப் பெற்றுள்ளது.

இரண்டாம் இடம் பிடித்துள்ள திமுக 31.5 சதவீத வாக்குகளையும், அதன் கூட்டணி கட்சியான இந்திய தேசிய காங்கிரஸ் 6.5 சதவீத வாக்குகளையும் பெற்றுள்ளன. அடுத்த இடம் பிடித்துள்ள பாட்டாளி மக்கள் கட்சி 5.3%, பாரதிய ஜனதா கட்சி 2.9%, தேசிய முற்போக்கு திராவிட கழகம் 2.4%, நாம் தமிழர் கட்சி 1.1 சதவீத வாக்குகளைப் பெற்றுள்ளனர்.

மதிமுக 0. 9%, இந்திய கம்யூனிஸ்ட் 0.8%, விடுதலைச் சிறுத்தைகள் கட்சி பூஜ்ஜியம் புள்ளி 0.8% வாக்குகளையும் மார்க்ஸிஸ்ட் கம்யூனிஸ்ட் மற்றும் இந்திய யூனியன் முஸ்லீம் லீக் தலா  0. 7 % வாக்குகளையும் பெற்றுள்ளனர். நோட்டாவுக்கு 1.3 சதவீத வாக்குகள் கிடைத்திருக்க, சுயேச்சை உள்ளிட்ட மற்ற கட்சிகள் மீதமுள்ள 4.5 சதவீத வாக்குகளைப் பகிர்ந்‌து கொண்டிருப்பதாக இந்திய தேர்தல் ஆணையம் தெரிவித்துள்ளது


.

2016 முள்ளிவாய்க்கால் பா!

முட்கள் பாய்ந்த மனங்களென

முள்ளிவாய்க்கால் நினைவுகள்

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உண்ண முடியுதில்லை உறக்கம் வருகுதில்லை

தூங்கா நினைவுகள்

கொடுக்கெனக் கொத்துகின்றன,

மனத்திலே உறுத்துகின்ற மரணக் கோலங்களே

கண்ணுக்குள் ஓடி வந்து கருத்தை நிறைக்கின்றன.

கூர்முள்ளாய் குத்தி குருதி பெருகுகின்ற

மீளாத் துயரங்களே நிரம்பி வழிகின்றன.

நினைவின் வலிகளிலே சக மனிதப் பிராண்டல்கள்.

சுக்குநூறாய் உடைந்த மனம்

பதறிக் கிடக்கையிலே...

கண்ணீரை துடைப்பதற்காய் கைநீட்டியது குற்றமென கண்களையே பிடுங்கியது

காலத்தின் நீதி ஒன்று.

உறுத்துகின்ற நினைவுகளில்  உருக்குலையும் மனங்களிலே

ஆறாத வடுவாக

முள்ளி வாய்க்கால் பேரவலம்

பிணங்கடந்து வந்தவர்கள்

நடைப் பிணமாக வாழ்கின்றார்

பிணங்களுக்கு ஒரு பீடம்

அமைக்க இடமின்றி;

தொட்டிலோடு பிள்ளை உயிர்

பிய்த்தெடுத்த பேய்களதோ

போருடையும் மாறவில்லை

பொல்லா வாளும் மாறவில்லை.

நாங்கள் மட்டும் மாறவேண்டும்

பழையதை மறக்க வேண்டும்

புதியதை நினைக்க வேண்டும்

புலம்பலை நிறுத்த வேண்டும்.

எப்படி முடியும் அந்த வலிகளை மறந்து விட.

காயங்களோ ஆறவில்லை

மருந்துகளும் அவைக்கு இல்லை.

புரையேறிய நினைவுகளாய் எங்கள் உற்றவர்கள்

சிரசுக்குள் நின்றுலவும் பிணக்கோலம்  மறக்குதில்லை.

நினைவுகள் கனக்கும் நெஞ்சத்துக் கனல் தணிய அழுவதைத் தவிர இங்கே

ஆறுதலும் ஏதுமில்லை.

