SLG Syndication

SLG Syndication is committed to aggregating excerpts from news published by international news agencies and key insights on contemporary issues published by think tanks. Our aim is to facilitate the expansion of its reach while giving due credit to the original source.

Sri Lanka: Transportation – Field Note 6

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3 mins read

This series is based on the excerpts of the first report of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council tabled in the Parliament by Patali Champika Ranawaka as the Chair.  Composition of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council,  Patali Champika Ranawaka (Chair), Naseer Ahamed, Tiran Alles, Sisira Jayakody, Sivanesathurai Santhirakanthan, Wajira Abeywardana, A. L. M. Athaullah, Rishad Bathiudeen, Palani Thigambaram, Mano Ganesan, M. Rameshwaran; all are members of the house representing various political parties – editors

Background

  • It was observed that numerous strategies of transportation have been used in various economic and political periods since the British era (before 1948).During the colonial period, it was decided upon the economic advantage and administrative requirements. In the welfare and import substitution economic era, (1956-77) the public transportation was made state owned whereas private vehicles were discouraged. However, private transportation was encouraged after liberal economic reforms and a massive investment was made on the roads used for private transportation after year 2005. And also, it was identified that the transport strategy should be changed in the existing surge of economic situation.
  • It was observed that a capital expenditure of 0.1-1.64% of the Gross National Production (GNP) on the development of roads, a percentage of 0.17-0.25% on promoting railways (the highest value of the GNP- 0.55% in year 2011-UthuruWasanthaya/Northern Spring) and a percentage of 0.1-0.11% (0.23% in year 2016-the highest value of the GNP) on enhancing the fleet of buses have been allocated during year 2005 to year 2019.
  • According to the statistics of the year 2018, an amount of US $ 5350 million (27% of the import expenditure) has incurred on vehicles, fuel and spare parts whereas another amount of US $ 700 million (3.5% of the import expenditure) has incurred in the same year on raw materials and equipment needed for development of roads.
  • As per the statistics of the year 2018, when 52% of the passengers choose public transportation, about 48% have used private transportation. Approximately 12% of the total fuel expenditure has incurred on fuel expenses for public transportation.
  • It was reported that about 15% – 18% of import expenditure incurred on vehicle imports and fuel consumption could be saved if 25% of the passengers changed their mode of transport into public transportation.
  • Although a comparative increase in railway passenger transportation was reported, a reduction of passengers who use public and private bus services and taxi services was notably reported by 20%-25%.

Proposals and Solutions

  • It is proposed to reduce fuel consumption as the first strategy.
  • It is important to utilize market equipment such as import taxes,price formula etc. in order to address the demand and to improve and encourage transport modes with high fuel efficiency and no fuel consumption. And also, it is necessary to introduce tactics of damage control and ways to minimize the use of low efficient fuel and equipment.
  • It is proposed to devise a quality public transportation as the second strategy.
  • It is necessary to introduce policies in which train, bus, taxi and van services are prioritized.
  • And also, it is recommended to build up a digitalized platform of public and private transport services (mobility as a service-mass). In order to do that, a new integrated programme should be arranged reviewing the platform which is currently used by institutions such as Uber, Pickme etc. and the proposed programme put forward by “Sahasara” initiative.
  • Digitalizing the transport facility by means of a unique digital card or mobile phone connected device for trains, buses, office and school vans, taxis and taxi facilitationservices (Uber, Pickme etc) for the convenience of the passengers.
  • Making Sri Lanka a “Transport and Services Hub” for smart industries and services (Industrial Revolution 4.0). Drafting laws, procurement processes and human resource development programmes pertaining to that and devising a proper integrated digitalization process of public and private transport services used for passenger transportation and lorries and trains used for freight.
  • The frequent use of trains for transportation of goods, giving priority in supplying fuel, charging of fees and travelling on the road for vehicles used to transport more than 8 passengers.
  • Removing weaknesses and bottlenecks identified in railway signal systems and railways within a year.
  • Making a proper investment on purchasing new low floor buses and railway locomotives and also, lifting out restrictions imposed on spare parts.
  • Introducing flexible time slots for government offices, private offices and schools following a proper pilot project.
  • Opening the expressways for Lorries, trucks and buses with a minimum charging fee (For transportation of goods and passenger transportation).

