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Are the people aware of the economy?

Date : 2020-Nov-23
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These days, the whole world is talking about the economic crisis and collapse of economies. Most of the countries were locked down in order to prevent the spread of Corona virus. As a result, the economic process was completely ruined. Even though, countries like Sri Lanka were the least affected, developed countries and top manufacturing countries were highly affected.


Crude oil, which is an essential intermediate good, was sold on a negative price during the months of April/ May. The production companies agreed to pay $ 13.50 to the buyer, since there was stock surplus due to the decrease in demand. A lot happened with the decrease of the demand and the spread of the virus. In simple terms, the number of individuals who have lost their jobs is 38 million. It is twice the number of the population of Sri Lanka. Around two million people lost their jobs in the United Kingdom.


Specially, a large number of employees have lost their jobs at hotels, restaurants, airlines, coffee shops, massage centers, SPA, etc and jobs related to tourism, transportation, prostitution. Around 20 million people have lost their jobs in India. This issue of unemployment is hard to solve. Still we have no knowledge of the number of persons, who have lost their jobs in Sri Lanka.


The best example of the collapse of the economic process or production process is that the production in India has declined by 23.5% in comparison to the first quarter. The production of United Kingdom and America has declined by 21% and 15% respectively. This can also be described as a decline in the Gross National Product.  The decline in the Gross National Product of Sri Lanka in the first quarter is 1.6% - Even though, our estimated growth of the Gross National Product in the first quarter is 5%, it has reduced by 1.6% in the first quarter.


When the production is decreased, exports decrease as well. It affects the personal income and the benefits from the job are also reduced. All the airlines have stopped functioning at present. They function now and then for special tasks. According to the International Air Transport Association, 4.8 million employees in this field around the world have lost their jobs. 600,000 employees in the Airline industry itself have lost their jobs. They were engaged in highly paid jobs.


Every Airline company requests a large amount of aid from the Government to restart their operations. They are unimaginable amounts. United Airlines in America requests for 6 billion. Virgin Australia Airlines is not operating at present. 30,000 employees have lost their jobs.  However, Sri Lankan Airlines is still operating. We do not have the relevant statistics. It is said that a loan of $ 75 million has been obtained by them.

Sri Lankan Airlines has lost Rs. 18 billion by now, which is an amount that can complete the 4 – 5 projects as the Mahaweli project. However, Sri Lankan Airlines was ready to introduce a voluntary retirement scheme to around 7000 employees last week. This has been approved by the Cabinet of Ministers.

 

The Treasury of our country is also functioning with much difficulty. The contractors have not been paid for the past two years. The pharmaceutical companies and fertilizer companies are still to be paid. The Treasury gave bonds worth Rs. 9.2 billion to the commercial banks to be paid to the contractors. The said amount will be paid by the Government before the 31st of December. 

   

Now we have an idea of the current condition of our economy. One billion dollars from our debts has been paid in October – It’s good news! We have to pay 4 billion dollars per year next year onwards. So we are on the verge of an economic crisis.  Therefore, we thought of making the general public aware of economic matters every week.


It is better to have at least a general knowledge on economy, finance, development, foreign debts, unemployment, interest rate and share market. Import of certain goods has been banned for the past 7 months. The European Union has expressed its objection regarding this matter. Since this is a highly an important matter, the full statement is quoted below.

 

Quotation.


The European Union is of the view that the restrictions on imports in Sri Lanka at present make negative effects. The European Union states that the present restrictions on imports under the import restrictions of the Government make adverse effects on businesses in Sri Lanka and Europe and foreign direct investments.


This was revealed through a combined declaration issued by the group of representatives of the European Union and the Embassies of France, Germany, Italy, Netherland and Rumania some time ago.    

 

The European Union emphasized the fact that trade is not a business headed towards one direction and the present restrictions on imports make adverse effects on businesses in Sri Lanka and Europe and foreign direct investments.

 

It further points out that steps of this nature are a barrier to the attempt made by Sri Lanka to become a regional centre and restrictions on importing value added material and machinery have adversely affected the Sri Lankan export industry as well.


The European Union points out that a long term ban on imports does not conform to    the regulations of the World Trade Organization. The group of representatives is worried about Sri Lanka’s decision to withdraw its support with regard to resolution 30/1 of the United Nations Human Rights Council. 

 

The Government has declared that it would continuously act towards improving justice and peaceful coexistence among various communities in Sri Lanka. European Union is ready to assist the efforts of the Government. Rule of law and a strong civil society are essential in this regard.  European Union stated that it intends to maintain the international partnerships and the deep relationship with Sri Lanka according to the said partnerships.

 

With the challenges created by COVID – 19, the Heads of the Mission based on Colombo representing the European Union and its member countries conducted a series of meetings with the top level Officers including Dinesh Gunawardena, Minister of Foreign Affairs. 


They emphasize the long term assistance given to Sri Lanka by the European Union as a faithful partner including grants over 25 billion Euros within last 25 years without considering the bilateral aids of the member countries. 


They mention the fact that European Union is a decisive economic partner of Sri Lanka and it has been given the opportunity to enjoy the access without quota in the European market due to GSP + based on implementing 27 international conventions on human rights, labour, environment and climatic changes.  


European Union is the second largest export market for Sri Lanka around the world and they further emphasize that a positive trade balance of over 1 billion Euro (Around Rs. 220 billion), which has been made in 2018 and 2019, is not due these unilateral exports.   

 

-Sena Suriyapperuma-

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