வெற்றிச்செல்வி

14.05.2016

முள்ளிவாய்க்கால் விடுதலைக் கானங்கள்

மே 18 ENB சுவரொட்டி

Fitch downgrades Sri Lanka rating to ‘B+’ on external debt

ENB File Photo

Fitch downgrades Sri Lanka rating to ‘B+’ on external debt

Author LBO
Posted on February 29, 2016

Feb 29, 2016 (LBO) – Fitch Ratings has downgraded Sri Lanka’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) one notch to ‘B+’ from ‘BB-‘.

A Negative Outlook has been assigned to the IDRs. The issue ratings on Sri Lanka’s senior unsecured foreign- and local-currency bonds are also downgraded to ‘B+’ from ‘BB-‘. The Country Ceiling is downgraded to ‘B+’ from ‘BB-‘ and the Short-Term Foreign-Currency IDR is affirmed at ‘B’.

Fitch said the rating action reflects increasing refinancing risks.

“The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities. Further, the sovereign’s external liquidity position remains strained, reflecting pressure on foreign exchange reserves.”

“In Fitch’s view, this partly reflects a weakening in policy coherence that increases the likelihood of Sri Lanka requiring external liquidity support from the IMF and other multilateral institutions.”

A statement from Fitch said Sri Lanka’s external liquidity ratio, as measured by Fitch at the end of 2015, was 70.9%, which is far below the median of ‘B’-rated peers’ of 171.9% and the ‘BB’ median of 152.4%.

Another reason for the rating action was significant debt maturities.

“Sri Lanka faces significant debt maturities in 2016 amid the country’s vulnerability to a shift in investor sentiment. Fitch estimates the sovereign’s external debt service to be close to USD4bn for the rest of 2016, compared with FX reserves of USD6.3bn (end-January 2016).”

“Sri Lanka’s vulnerability to a shift in investor sentiment was evident when investors sold-off the equivalent of nearly USD2bn in local-currency government securities in 2015. A further outflow from treasury bills and treasury bonds, which account for about 31% of the country’s FX reserves, could put more pressure on reserves.”

However, prevailing low oil prices will continue to support Sri Lanka’s current-account deficit in the near term, Fitch said. Fitch expects the current-account deficit to remain manageable at about 3% of GDP over 2016-17.

In terms of weaker public finances, the deterioration in Sri Lanka’s fiscal finances is driven partly by consistently low general government revenues.

At an estimated 13% of GDP, Sri Lanka’s gross general government revenues remain far below the ‘B’ median of 25.4% and the ‘BB’ median of 26%. The 2016 budget did little to address this issue directly and absent any significant fiscal consolidation, Fitch expects continued fiscal slippage over 2016-17.

Sri Lanka’s gross general government debt (GGGD) burden is estimated to have increased to more than 75% of GDP by the end of 2015, up from 71% at the end of 2014 and much higher than the ‘B’ median of 52% of GDP and ‘BB’ median of 43.6%.

Fitch has revised downwards its forecast for foreign-exchange reserves, with reserve coverage of current external payments now forecast to decline to 2.9 months in 2016 from an estimated 3.4 months in 2015. This forecast compares unfavourably with Fitch’s earlier forecast of 3.9 months for 2016 and is well below the ‘BB’ median of 4.2 months.

While the authorities have undertaken certain measures to support external finances, including entering into bilateral swaps with other central banks, Fitch does not view this to be a sustainable way to improve the stability of the external finances.

Sri Lanka has also increased its issuance of foreign-currency debt, which Fitch estimates now makes up close to 46% of total public debt, up from nearly 42% at the end of 2014. This has increased vulnerability of Sri Lanka’s public debt to a significant depreciation of the exchange rate, which would increase the debt burden in local currency terms.

Sri Lanka’s macroeconomic performance remains stronger than some of its peers’ in the ‘B’ and ‘BB’ range with real GDP growth for the five-year period ending 2015 averaging close to 6%, compared with the ‘B’ median of 4.6% and ‘BB’ median of 3.9%.

Sri Lanka also continues to score highly, compared with the ‘B’ median, on basic human development indicators, such as education, health and literacy, which is indicated by its favourable ranking in the UN’s Human Development Index. These relative structural strengths, combined with a clean external debt service record and smooth transition of power during the presidential and parliamentary elections in 2015 indicates a basic level of political stability, which supports the rating at ‘B+’.

