Economy Forward

  Article's purpose and background This article is to predict the possibility of a new global monetary order that may evolve in response to the new tariff policy declared by the US President Donald Trump (announced on 2 April 2025 to be effective from 9 April 2025). Therefore, the article does not comment on its viability or fairness from any perspective. The present global monetary order has evolved on the US dollar as the global reserve currency created largely through free and facilitative trade and balance of payment (BOP) deficits of the US economy with the support of its allies and the US-sponsored international institutional network. However, Trump's new tariff policy is to hack it radically by an attempt to have zero trade balances of the US with individual countries through the imposition of reciprocal tariffs and trade barriers variant on the US trade deficit with each country. Accordingly, Trump's new tariff policy is aimed at a zero trade balance with each count...

  Article's purpose This short article is to alert a possibility of Treasury bill market irregularities that can cost to the government and its debt sustainability. This is revealed from the unusual pattern of acceptance of bids at the last Treasury bill auction held on 26 March and recent auction trends. Auction results   Yields rates were kept unchanged at the previous week's levels by accepting significantly below the funding requirement, especially for 91D bills. Selected early warnings and concerns over the auction results Acceptance of a negligible amount of 91D bills (Rs. 4,809 mn) way blow the announced amount (Rs. 20,000 mn) and bids (Rs. 21,383 mn) which is a deviation to the recent trend. The trend of lower acceptance of 91D bills was observed from several auctions prior to this although the normal tendency has been to accept bids of 91D much more than the amount announced for the auction. Acceptance of sizable amounts from other two longer maturities while this ten...

  Article's Purpose This article is to provide quick comments on the irrelevance of the monetary policy statement released today as part of the Central Bank's media activisms (Read the policy statement here) . The Monetary Policy Board (MPB) has announced of keeping its operating policy interest rates unchanged at 7.50% (Standing Deposit Facility Rate) and 8.50% (Standing Lending Facility Rate) despite the persistent deflationary trap confronted by the economy since August 2024 that requires a considerable policy rate cut to arrest the deflationary trap to return to the statutory inflation target of 5% on a quarterly basis. The policy statement has become unusually short-cut due to the non-availability of macroeconomic facts supporting such unchanged interest rates despite the deflationary course of 6 consecutive months which the MPB predicts to continue until mid-2025 and settle in the targeted levels (i.e., 5% with a margin of 3%-7% of highly inflated economy) by end of 2025....

  Article's purpose and background This article is to present key points published in the Daily Mirror, 14 March 2025 (Press here to read the article) , based on a public lecture made by  Dr. Indrajit Coomaraswamy, Central Bank Governor 2016-2019, on 10 March 2025 in celebration of the 75th Anniversary of the Central Bank of Sri Lanka. This blog article reveals the importance of the contents of the Daily Mirror article to provide a key source of information critical for investigating into those who are responsible for the economic crisis that the country has been confronting since late 2020 if relevant authorities are interested in conduct of a technical investigation. It is the general practice seen in many countries that official reports are published after economic crises to inform the public of causes, impact and resolution measures of such crises and reform agenda proposed to prevent the recurrence of such crises. However, whole blame for the crisis in Sri Lanka has ...

  Article's purpose This article provides a summary of the interview I happened to watch on 8 March 2025 in the social media conducted by Ada Derana Hydepark with Professor Asoka Bandarage largely based on her book "Crisis in Sri Lanka and the World" released in 2023. (Watch  Interview   here) ( Book Link ) I was interested in reading the book to search materials that I may have missed in my book on the crisis published in 2023 ( 2022 ශ්‍රී ලංකා ආර්ථික අර්බුදය, ආර්ථික විද්‍යා ඇසකින්. අර්බුදය වැලැක්වීමටත්, නිරාකරණයටත්, අප අසමත් වූයේ ඇයි? අර්බුදයේ දෙවන වටයට සූදානම් වෙමු ද? )( Book Link ).  Books on any crisis differ as the approach and information covered in each book or article are different, given the fact that the exact nature and causes of crises are not known black and white. Some perceptions of the books are as follows. The book analyses colonial and neoliberal origins as structural roots of the crisis and explores its emergence in Sri Lanka in 2022 in the contex...

  Article's purpose and background This short article is to highlight radical actions taken by the President Donald Trump to clean up the federal government from corruption and inefficiency to reform it to be market friendly. His ideology is to cut the deep federal bureaucracy and regulations and reduce budget deficit and debt so that the economy can grow faster competitively through markets with lower inflation. The short background of the topic is as follows. Unlike in Sri Lanka, Donald Trump has already commenced historic actions against the corruption of the federal government as promised at the Presidential election. As promised, he immediately after taking oath on 20 January 2025 established the Department of Government Efficiency (DOGE) headed by Elon Musk, a top global businessman in the US, to audit all federal government agencies, assess the performance and efficiency on tax payers' money, detect wasteful spending and close or reform such agencies without delay. The D...