Economy Forward

Article's background Sri Lankan economic crisis is primarily a result of bankruptcy of the government on default of foreign debt and central bank of foreign currency reserve. Both debt and foreign reserve were managed by professional economists of the central bank for the past since 1950. I saw a Parliamentary debate recently on an extraordinary 75% increase in wages of the central bank. The ruling party members justified the wage increase as required to retain professional experts at the central bank, given its independence to take such decisions. The opposition responded that same experts caused the economy's bankrupt in 2022 and questioned the rationale of the wage increase while the rest of the economy is timed. Most do not understand that the central bank can make any spending by simply printing money digitally in its computers. Therefore, this short article will explain how the central bank and its experts should be held responsible for the economic crisis confronted by ...

  On 08 Feb 2024, the  Domestic Operations Department of the  CB issued a press release announcing the decision of the Monetary Policy Board (MPB) taken at its special meeting held on 07 Feb 2024 to relax restrictions on standing facilities with effect from 16 Feb 2024. The press release clarified the the purpose of imposing such restrictions as well as their favourable outcomes that helped relaxation of same now. The purpose of this short article is to shed some light on the corruptive manner in which the CB/MPB conducts the monetary policy as revealed from those restrictions of standing facilities, their implementation, relaxation and contents of relevant press releases. In this article, the corruption is defined as adoption of ad-hoc policy actions in non-compliance with the generally accepted policy principles, the lack of publicly accountable internal controls behind such policy actions, breach of the authority, arbitrariness of policy actions without supporting...

  This article is a reproduction of the Chapter 4 of the book " INNOVATING CENTRAL BANKS   With New Mandate and Governance to Promote Safer Money and Banking in Open Economies " (pages 67-99) published by me through Sarasavi Bookshop in February 2019. I feel that views expressed in the Chapter will be useful now as state authorities provide diverse promises to stabilize and recover the presently bankrupt state and economy of Sri Lanka soon and to secure the development country status in the next two decades whereas the instrument they use to deliver all these promises is the public service or the state sector, given its dominance over the economy and people.  Macroeconomic Significance of Public Service The public service can be defined as a set of state interventions in the free movement of people in their living and civilization for broader interests of the society as the authorities deem fit within their ideologies. Accordingly, the public service comprises of all...