Sri Lanka hikes VAT, taxes capital gains before IMF loan talks

Sri Lanka hikes VAT, taxes capital gains before IMF loan talks
COLOMBO | BY SHIHAR ANEEZ AND RANGA SIRILAL

Sri Lanka will raise its value added tax and reintroduce capital gains tax to break out of a debt trap, Prime Minister Ranil Wickremesinghe said on Tuesday, ahead of talks on a $1.5-billion loan it is seeking from the International Monetary Fund.

Sri Lanka's finances are under scrutiny after ratings agency Fitch last week downgraded its sovereign rating by a notch, to "B+", spurred by a ballooning fiscal deficit, rising foreign debt and sluggish growth prospects.

It also faces a balance-of-payments crisis after a third of its foreign exchange reserves was depleted within the 15 months to January by the central bank's defence of the rupee currency, pressured by heavy debt piled up under the previous government.

"This crisis can be overcome only by reducing the budget deficit and a medium-term joint financial programme aiming at suitable reforms to reduce the debt burden," Wickremesinghe told lawmakers.

Taking action to boost revenues, he announced that VAT would be hiked to 15 percent from 11 percent, while capital gains will be taxed for the first time since 1987.

Wickremesinghe said the government owed 9.5 trillion rupees ($65.6 billion), as he revised some of the main budget numbers presented in November.

He said the former government headed by Mahinda Rajapaksa has not included 1.04 trillion rupees in borrowing by state enterprises in the national debt, which was estimated at 8.48 trillion rupees at the end of last year.

The prime minister, also the minister of policy planning and economic development, said the country has to pay 1.21 trillion rupees on its debts this year, including 562 billion rupees in interest.

The IMF has long called on Sri Lanka to reduce its budget deficit, raise revenues, and bolster its foreign exchange reserves. These are likely to be the main conditions for the grant of a loan, economists say.

Sri Lankan shares fell more than 2 percent on Tuesday, hitting a near two-year low on concerns over the government's possible tax hikes to qualify for what the finance ministry expects will be a $1.5-billion IMF loan. [nL3N1633XT]

The uncertainty over taxes also hit the rupee LKR=LK currency.

"The government is responding to an urgent revenue need," Anushka Wijesinghe, the chief economist of Sri Lanka's main business chamber, told Reuters.

"But ad hoc tax policy changes like these will hurt investor sentiment. The credibility of the budget is lost."

($1=144.8500 Sri Lankan rupees)

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Douglas Busvine and Clarence Fernande
================
VAT A Let-Down!
by Ashanthi Warunasuirya

Having failed to secure the much anticipated foreign assistance to carry out its promises, the government is now looking at increasing taxes. However, sustaining political power at the expense of the people is hardly justifiable. It is a known fact that a government cannot survive without taxes. In order to cover its daily expenses, every government imposes direct taxes upon the income of the rich and indirect taxes upon consumer goods such as fuel, communication and food items. However, there has to be a just basis when imposing taxes. Hence it is important to analyse how just the May 2016 tax hike is.

The government has been forced to increase taxes as they currently do not have enough finances to carry out the promises made to the people during the polls. Although the Yahapalana administration had high hopes of receiving international financial assistance, it has not become a reality. In reality, no foreign country is willing to provide money for a government to carry out its election promises. Thus the government has been compelled to turn back towards the very people they had previously deceived.

Some would opine that this is a fraud being committed in broad daylight. The Value Added Tax (VAT) that previously stood at 11 percent has been increased to 15 per cent with effect from May 2. According to Finance Minister Ravi Karunanayake, the education and pharmaceutical sectors have been exempted from this increase. Accordingly, import or export of communication equipment including copper cables for the telecommunication industry and the issue of licences to local telecommunication operators by the TRC are liable for increased VAT. The supply of goods and services to any specified project other than housing projects approved on or after May 5 will also be taxed.

Expressing his views on the recent tax hike, former President Mahinda Rajapaksa has said that the present government made irresponsible promises at the presidential election in order to win votes. He has said that after winning, they had to fulfill at least some of their election pledges if they were to win the parliamentary election.

