By Dr. Ranil Senanayake
It is with a sense of foreboding that I pen this, returning from Ecuador, to find the rupee tumbling at pace that was once familiar to me back in 1994 in Ecuador. At that time the IMF was giving them the same advice that they are providing us today: “The International Monetary Fund urged Sri Lanka Wednesday to let its rupee keep sliding and not intervene further to bolster the ailing currency as it fell to historic lows “(23-08-18). My first arrival in Ecuador it was 1994 and their currency the Sucre, was about 2000 to a dollar but every month it seemed to fall a little further. An inquiry, revealed that the IMF had urged the government not to bolster the ailing currency which was 25 per USD by 1970 and 1990 stood at around 800 per USD. As the currency sank to 3000 Sucre to a dollar in 1995, the impact on the population especially the poor became serious, but that time, the fall was unstoppable and relentless, by the end of 1999 it stood at 25,000 Sucre to the dollar and on March 2000, President Noboa signed a law passed by Congress, replacing the Sucre with the United States dollar at an official exchange rate of 25,000 Sucres per US$1.
Does this scenario sound familiar? Does the relentless downward slide of our currency, reflect compliance with the dictates on the IMF? Why do our politicians, having borrowed for useless white elephants, insist on borrowing even more to pay the interest on these extractive loans? Has the public ever considered the consequences of this stupid profligacy, when we have to pay increasingly more for the weekly groceries? It is reported that a former finance minister recently commented that, they need to take loans because “A new government can’t just stop loans. It’s a relay; you need to take them until economic discipline is introduced.” Is the IMF’s idea of financial discipline ‘letting the rupee slide?
It is the uncaring attitude of the political hegemony and their deluded idea of ‘development’ that has propelled us down the road of debt and loss of independence, both financially and politically. No matter what stupidities the ‘developers’ mouth, the bottom line is that the purchasing power of the rupee is weaker and we can afford less with what we earn.
Like Shylock, wanting to extract his pound of flesh, the loan sharks now circle our precious land. They ask for our land, the lowering of public protections and cheap access to our resources. The stupid politicians with no idea of how to escape their trap, give up more and more of our protections and independence in exchange for servicing the loans.
To make matters worse, bureaucrats work behind closed doors to negotiate away our well- being through the so-called trade agreements. With no public participation, nor information, they agree to opening the doors to the dumping of hazaedous, toxic and radioactive waste on our land in the name of re-processing. The irresponsibility by the nation and our future generations is seen in the unilateral agreement to hand over thousands of acres of our county in the south, to Chinese Industrialists without any public discourse or without any requirement for a national Environmental Impact Report (EIA) or similar protection for the citizens.
The current development model stresses the need to be evaluated by abstract metrics such as the GDP as economic indicators of social goals. The problem in applying such metrics for populations, is that, if it is too wide, it will fail to capture the quality of life for a large proportion. If metrics are to be used in development, why not very focused, do-able goals, such as that enunciated by the Hon D.S. Senanayake our founding father, who set the ‘larder of the poorest of our homes’ as the indicator, with the understanding that this represents ‘trickle up’.
To keep borrowing until ‘financial discipline’ is achieved, seems suicidal, especially if there no clear idea what ‘financial discipline’ means. If it meant evaluating the return on investment (ROI) each time a loan was to be taken, that would be great, but we will have to borrow for a long time until such‘ financial discipline’ happens. To make things worse, not only do we borrow for ‘white elephants’, we also take loans for development infrastructure whose energy requirements are tied to fossil sources such as coal, gas and oil. Resulting in a society completely dependent on external energy to maintain stabiility.
The burning of fossil fuels to obtain energy produces Carbon Dioxide and Water vapour, that are new and never existed in the atmosphere before. Both seemingly innocuous, but the increase of either in the atmosphere leads to global warming and climate extremes. Carbon Dioxide and water vapour are both contributors to keeping the atmosphere warm, but it is the injection of extra quantities of both through the burning of fossil fuels, that increases atmospheric concentrations and lead to Global Warming and weather extremes. Especially the ‘new’ water vapour, because at saturation it condenses as water from the atmosphere, generating local heat, the driver of cyclonic intensity.
But the worst part is that burning fossil fuels takes from the limited stock of Oxygen present in the Global Commons, our atmosphere. Our atmosphere, is the ‘Global Commons’ which is shared by and sustains humanity. It is being compromised today by the internal combustion engine and industry, which use billions of tons per year for economic development, without paying a penny for its replacement and thus, affecting the life of every living person on the planet.
If replacement of this critical aspect into the Global Commons is done as a measure of addressing global debt, by actively investing in it. we could help both the planet and the Rupee. The question is can our policymakers try to understand, new economic realities such as the value of Primary Ecosystem Services (PES) or will they shuffle about, looking for another loan while the Rupee plummets.
The current vision of development as our experience confirms, has led to the harming of the environment, harming of our economy and suffering of our people, enriching a few and beggaring the most. The collapse of the rupee threatening to amplify the suffering. Should we listen to the IMF to ‘let it slide’ or the Buddha who in the Kalama Sutra noted that, if “these qualities, when adopted & carried out, lead to harm & to suffering — then you should abandon them.”