Rajpal's Column

28th January 2001

The economy with a human face

By Rajpal Abeynayake

In Sri Lanka, either the people will perish coping with the cost of living, or they will die laughing. With a person of the calibre of S. B. Dissanayake as the Deputy Minister of Finance, the dollar will soon hit the 120 equivalent, in step with Dissanayake's claim that the "rising dollar has given more return on investment for Middle East employees.''

But, what's more important is that the cost of living is quickly surpassing the threshold tolerance levels.Pettah traders, who are not by any means the darlings of the people, have been hit with a liquidity problem of unprecedented proportions. Kebbithigollawa will not get onions anymore, Pettah merchants have decided. And Nuwara Eliya will not have potatoes.

The untrammeled free market has wreaked havoc, with the connivance of an inept government , and the IMF has already yelled " we are happy.'' ( Marie Antoinette would surely have blushed.)

The Chairman of the Hatton National Bank has made his token statement. Says he that " the free float of the dollar is going to benefit the country.''

Rienzie Wijetilleke will in short order, advise people to eat less potatoes and tinned fish, but play more cricket.

Of course there have been free floats of the dollar before, in various countries, and in various situations. The rupee can float against the dollar within a "managed band'', be regulated by the Central Bank or be buoyed on a free float, and pegged in one of several ways to the dollar.

The noisiest economic advisors who will commit hara-kiri before they forsake the policies of the free market, will say that the " currencies have to be adjusted to the dollar depending on the particular economic circumstances of various nations.''

Economically pummeled nations such as ours have also often been advised of the "deleterious economic effects'' of being unrealistic about exchange rates.

Even by the most sanguine standards of the local converts to the neo-liberal economy, it is left to be seen whether the free float of the dollar will ultimately benefit a battered economy.

But, if it doesn't, the people are staring at the worst cost - of - living crisis since the 1970's, when the current President's mother made history by saying "man does not live by bread alone'' when the nation was hit by a food crisis.

But, if the economy shows no sign of respite, at least the cackle has to be cut. The government's favourite moonlighting czars, Rienzie and the brood, have come out as if to say that "the free float was an astute economic measure that the government has taken freely for the greater good of the economy and the system.''

The Thai Baht for instance, came under serious pressure against which "its' semi-fixed links with the United States dollar were no longer defensible, and were put on float during the second half of 1997.'' After initially capitulating to the free float, the world witnessed a situation in which the Thai Baht and other similar currencies "floated down precipitously'' against the US dollar.

But, neither the Thai Prime Minister, nor even the King with all his regal clout, claimed that "this is the best thing for the economy'', because it was obvious that it was a case of a currency becoming indefensible because it's value had collapsed so badly.

Eventually, Thailand and similar economies, which faced the crisis, had to negotiate massive rescue packages with the IMF, and stomach all the "conditionalities'' which come with such help.

Sri Lanka cannot escape the same scenario, which is incidentally why the IMF must be happy. But that's an aside, and aside that, what's important is that if the economy is forced to take this kidney punch, let it be done with human dignity.

Granted, that sounds simplistic and eerily unsophisticated to trained minds of the neo-liberal school of economic thought, and also to Bank Chairmen of various assortments. But, so be it.

Let the people not die laughing, listening to the rationalizations of the Deputy Minister of Finance ( Sports Club variety ) who had said previously that "we have raised the rupee equivalent for your sakes''.

This joker of the pack is followed by others, who offer rationalizations at the drop of a hat saying the free float is "good for the economy?'' (.…in which case, it also raises one tiny question, why didn't they root for it before?)

If the currency has collapsed, and is no longer defensible, let the government ensure that there is economic equity. Equity is usually a footnote in IMF documents. A conniving government cannot care about equity either. Else, it would not have heaped so many obscene burdens on the consumer, concurrently.

But, if the IMF and the government are thrashing the economy together, where is the people power? Hear the government propaganda unit says it: "The people power has to be suppressed, because anybody who protests against the cost of living, is a traitor, and is a backer of Eelam.''

Prabhakaran never dreamed of this – today, this whole country is an Eelam.

The Guest Column

Editorial/ Opinion Contents