Sri Lanka economy veiled with illusions
Daily Mirror Editorial
Feb 6, 2011
For anyone who watches and listens to the state run media channels, Sri Lanka’s economy may seem as good as, if not better than that of a first world country. Even though, the purchasing power of the people is fast receding, most of them are under the illusion that, with the skyscrapers and expressways, Sri Lanka is heading towards revolutionary development. As optimistic as it may seem, reality is far from the picture conjured by the government’s economists, whose sweet-talk often carry nothing but praises for the President and elaborate accounts on his commitment. In fact, it is doubtful whether they are intelligent enough to understand that the so-called development they boast about 24/7 is not reflected in the country’s economy nor does its benefits trickle down to the domestic level.
It is in this scenario that the depreciation of the rupee took place, primarily to control credit growth. However, it drew criticism from many independent analysts and economists who rightly predicted possible price hikes on consumer goods and imported items. Proving their prophesies true, the move has led the Central Bank to raise its key interest rate for the first time in five years. In the aggravating trade deficit, the Central Bank went on to request the commercial banks to reduce lending.
Daily Mirror reported on Saturday that the country’s trade deficit reached a record US$ 8.83 billion in the first 11 months of last year; it also went on to reveal that Sri Lanka's foreign currency reserves fell to $5.9 billion at the end of 2011, compared with $8.1 billion in July 2011. At the onset, Central Bank Governor Nivard Cabraal admitted that the bank ‘misjudged’ the trade deficit that had grown into a whirlpool and it could not properly read credit expansion. Even though, the move is viewed as surrendering to IMF pressure, which is urging Sri Lanka to follow a more flexible mechanism, bankers are of the view that despite the shift, the demand for imports will continue to grow, thereby aggravating the situation.
Hence, will the government policy-makers still paint a rosy picture of an economy that is struggling with its gears to resist the fall downhill? Despite the complicated formulas and mechanisms that will come in the form of explanation, that are deliberately made complex so as to confuse the consumer, there will be one point left out from those lists. That is, whatever befalls the country’s economy, the people will have to bear the brunt.
Perhaps, the next time when they relate fairytales, they should not, at any rate underrate the intelligence of the citizenry, who, even though not as rich as them, still have their common sense intact. By talking such gibberish, they right royally exhibit the height of their stupidity, which makes people think aloud— what else can one expect, when the country’s economy is in such hands!
The reality that needs to be unveiled is that, despite the so-called unusual growth rate, there is a price hike that is on the way. The grocery lists are going to be shorter and people will have to be satisfied with one curry to go with their daily plate of rice. On the other hand, there will be night races and expressways for those who can afford to indulge in them.
There is a cry that is waiting for a voice. There is a silence that needs to be broken.
Source: Daily Mirror - Sri Lanka