Source: Sri Lanka Parliament

Concluded

President and U.S. Ambassador Commission the U.S-donated Cutter

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1 min read

On November 22, 2022, the President of Sri Lanka Ranil Wickremesinghe, the Secretary to the Minister of Defense Kamal Gunaratne, the Commander of the Sri Lanka Navy Vice Admiral Nishantha Ulugetenne and the U.S. Ambassador to Sri Lanka Julie Chung attended the commissioning of the Navy Ship Vijayabahu, formerly the U.S. Coast Guard Cutter Douglas Munro, in Colombo Harbor.  The United States had donated the ship to Sri Lanka on October 26, 2021 as part of its continuing commitment to strengthen Sri Lanka’s ability to protect its maritime sovereignty and security.

Viewing the commissioning ceremony with Sri Lankan dignitaries, Ambassador Chung extended her appreciation to the ship’s officers and sailors for their skillful handling of the ship during the voyage.  She also expressed her thanks to the families and loved ones of the sailors for their sacrifice during the crew’s long absence.  

Sri Lanka’s Exclusive Economic Zone (EEZ) is seven times the size of its land area and maintains a Search and Rescue area nearly 25 times as large. The new vessel is capable of performing wide-ranging operations that include conservation of marine resources, search and rescue of naval and fishing vessels in distress and interdiction of drug and weapons smuggling among other crucial functions. 

The Vijayabahu is the third ship donated by the United States to the Sri Lanka Navy, preceded by the Gajabahu in 2018 and the Samudura in 2004, which continue to patrol the nation’s waters.  The latest ship, a former Hamilton-class high-endurance 115-meter cutter, undertook one of the longest voyages in Sri Lankan naval history embarking from Seattle, Washington, on September 3 and arriving in Colombo on November 2, 2022. 

In its former U.S. role, the then-Douglas Munro enforced fishing regulations in Alaskan waters, seized trawlers engaged in illegal practices and interdicted 11.5 tons of cocaine off the coast of Mexico, one of the largest hauls in the history of the U.S. Coast Guard.  After the 2004 tsunami, the cutter provided food and water to Indonesians and later seized a vessel overtaken by pirates off the Horn of Africa.  The ship also rescued survivors of numerous shipwrecks in dangerous and frigid waters off the Alaskan coast.

The transfer of the vessel is just one point in a long history of cooperation between Sri Lanka and the United States in preserving a free and open Indo-Pacific region.  The U.S. is committed to supporting Sri Lanka’s efforts to protect its sea lanes, which are vital to alleviating the current economic crisis.

Commissioning of the Navy Ship Vijayabahu, formerly the U.S. Coast Guard Cutter Douglas Munro, in Colombo Harbor. [ Photo: US Embassy in Colombo]
Commissioning of the Navy Ship Vijayabahu, formerly the U.S. Coast Guard Cutter Douglas Munro, in Colombo Harbor. [ Photo: US Embassy in Colombo]

Sri Lanka: Energy–Field Note 5

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4 mins read

This series is based on the excerpts of the first report of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council tabled in the Parliament by Patali Champika Ranawaka as the Chair.  Composition of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council,  Patali Champika Ranawaka (Chair), Naseer Ahamed, Tiran Alles, Sisira Jayakody, Sivanesathurai Santhirakanthan, Wajira Abeywardana, A. L. M. Athaullah, Rishad Bathiudeen, Palani Thigambaram, Mano Ganesan, M. Rameshwaran; all are members of the house representing various political parties – editors

Background

  • It was identified that the economic growth of Sri Lanka and the demand for and supply of energy (oil, coal, gas and renewable energy) are inter-connected with one another.
  • It was also identified that any policy related to energy should be considered in conjunction with the current economic bankruptcy of Sri Lanka, the shortage of and the difficulty in drawing foreign exchange and the policies of similar countries that compete with Sri Lanka for exports and economic factors, etc.
  • It was emphasized that the factors namely energy security and self-sufficiency in energy, enhancing energy efficiency, managing the demand, new technological and management strategies of saving energy, tariff system and the price of energy should be jointly considered.
  • It was further identified that an administrative, managerial and financial restructuring of the state-owned energy sector institutions such as the Ceylon Electricity Board (CEB), Lanka Electricity Company (LECO), Ceylon Petroleum Corporation (CPC) and Ceylon Petroleum Storage Terminal Ltd and Litro Gas Company is essential.
  • It was identified that there has been a significant decrease in the consumption of all forms of energy (fuel, electricity, gas), and factors such as the economic collapse, high prices and the limited supply has contributed to this situation.

