Spotlight: Econ Op-eds in Summary (Week ended 20th October '21)
1. Fresh economic thinking and pragmatic policies imperative
By Nimal Sanderatne
Drawbacks in past economic policies and reforms seems to negatively affect Sri Lanka’s present economic environment. Recently, the government has identified these issues and seems to be taking measure to reverse certain decisions such as the fertilizer ban. While this is a step in the right direction, a pragmatic approach is needed in policies relating to monetary, fiscal, agriculture and trade.
Government’s alternate economic policies and MMT has led to high inflation, fiscal, trade and BOP deficits. Thus, Budget 2022 will need to include policies on trade liberalization and a more realistic exchange rate, as low foreign reserves in the country has created parallel exchange rates as well as shortages of food and essential items.
Further, despite import restrictions, imports are on rise. While exports have also increased compared to last year, the trade deficit is expected to remain increasing. Given these circumstances, though foreign assistance and swaps provide temporary relief, economic reforms are vital to stabilize the economy.
2. How do we market Sri Lanka globally as a unique country – green socio-economic system
By: Jayampathy Molligoda
It has been five months since the prohibition of chemical fertilizer imports with the government now allowing the importation of potassium chloride– which isn’t an organic material, though it can still be used for organic farming. With regards to the tea sector, Analysis reveals no significant yield declines from the prohibition of fertilizer imports so far, with cumulative tea production being higher compared to last year.
According to the government proposal, stakeholders need not immediately convert tea production into organic products and would therefore not result in income losses for famers during this transitional period. Farmers are allowed to use non-hybrid chemically bond fertilizer till self-sufficiency in the production of organic fertilizer is realized.
Currently, organic fertilizer imports have been approved for the tea sector, with domestic production of it increasing as well, although the government must support this by providing sufficient levels of nitrogen and potassium to maintain product quality. From a bureaucratic perspective, state policies should be viewed as positioning Ceylon Tea as a unique product to customers globally to be on par with the Tea Strategy Roadmap for 2030.
(Compiled by: Promodhya Abeysekara, Malitha Goonerathne & Mariyan Perera)
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