e-Con e-News

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‘Before you study the economics, study the economists!’

e-Con e-News 29 December – 04 January 2025

The so-called newly ‘independent’ Central Bank’s exclusive Employees Provident Fund (EPF) is ‘a blatant act of self-serving privilege’: so says the United Federation of Labour (UFL).This ‘exclusive’ EPF – sanctioned by the Monetary Law Act – is ‘a breeding ground’ for (you guessed it!) ‘corruption’. For ‘unlike other institutions, the Central Bank possesses ‘privileged access to confidential economic data & policy decisions before they are made public’ – so declares the UFL (a gathering of 9 trade unions). Meanwhile, ‘informal sector workers’ are ‘gravely’and unjustly excluded from ‘essential social safety nets like the EPF & ETF’. And then there are also other more lowly EPFs….

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The Central Bank has the highest number of registered PhDs per square foot in the country! And. It is no wonder. These PhDs are led by an eminence who the ‘LMD, a leading business magazine in the country, has named ‘Sri Lankan of the Year for 2024’:

     So say hello and goodbye then to CB Governor Dr Nandalal Weerasinghe, for we are now rushing headlong through Gregorian 2025. LMD we can assure you is or was Lanka Monthly Digest, though the M could more appropriately stand for Merchant or Moneylender or iMporter or Marketing Digest or all 4 Ms if you are generous– as they also do these fake surveys and polls with Ceylon Tobacco’s Co (BAT)’s money, number and word spinner PepperCube. We usually encounter this glossed-out magazine, largely untouched like a heavily made-up virgin, at private dentists’ or chiropractors’ offices – midst a lot of pain. So these are the forces – a rentier carnival of non-smoking environmentally and health conscious virtue-signalling shills and clowns really – who celebrate now and shall later sacrifice the governor. As the economy is set to tank again. They call it dynamic disruption. Effervescence, even.

     And worse: the IMF was allowed to make, or enabled – under the governor’s imprimatur, with the former Government’s acquiescence – a ‘predatory raid’ on the (not-just-the-CBSL’s) EPF, ‘disguised as domestic debt restructuring’. The UFL makes more startling allegations midst presenting 24 proposals for a more just and equitable economy via the 2025 Budget. The ULF statement in English seems to have been only carried ‘mass-media-wise’’ by the Wijeya Group’s Financial Times (see ee Focus, For a Working People’s Budget in 2025).

     The ULF, perhaps unfortunately too-inconvenient or too-obvious to larger media – point to the ‘Government’s insatiable appetite for tax breaks for large corporations – a staggering Rs 978 billion in 2022 (4.1% of GDP) according to the Ministry of Finance & the IMF’. ‘Instead of squeezing the poor with regressive taxes on essential food in the guise of protecting local farmers’, they – noting ‘nearly 30% of paddy cultivation costs [are] tied to machine rent’ – call for investment ‘in a rental program to drastically lower these exorbitant fees benefiting a machine-owning upper middle class in the rural economy’.

     But what about making these agricultural machines? ‘Renters’ of rural machinery like ‘celebrated’ NGO Sarvodaya and finance companies like LOLC, etc, – importers of multinational products – have minted billions. Yet the UFL proposals fail to even broach such a crying necessity for investment in modern industrial production, even as medium-to-long-term goals. Perhaps the UFL is merely making ‘annual budget’ proposals for ‘trade unions.’ But as Shiran Illanperuma highlights (see ee Focus, NPP Needs to Get Serious about Industrialization to Avoid Another Crisis):

Uplifting our large rural population requires industrialization.

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A strong focus on value-added manufacturing has been the

only way for countries to sustain rapid growth levels, develop

indigenous technology, & uplift the living standards of the majority of people.

He also pinpoints: With a population of 22 million – comparable to Syria, Burkina Faso, or Chile – Sri Lanka is hardly a ‘small country’. And he could of course have added that industrial & agricultural powerhouses like Holland & Spain, etc., have even smaller populations than Sri Lanka.