Rajapaksa has said that for more than a year now the government has been borrowing heavily in the foreign as well as domestic markets to pay for the salary increases and various handouts they gave in its bid to win the election. Rajapaksa has said that after January 2015, the government has obtained USD7,436 million in foreign loans, nearly half of which (USD3,298 million) has to be paid back before the end of this year, apart from the hundreds of billions of rupees the government has been borrowing in the domestic market by issuing treasury bills and bonds. According to him, the government is now trying to collect taxes from the people to repay these debts. While the former President made these comments on tax hikes, Media Minister Gayantha Karunathilake called these taxes ‘Rajapaksa taxes.’ He has said the government has been compelled to increase taxes in order to save the country as they have been given the country amidst immense financial debts. Pointing out that the economy has to be managed with the commitment of all, the minister has further said that VAT has been increased with a minimum burden to the people. He has also said that conditions would be more favourable after the Prime Minister’s oncoming China tour and the President’s Japan visit.

However, various social groups have expressed different views on this matter. Accordingly, the national organiser of the All Island Cafeteria Owners Union, Asela Sampath said the prices of food items sold in cafeterias will be increased parallel to the 15 per cent VAT increase. He said the prices of food items will be increased at least by 10 rupees.

Sri Lanka to lose US$ 39.8 mn from TPP exclusion

Sri Lanka to lose US$ 39.8 mn from TPP exclusion
MAY 11 2016

The level of trade diversion or market loss for Sri Lanka due to Sri Lanka being excluded in the Trans-Pacific Partnership (TPP) is expected to be around US$ 39.8 million, Preliminary estimates by the Institute of Policy Studies of Sri Lanka (IPS) shows.

The TPP was signed last February bringing together 12 countries, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, and Vietnam. These countries accounts for more than one-third of world’s GDP, and one quarter of world trade.

TPP will now undergo a two year ratification process in all the 12 countries.

Trans-Pacific Partnership (TPP)

A country-wise analysis shows that the biggest loss in exports for Sri Lanka would be in the USA (81%). To a much lesser extent, export loss will also take place in Mexico (8.8 per cent), Canada (5.7 %) and Japan (1.7%).

“When reviewing the garment sector, Sri Lanka need to carefully address the TPP under which tax free garment export opportunities have been given to countries such as Vietnam. This has enabled them to engage in competitive markets and supply the American and Japanese markets at low rates. This may also affect exports from Sri Lanka in the future. TPP must therefore be reviewed further,” the study said.

Duty free market access provided under the Agreement for member countries would result in cheaper prices for goods traded among TPP countries. This can in turn would be diverted towards TPP countries where buyers can benefit from purchasing cheaper goods.

The size and scope of this trade deal makes it a pertinent trade policy issue for both members and non-members like Sri Lanka.

Countries such as Korea, Taiwan, the Philippines, Colombia, Thailand, Indonesia, have expressed an interest in joining the mega regional grouping. Therefore, the risks of trade loss or diversion are likely to increase with time given that Sri Lanka is also not part of the other mega-regional trade agreements under negotiations.

Sri Lanka too has cast its eyes on TPP and is currently conducting a feasibility study to determine the pros and cons of the Agreement.

Sri Lanka should strive to improve the competitiveness of its own exports by creating competitive infrastructure services, promoting export oriented foreign investment, facilitating goods across borders effectively, addressing export market issues through trade agreements, and improving

access to inputs of materials, capital, and technology for the export sector.

In November 2015, Prime Minister, Ranil Wickremesinghe stressed the need for an urgent review of the TPP in his Economic Policy Statement.The IPS study was conducted by Research Fellow Dr. Janaka Wijayasiri and Research Officer Nipuni Perera.

The Sad Story Of Widows In The North

The Sad Story Of Widows In The North
by Dilisha Abeysundara

War widows
At a time the blazing sun’s heat was boiling the still waters of Nandikadal lagoon situated in the South Eastern part of mullaitivu, we arrived at Salewaraji’s residence. Through the walls of her shabby and small house, dark shadows of a sad past were thoroughly visible. “During the height of war my husband and three off my children were killed by shell fire. Now with the remaining three children I have been compelled to make a living with utmost difficulty” she said.

