Former President Mahinda Rajapaksa feels Sri Lanka must use US President Donald Trump as an example on how to manage the economy.
Rajapaksa said in a statement that President Trump has strengthened the US economy through a policy of giving incentives to indigenous businesses and imposing tariffs on imports to encourage local production.
“My Government also had a policy of producing whatever we could locally and reducing imports particularly of foodstuffs such as diary products, maize, soya, sugar, onion, potato, fruits, vegetables, poultry and certain industrial products. This Government in contrast believes in limitless liberalization and free trade without a clear strategy to increase exports and reduce imports,” Rajapaksa said.
He said that the role of a Government is to keep abreast of worldwide developments and to take steps to strengthen the economy instead of complaining that a foreign leader has strengthened his own economy and that Sri Lanka’s currency was collapsing on that account.
“The Rupee has depreciated steadily against the US Dollar ever since the yahapalana government came into power – a trend which has now accelerated alarmingly. The value of the US Dollar which was Rs. 131 at the end of 2014 when I left office is now over Rs.170 and continuing to slide on a daily basis. Members of the government claim that the reason for the collapse in the value of the Rupee is the appreciation of the US Dollar against other currencies. During my Presidency, the currencies of many Asian countries such as South Korea, Indonesia, Thailand, and the Philippines declined sharply against the US Dollar due to the 2007-2008 global economic crisis. Sri Lanka was one of the few countries in Asia that emerged largely unscathed from that currency crisis,” Rajapaksa said.
He said the reckless salary increases, fuel price reduction and tax reductions on certain imported food items given in 2015 to win the Parliamentary election of that year led to a sudden increase in Government expenditure, and resulted in increased imports of fuel, motor vehicles etc.
This, he says, led to widening trade and fiscal deficits and heavy borrowing to meet the shortfall.
Rajapaksa says the Government has been trying to downplay the depreciation of the Sri Lankan Rupee by claiming that the Indian Rupee has depreciated even more.
However he noted that the Indian economy is growing at nearly twice that of Sri Lanka and they are better able to weather the shocks. (Colombo Gazette)