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On 18 December, new President Anura Kumara Dissanayake pledged that under the leadership of his party, ‘we will never allow a situation like 2022-23 to reoccur in our country’. But as Illanperuma points out:

If AKD & the NPP intend to keep this promise, they will have to get a lot more serious

about industrializing an economy dependent on services & remittances.

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Meanwhile, as the new government is finding out – much to the pique of a merchant-run media who are protesting political ‘interference’ in the sacred bureaucracy – an entrenched ‘mafia’, with their powerful sponsors, still rule the roost and run circles around them! (Who still run the ports? If not the multinationals like Unilever, etc?) A merchant media gives much more prominence to the safety of monkeys, elephants & leopards than they do to the occupational health, let alone upskilling, of farmers & workers.

     While there is much talk about ‘transparency’ and demands for declarations of politicians’ private assets and funders, similar demands could be made from bureaucrats & media personnel (owners, editors & columnists): to declare their ‘sponsors’? As we often note, the media is packed with corporate & embassy & NGO press releases parading as ‘news’, no doubt given repetitive publicity with much ‘greasing’ of palms and other organs. And then there is the revolving door between public & private offices (this week, media reported how US Supreme Court judges & their children openly take bribes! see ee Random Notes, Scalia), ee has noted before, how formerly sacred Chief Justices of Sri Lanka’s Supreme Court have joined the worldly boards of banks like the Commercial Bank of Ceylon, etc. So see how they run:

     ‘Vallibel One’s Dhammika Perera has appointed 4 new directors: Perera is supposed to be interested in the further privatization of Sri Lankan Airlines or the air space. One of the new directors is Anura Fernando, another Accountant, who cites breast-slapping Nestle Beverages and US aerial warmaker Pratt & Whitney Space Propulsion among his credentials. Next comes another immaculate:

JKH Board & University of Kelaniya & Monetary Policy Board

of the Central Bank’s Manil Jayesinghe, who is also a member of

several Chartered Institutes – of Public Finance & Accountancy etc., – has served

Ernst & Young, SL & Maldives… As a resource person for Central Bank

Training Centre, he has conducted many training sessions on Accounting,

International Financial Reporting Standards & Basel, and was the lead engagement

partner on Audits subcontracted to EY by the Auditor General of SL.

Jayesinghe is an ‘Independent’ Director of Diesel & Motor Engineering (DIMO),

Ceylon Hospitals, CW Mackie, Lanka Milk Foods (CWE), JKH…

(see ee Random Notes)

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Kelaniya University Professor Ajantha Samarakoon, new Chairman at

People’s Leasing & Finance PLC has been the Chief Examiner for the GCE A/L examination

 since 2006 & is a member of Curriculum Development Committees in government &

private universities… coordinator of the Master of Business Administration (MBA) program

& Quality Control Reviewer for the University Grants Commission.’

(see ee Finance)

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Now you know why we cannot read or count. Or are functionally innumerate and illiterate. Indeed, as Illanperuma wonders in another essay in this ee Focus (Sri Lanka’s New Government, Indo-Pacific Debt Trap, & Struggle for the 21^st C), can the JVP, which has survived (but how?) 2 annihilations, and at much human sacrifice of successive generations, overcome the antics of these multinational agents who have leg-break-ed and bowled out many-a-previous popular government? The JVP apparently bravely and vociferously opposed many attempts to subjugate the country, like the Indo-Lanka Accord of 1987, and the USA’s MCC, SOFA, ACSA & other military encroachments.

     A former foreign official, maybe wrongly seen as a diehard senior yankee doodle and anglomaniac, revealed this week that the 1978 Indo-Lanka Accord allows our beloved neighbor to take over the country’s ports & habours at its will (see ee Random Notes)….So what about commodity prices?

