Economy Forward

  Lanka News Web has reported two news items given below. 1. State Finance Minister Shehan Semasinghe assets "that prudent economic fundamentals are being deployed towards economic stabilization and to raise the economic growth rate to around 7%-8% in the next two years." 2. CB Governor Nandalal Weerasinghe says new Act to "strengthen Central Bank Independence" and thereby curb monetary financing of the budget and place a check on inflation" is to be enacted shortly: new law said to be a "prior action" to unlock the IMF deal that is yet to take place even after 8-1/2 months of negotiation. The purpose of this article is to educate readers of some of public issues involved in the two news items as highlighted below. Prudent Economic Fundamentals It would be better if the Minister states; What are those prudent economic fundamentals, at least a list, From where those are bought to be deployed? What is their link to  economic stabilization and to econo...

The Monetary Board at its meeting held on 23rd has decided to maintain its policy interest rates at current levels of 14.5% and 15.5%, despite the continuance of hyper-inflationary pressures. The contents of the press release issued on 24th are clear evidence that the Monetary Board has no clue whatsoever as to what the monetary policy should be for the bankrupt Sri Lankan economy in terms of the public mandate given to it by the Monetary Law Act. Therefore, the purpose of this article is to establish the meaninglessness of the monetary policy as revealed from the contents of its press release.  My comments are given below under 6 categories of contents in the press release.  Overall, the press release is formal evidence for Monetary Board's inability to carry out a sort of monetary policy to assist the government and general public to recover the economy from the current bankruptcy caused by the monetary policy itself. Therefore, the mandate given to the Monetary Board b...

  Central Bank of Sri Lanka (CBSL) issued a press release on 9 th November to inform the public of its latest publication “Recent Economic Developments.” The press release in its published format is given below at the end of this article. Seeing the press release, I could not believe the pathetic situation that skills on research and publication at the CBSL have now reached after 72 years of its research operations. Internal process of research findings and presentation in the CBSL 1. The general habit of the CBSL staff is to do research and present findings in a consistent and clear manner so that issues are rightly detected and implementable policy solutions are recommended. As all levels of supervisory layer up to the Governor are highly attentive and meticulous, the research staff irrespective of their language skills find painful and heartening times in getting their research reports cleared for submission to the next layer. Almost all reports go to the Governor who finally d...

Modern economics subject has formally evolved during the past four centuries in the context of analyses of markets on production and its utilization although markets started a long time ago in the human history through direct exchange of products each other known as barter system. However, invention and evolution of money have eased, expanded and sophisticated markets as well as economics. Economics is believed to be a set of principles or hypotheses that drive markets to find choices between human wants and resources in order to solve basic economic problems, such as what to produce, how to produce and for whom to produce, confronted by human being whereas productivity/efficiency-based competition in markets gives optimum solutions or choices. Therefore, economics is largely focused on the production or supply side of markets in order to mobilize productive resources to solve basic economic problems.  As such, the demand side of markets is externally determined by needs and wants ...

  The objective of this short article to provide my quick comments on the CBSL press note “ CBSL sets record straight on money printing” published in Daily FT 4 th November as a response to an anonymous press note “New CBSL regime prints more money than the former” published in Daily FT 31 st October (see the notes at the end of this article). The anonymous press note stated just one point. The CBSL has printed Rs. 691 billion at an average of Rs. 3.4 billion per day during the tenure of  203 days of  the present Governor so far as compared to Rs. 446 billion at an average of Rs. 2.2 billion during the entire tenure of 203 days of the predecessor. Therefore, the money printed during the predecessor’s tenure is 54% less than the tenure of the present Governor. Therefore, press note gives a numerical fact to which the CBSL’s counter response could have been one short paragraph of few sentences. However, the CBSL has released a technical note of about 3 A4 pages. If ...