47 year old Salevaraji (assumed name) who lives in Kapopilaw, Mullaitiu, along with her three children had lived in IDP camps for over two and a half years after the end of war. During the war her husband had provided for the family by selling sweets in LTTE bunkers in Walliyamulliwaikkal. Unfortunately on the 29th of  May  2009 her husband along with three children had perished from a shell attack. Two other children who had survived the blast have become disabled. At present Salevaraji has been compelled to make a living along with these two disabled children and one other child. 

The never-ending burden of life and unemployment “Only one of my children is doing a job. He is earning some money by fishing. Our whole family depends on what he earns. Even he is carrying out his work without any facility. Although the government  promised to give us fishing nets so far we have not received anything. The disabled children cannot do any work. I cannot  send them away. Selvaraji puts out her sorrow without a pause. From time to time she wipes off tears from her eyes.

“ We need money to live. We need money to buy medicine for the children. Previously they were treated by the Army. I too am earning a little money by preparing food for villagers. Even that is hard to continue as we all are ridden by poverty”.

This plight is not confined only to Mullaitivu. According to investigations carried out by various civil society organisations it has been uncovered that around 40,000-60,000 women have become widows in the North. In a recent survey conducted by the government 50,000 families have reported that they are headed by females. According to the 2012/13 Domestic unit income and expenses report of the department of statistics the majority of the female heads of household belongs to the 40-59 age group. Half of them are widows.

The 30 year war has destroyed the lives of widows in the North. “Even after the conclusion of the war, the problem of war widows has become a serious issue. It is only now that its true impact has started to emerge. Economically they have faced various problems,” Additional District Secretary of Mulllaitivu District Mr. M. Mohandas says. 

The biggest problem is that these women do not have sufficient means to provide for their families. Although the North has witnessed some infrastructural development after the war, it has not done much to thousands of poverty-ridden women such as Selvaraji. “Even during the war we had no means of employment. That is why my husband tried to sell sweets. Even now there is no favourable condition to earn money. I am only able to find some money by cooking meals for neighbours,” Selvaraji said. This problem of unemployment among women in North was confirmed by  Mohandas as well.

Is the Govt support on widows adequate?

According to 2014 Govt statistics unemployment among women in Sri Lanka is 65 percent. Out of the four districts that have the most number of unemployed women, Killinochchi and Mulliativu are at the top. At present a project has been initiated to empower the war widows here. The Ministry for Women and children’s affairs has allocated Rs. 5.43 Million to provide self employment facilities to war widows. Under this project 181 families would receive a monthly allowance of Rs. 30,000. Further, over 54000 families in Jaffna are receiving Samurdhi benefits. However, when queried as to how many war widows are receiving Samurdhi benefits, the Samurdhi officer at the Jaffna District secretariat office said that he was unaware of the number. Apart from this the government has also initiated a programme to grant a monthly allowance of Rs.3000 for families affected by the war.

However, Northern Province Chief Minister C.V. Vigneshwaran points out that this programme is not something that is focused on war widows and that the government officials do not have any clear idea as to what type of families that can be admitted to the category of “families affected by the war” “Even having enough funds at hand, these officials do not give them to those who are in need. When asked why they are not giving away the funds, they said that they had not yet identified the various need groups. When asked as to how they are planning to dispense the funds, they said that the families must personally apply for it. Then I explained to them that the people would never do such a thing,”  Vigneshwaran said. 

Claiming that he had instructed development officials to look for families in need by engaging in field visits, the Chief Minister further claimed that the Prime Minister has also listened to his proposal of increasing the allowance to Rs 6000 Rupees. “We have decided to allocate the majority of the Rs 6 Million funds that we have received from the consolidated fund, for the benefit of war widows. Up until recently there was no ministry for women’s affairs in the Northern provincial council. Now we have set up such a ministry. We did not receive any government funding for this. We have requested funds from international organisations” he said.

Expressing his views on the matter, Northern Province Governor Reginald Cooray said that although the government and the international community have spent a fortune on rebuilding the North, it has still not been able to cure all the wounds of war. “There are two main reasons that have aggravated the problem of widows in the North. First, as a percentage from the entire population in the area, the number of women is very high. Since a lot of lives have been lost in war the situation has become even worse. The second reason is the added burden that has fallen on these widows such as feeding and teaching the children while having to provide for the family. These reasons have pushed these women in to misery. “ the Governor said. 

