Economy Forward

  I saw an interesting article published in "mint" e-paper website, 22nd December (Article) , on comments made by Indian authorities to the IMF 2023 Article IV Consultation Report which was issued on 20 November 2023 ( IMF India Report ). The Report is seen giving A + ranking to Indian economy and its macroeconomic management as revealed from the IMF Executive Board Assessment. However, the IMF staff has made few adverse comments on corner items to create long-term issues unnecessarily. However, it is admired that Indian authorities had the courage to discredit such IMF comments. Therefore, this article provides highlights on IMF comments and Indian response so that other country authorities can learn how to deal with the IMF staff in the national interest in front of the day jobs of the IMF staff members.   IMF Executive Board Assessment on Indian Economy Commended the Indian authorities for their prudent macroeconomic policies and reforms that resulted in the economy’s ...

Article's background Last two years saw central banks world over raising interest rates and cutting money printing. This is the so-called tight monetary policy stance in the language of central banks and financial markets. This monetary tightening is the text book macroeconomic drug available to central banks to fight inflationary pressures. They applied it this time to fight three decades high inflationary pressures caused by Corona pandemic-induced disruptions in  global   supply chains.  The cause for inflation in class room economics is the excess aggregate demand (for goods and services) that pushes prices in general. The monetary policy prescription to fight inflation irrespective of causes is to reduce the growth of aggregate demand to match the aggregate supply externally determined. The monetary drug in the prescription is to raise interest rates to curtail credit creation of the banking system which will slow down the aggregate demand.  The underlying belie...

Background of the article In last last two years the media has been full of analyses on what caused the country's economic crisis in modern history, who were responsible for and what policies are necessary to recover the economy. While all these analyses are presented on a micro set of information, the common feature has been to blame each other who governed the country in the past several decades inter-changeably or in political coalitions. In such blames, the state corruption is presented as the cause of the crisis. I also wrote several articles to this blog and published a book (Sinhala medium) ( 2022 ශ්‍රී ලංකා ආර්ථික අර්බුදය ආර්ථික විද්‍යා ඇසකින් -  අර්බුදය වැලැක්වීමටත්, නිරාකරණයටත්, අප අසමත් වූයේ ඇයි? අර්බුදයේ දෙවන වටයට සූදානම් වෙමු ද? ) in July this year based on macroeconomic management information available to me. Now awaiting for elections next year, political leaders have commenced enumerating heart-felt livings difficulties presently confronted by the public and ma...

  The picture below is the CB Communications press release. I was confused to understand what CB Communication Director intended to tell the public whether; His Governor made a presentation on Sri Lanka's inflation success story to a Forum in Germany or on  Sri Lanka's  inflation control success story, European Central Bank (ECB) President Christine Lagarde spoke at the event of SL Governor's presentation or at some other event of the Forum, and the intended message of this communication and its purpose are in the observance of public trust attached to officials of the CB. Anyway, I am not surprised of the pictures as top level public officials these days has a fondly habit of communicating of their pictures with the international icons to the public, possibly to impress the public of their ability to resolve the present bankruptcy of the country. However, I felt whether the CB Governor and Communications Director have attempted to show leaves to those who are u...