Deal-makers and Central Bank arrogance
View(s):A country has many assets and many liabilities. Its’ assets would be in natural resources, human resources or financial resources.
Human resource capability would also include the ability and efficiency to conduct negotiations, discussions or contracts, which eventually end up in a deal concluded to the satisfaction of all parties concerned.
While Sri Lanka would rank high in natural resources as an asset, it would rank lower down the line in terms of financial resources or human resources. Financial resources are scarce for one simple reason: the country is living far beyond its means. Entrusted with the task of managing an economy within the fundamentals of revenue earned and a reasonable level of borrowing, the Government borrowing has touched ‘never before’ levels. Arguably the authorities would point out to the massive post-war development that any administration needs to undertake and in this context borrowing is a ‘necessary’ evil, with such capital infusion resulting in long term benefits. Others however argue that the development taking place is at stupendous cost, for, annual interest payments alone account for over 40 per cent of annual revenue! The balance 60 per cent is left to pay back loans and the country’s entire expenditure for that year.
Thus poor budget management due to the inevitability of mega budget deficits is one of Sri Lanka’s biggest liabilities. Another (in the human resource discourse) is the kind of deal-making that goes on in Colombo – for the wrong reasons: fat commissions and political influence.
A Business Times report today talks of an influential official being in the dock over alleged pay-offs in a mega mixed development project.
This kind of wheeling and dealing is not new to Colombo’s glitterati. Politicians, politically powerful businessmen and others have been doing this for years. Otherwise, how does a politician repay loans given to him during an election campaign? Recently at a symposium on ‘corruption’ for parliamentarians, it was disclosed that politicians were virtually forced to be corrupt because of the election process where a sure win is measured by the amount of money spent on a campaign; not whether the individual is capable, honest and hard-working.
Nevertheless what amazes most people is the brazenness by which deals are proposed and concluded without any transparency, without batting an eyelid and two hoots to the anti-corruption busters at the totally, ineffective Commission to Investigate Bribery and Corruption (CIBC). The arm of the law is indeed short for the politically powerful and those with access to the first family.
All or most of Colombo city’s mega projects have been through some kind of deal-making which has suspicious motives behind it; certainly not national interests. Patriotism? My foot! The ‘real’ patriots with the country’s interests at heart are those who are honest, sincere and will not touch a red cent even if millions of rupees are offered on a platter. The thousands of simple and humble folk who are daily wage or monthly wage earners and living on the fringes of the capital, are the ‘real’ heroes; not politicians and certainly not parliamentarians who are compelled to acquire money through different means when it is payback time.
CB arrogance
The Central Bank (CB) this week has expressed fury over a Moody’s rating for Sri Lanka to ‘Stable’ from ‘Positive.’
Moody’s contention is that the country’s foreign exchange reserves position is ‘below’ peak level compared to its earlier assessment in June 2012.
Local banking economists however concur with the CB view that the reserves position is as good as it was in June 2012 and if not why did Moody give a ‘Positive’ rating status then. Good point indeed!
But the tone of the CB is (and has in recent years been) arrogant and abrasive to the point that everything that someone else says about the way economic data is collected is wrong. And that label is stuck on opposition parliamentarians, economists and the media and international agencies.
While criticism on economic issues could also be coloured with opposition agendas and may not reflect the accurate position, comments from eminent economists and those in the public policy debate circle shouldn’t be discounted just for the sake of being ‘bad’ news to the authorities. Criticism should be taken in the spirit of accountability and transparency. That’s why the Moody rating response could have been more dignified and diplomatic, rather than in blunt and tough-talking terms. After all a rating agency is hired to do a job and do it well. Otherwise it would lose its credibility and just be another commercial vendor, do what the client says and turn a blind eye to the negative happenings, just like what – to a large extent – happens in the country’s audit profession.
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