Rajpal's Column

20th September 1998

Economy

Not many girls on the beach

By Rajpal Abeynayake

'Yatithalapahasukang'' is a relatively new word added to the Sinhala lexicon, and despite some jaw breaking qualities the word has achieved currency in the political discourse. It means "infrastructure development'', and now we should know why 'Yatithalapahasukang'' is a relatively new word in the Sinhala dictionary.

President Chandrika Kumaratunga, in a light blue saree to match the occasion, spoke to her faithful flock at the SLFP convention which was held in Kandy last week.

It was a serious speech, made in pugnacious undertone, though never reaching the high risque standard of dentist Rajitha Senaratne.

The president talked of Yatithalapahasukang to a set of bedraggled followers, some weather-beaten and wan, but almost all hanging on to her every word.

This is after all a President who has a concession ride from an opposition, which had given it a walk over in recent times.

But, she has acquired a national stature that is now beyond doubt, ( indubitable — to make that sound more respectable.) Last week, she also blasted the Bretton Wood twins, the IMF and the World Bank, at the opening of the Sri Lanka day of the SAARC trade fair.

It appears that she has realised that the best way to consolidate support for her government is to concentrate on economic issues when there appears to be "failure'' in reaching consensus on pressing political problems.

Though the Kumaratunga government came to power on an agenda of social reform, soon enough any gains it made on this front were offset by the negative image that stuck to it in the area of the economy. The Harvard economic report on South Asian countries, says this of Sri Lanka. "The populist policies of the new Sri Lankan ( Kumaratunga ) government negatively effected the economy, slowing down the 5 per cent growth rate that was achieved in the period from 1991 to 1993.''

Now, that growth rate is gradually rising, after the government ditched some of those populist policies and began to get smarter on the economic front. Therefore, if there is a vigorous thrust planned by the President on the economic front at this time, that may be good thinking, because consolidating the economy perhaps maybe the better way of addressing intractable social and political issues which appear unsolvable.

Perhaps, the other strategy that the nation can get smart to is the old stratagem of making disadvantages into advantages. Though this may sound simplistic, economists will be able to tell us whether there is some hope for turning the current global and Asian economic downturn actually to the advantage of a country such as ours.

So far , it appears that the market slump has not had a domino effect on Sri Lanka, and if the relatively slightly better performance of the Colombo bourse last week are anything to go by, it may be clear why Sri Lanka should turn its attention on turning the current global Asian economic downturn in its favour.

While Americans are looking for new markets, they are also looking for new economic locations which have not been hit by the current currency crisis. On both counts, Sri Lanka has a reason to feel slightly sanguine, even though the global recession is poised to effect Sri Lanka as it will effect all other countries.

Though we never were in the economic league of the Asian dragons, it is to the country's advantage that its banking systems are sound and that it is placed at the moment on a growth tangent.

Infrastructure development at this juncture is a crucial factor that will give the investor that extra reason to think of coming here when economies in competing regional economies are looking shaky and quite unstable. ( We may not be the only girl on the beach, but certainly, there aren't many girls on the beach now.)

That is the simplistic part of the reasoning, that needs to be authoritatively ratified by the economists and the trend analysts. But, most policies begin on a hunch, and there is more than good reason to think that Sri Lanka should concentrate more on production while grappling with intractable political issues which remain intractable.

The final dicta of the twentieth century economic theory, while the millennium draws to a close, is probably that production rather than social reform or redistribution of wealth is the path to economic wellbeing. (Particularly in a developing context.) If the quality of life is to take an upturn, there is no point doing social engineering, and that has been the economic verity that has been endorsed by Galbraith, Freidman and all the economists who remain in fashion as the millennium draws to a close.

So there. If the Chandrika Kumaratunga government is really intent on increasing production, and improving the "Yatithalapahasukang'', then it may be poised to take advantage, perchance, of the Asian disadvantage.

Endpiece: Georege Soros has said that "capitalism itself will collapse if the US congress does not pass the initiative for monetary support for the International Monetary Fund. Coming from Soros, who has led attacks on the currencies of several countries which encountered financial misfortune in the recent past, that's curious. What role did he have to play in the "impending collapse of capitalism?''

But, there is not much indication that Clinton will be concerned unduly about the "collapse of capitalism", being as he is more concerned about the impending collapse of his Presidency.

Nixon, they said, was concerned most of his Presidency about the "Cold War''. Clinton, they say was more concerned about the "cold sore.'' Until now that is.

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