Meanwhile the chairman of the national committee for war widows Mrs. Shantha Abhimanasingham PC points out that the small scale projects initiated by the central and provincial government aimed at the welfare of war widows, they are inadequate to address the issues faced by them. “During the LTTE insurgency most of these women had lived by cultivating in government and other deserted lands. However,  since many of the land had fallen in to the hands of the military as well as the owners who had gone abroad a long time ago, their way of living has been threatened. They have even lost their houses. Since the prices of necessary commodities are still high, they have faced many difficulties in surviving,” she further said.

“This has prevented them from sending their children off to school. They are not able to bear the expenses of books and transport. If this continues, there is a danger of uneducated youth falling into dangerous ways”  Abhimanasingham said. At present, for a woman to live alone in society is like getting stranded in the ocean. Especially women who are left helpless due to the burden of providing for their families often become easy prey for wrongdoers. Re-marriage is frowned upon in the Sri Lankan culture, especially in the North. Therefore the widows in the North have faced an immense problem of survival. Unemployment, economic hardships, education of the children, sexual abuse and mental stress are some of the problems faced by these women. 

There are 1237 war widows in Killinochchi alone. Out of the 4967 widows 1442 have suffered their fate from the war. 985 families are headed by women below  40 years. In the Jaffna district there are 13000 families that are headed by women.

Parameshwari’s Story

34 year old Parameshwari’s husband had died in 2009 from a landmine. Being a mother of four children she is living a hard life. “When my husband died our youngest daughter was only two months old. My husband was the sole provider for the family. He was a fisherman. I got married at the age of 16. My father had also perished in the sea. After my husband’s death I could not figure out how to survive alone. There were many problems. Even though I wanted to send my children to school it was not possible. I had given up all hopes of living, but I had to hold on for the sake of my children. In 2010 an NGO came to help me. Now I make my living by selling sweets but that is not enough to provide for my children. Now my eldest son is working as a labourer. “Parameshwari is living with mental stress. Although she is receiving help from her relatives, the loss of a father and a husband has become a serious problem. She expressed her dislike towards getting married again.
“I thought of getting married again but I cannot do so while the children are around. There was such a woman in our village who got married again but the villagers spoke ill of her. I do not need to suffer such insults. It would not be good for the children too. What would happen to them if I could not look after them after getting married?”

This is how Parameshwari sees the issue of re-marriage. Is re-marriage off limits to a widow? For most widows in the North it is against their religious culture and they continue to live alone and bear up the hardships of life. Furthermore they have doubts as to whether the new husband would be trustworthy and whether the children would be looked after.

In a survey conducted by the Jaffna Women’s Development Center it has been revealed that 52 percent of the widows have consented to a re-marriage but 42 percent have refused to comment. Many have not spoken about getting abused. Hence the Tamil community must be more sympathetic and humane towards these war widows.

The problem of dowry has also prevented many widows from thinking about a re-marriage, the Center says. For a woman who is making a living out of scraps, finding a dowry would be  like falling into the fire from the frying pan. There is an urgent need of providing physical and mental health support to these women. Not only the widows, but also their relatives must be made aware of these problems.

“The majority of war widows are young women. In order to rebuild their lives the cultural bonds must be relaxed, former dean of the Jaffna University Art Faculty and the head of the Social Sciences department,” Prof. R. Shivachandran says. He pointed out that Tamil political leaders including the TNA must make a request from the public to allow these widows to re-marry. “Even at the height of war these women had means of earning an income. Some were even proud that their relatives were in the LTTE  and since all such things have now been wiped off they have faced a serious mental collapse. Even though it is not shown  these are the reasons why some widows are prone to prostitution, narcotics and even suicide.

“Getting married at an early age due to the war, getting abused and cultural barriers have aggravated mental problems among these women,” Psychiatrist at the Mullaitivu hospital Dr. C. Wijendran says. Many political parties and NGOs have raised their concern about the rising level of prostitution in the area. So far accurate data has not been received. Under this crippled social system, there is no wonder why these women turn into such darker ways. The lives of thousands of widows living in the north and the lives of their family members cannot be cured just by bags of cash.