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 While there may be a new President & a slew of new faces in Parliament,

officials in charge of the Treasury & Central Bank remain the same.

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     Illanperuma points out, ‘in contrast to his fiery pre-election speeches, which lashed out at the corruption of establishment politicians’, AKD has had to strike ‘a measured tone’, acknowledging ‘the significant challenges that his government inherits, declaring ‘I am not a magician. I am simply an ordinary citizen.’ He notes, ‘The risk of lapsing into neoliberal immobility remains ever present’. Or perhaps, they, like the Russian Communist Party of Comrade Lenin in 1921, or Comrade Stalin in 1939, are simply mixing messages, buying time to gird their forces, learning about and gauging the enemy, before launching the final battles.

     Contrary to the massive US & English propaganda in the media that China dominates Sri Lanka’s economy – the supposedly nationalist Derana and Island’s ‘Foreign News’ ‘Category’ is almost totally & unashamedly dominated by Unilever’s English state media outlet BBC – the ULF unequivocally declares, ‘The NPP inherits a state that is deeply in debt to Western finance capital.’

     Meanwhile, the UFL’s proposes: the immediate nationalization of ‘all large-scale paddy mills’, which are profiting off the country. They then point to the Sri Lankan tea market being ‘exploited by an oligopoly of estates, franchised export companies, tea brokers and the few conglomerates who own the entire apparatus. These oligarchs ‘suppress prices by an average of 50% below the actual export price’. They add, ‘after packaging, the same kilo of tea fetches exorbitant prices in the domestic market, often exceeding Rs3,000. This reveals the enormous profits raked in by tea traders, profits that are not reinvested in the sector or shared with the impoverished workers.’ By controlling the auction process, these interconnected conglomerates – encompassing regional plantation companies, franchised export firms, & tea brokers – have effectively suppressed wages.’

     The UFL does not state, how to appropriate, and where and in whom and what exactly the profits should be invested inside the country. Meanwhile, the national sweat and other liquids flow into the sea (or more precisely, the ports) uselessly:

     ‘Sri Lanka holds the distinction of paying the highest percentage of government revenue as domestic interest in the world – a staggering 80% in 2023, according to World Bank data.’ This tax burden has ‘plunged a quarter of our population into poverty, is squandered on enriching a counterproductive financial elite’.

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Indeed, as Nalliah Thayabaran details (see ee Focus, As a US Vassal, Japan Can’t Challenge China as a Superpower),such financial forces in the US & EU combined to bring down the mightier Japanese economy. Japan ‘was the biggest economic miracle in the 20^th century after the USA’ and this occurred after these forces signed what became known as the Plaza Accord – signed at ‘a pivotal moment that led many to believe Japan was going to surpass the USA’. These financial forces ‘played a very significant role in Japan’s slowdown’ after ‘Japan had established itself as a global manufacturing powerhouse, dominating industries such as automobiles, electronics, and machinery, conquering a huge portion of the semiconductor industry. So can the US & EU do what they accomplished against Japan, to China? Thayabaran believes not – though he does not provide much detail…

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We, however, believe the greatest economic miracles of the 20^th century, despite the inevitable steps back, have been the industrialization of the USSR and the People’s Republic of China. Russia’s Foreign Minister Sergei Lavrov pointed out this week (ee Random Notes) the US & English recipes ‘to create wars and other forms of chaos to keep Russia and China from developing their potential’ have their origins at ‘the beginning of the 20^th Century based on Alfred Thayer Mahan’s theory of maritime power’ which ‘was married to Halford Mackinder’s Heartland/Rimland Geopolitical theory’.

     Sri Lanka, at the centre of the Lakdiva Sea (now known as the Indian Ocean), and at the base, holding up all of Asia, is indeed central to this planned chaos…. Channelling and harnessing and expelling this chaos as another energy resource to serve the country may be a better plan.

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Contents:

Insider Trading by Central Bank Officials Exposed