Proposals and Solutions

  • As medium-term measures, it is proposed to acquire minimum seismic data (2D) systems for the petroleum resources development blocks (20 core blocks, 890 sub-blocks) that have been identified at present in the Sri Lankan coast, to provide opportunities to the producers (upstream
  • development) for the blocks of which data are already available, to obtain an appropriate financial model for the country, to develop the legal framework for that, and to commence an accelerated project (three-year) to supply natural gas to the gas turbines of the Ceylon Electricity Board.
  • It is proposed to declare an Energy Emergency.
  • Considering that Sri Lanka is not currently accountable internationally for carbon emissions (considering Sri Lanka’s per capita carbon emission to be 0.95 metric tons, and considering the per capita carbon credits as 2.1 metric tons according to the 2007 International Convention on Carbon Credits), and considering both the facts that Sri Lanka is a country that is seriously affected by the weather and climate changes caused by international emissions and that Sri Lanka is an island nation, it is proposed to immediately redevelop practically the 2030 carbon emission targets. In so doing, the policies should be decided on taking into consideration the composition of primary energy that affects the overall emission rather than electricity, which is a secondary energy.
  • To implement the following measures through an accelerated programme that runs up to year 2026:
  • Encouraging high-quality fuel and electricity consumers for self-sufficient energy supplies.
  • Granting permission immediately for power supply which overlaps between the CEB transmission space (2000 MW) and the 1600 MW licensed by the Sri Lanka Renewable Energy Authority. Immediate increasing of the existing rooftop solar power supply of 690 MW by further 600 MW.
  • Publicizing the renewable energy sources, geographical zones and evacuation brands and making public aware of them
  • Expediting the provision of renewable energy storage facilities (battery systems, water pump house storages), regularizing the time-varying tariff system and expediting the provision of meters required for that in order to control the night-time demand.
  • Providing a data platform for the private sector to sell and export old appliances and to import new appliances under the theme “new equipment in place of the old” in order to promote energy saving appliances (new bulbs, home appliances, machines etc.)
  • Under the same strategy described above, providing a platform for the private sector to convert the motor cars that use fuel oils into electric cars and hybrid cars.
  • Allowing the families of Sri Lankan migrant workers who send remittances to use a portion of their remittances to install solar panel battery systems and accessories for their homes and the homes of their family members.
  • Providing space for the private sector to explore the potential for power evacuation through wind power and solar power, which are not currently extractable, and for producing hydrogen fuel.
  • Publicizing the formula of electricity charges, updating the fuel price and the electricity bill once in every month and six months respectively. Determining the water bill and transport charges in accordance with that.
  • Amalgamating the Ceylon Electricity Board and its affiliated institutions and the Ceylon Petroleum Corporation and its affiliated institutions which is a part of the fuel billing system for increasing the technical and financial efficiency of these institutions having taken into consideration the cost for employees’ salaries and other expenses.
  • Introducing Key Performance Indicators (KPIs) on electricity losses, oil transmission losses, power outages and downtime, financial discipline in the power sector and entering into collective agreements with employees.

Short term proposals

  • Appointing an Energy Manager from employees of every state institution and saving energy costs by 10%.
  • Deploying 5% of biofuel which is properly formulated for Puttalam power plant.
  • Operating the refinery continuously and using crude oil that can give maximum contribution to CEB fuel requirement, petrol, diesel, naphtha, kerosene and gas requirement. Recommending the possibility of using Octane 87, 90, 92 again in suitable vehicles after a formal, quick and scientific test considering it as an emergency situation and determining the market price accordingly.
  • Increasing the supply of diesel and reducing the price of diesel, which is commonly used for industrial agriculture, fishing and public transportation (as in the train era). Promoting the provision of online services and using digital market equipments in general to manage traffic needs.
  • Utilizing the additional 150 MW for night peak by implementing Uma Oya project.

Source: Sri Lanka Parliament

Sri Lanka: Nutrition and Social Safety Net – Field Note 4

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2 mins read

This series is based on the excerpts of the first report of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council tabled in the Parliament by Patali Champika Ranawaka as the Chair.  Composition of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council,  Patali Champika Ranawaka (Chair), Naseer Ahamed, Tiran Alles, Sisira Jayakody, Sivanesathurai Santhirakanthan, Wajira Abeywardana, A. L. M. Athaullah, Rishad Bathiudeen, Palani Thigambaram, Mano Ganesan, M. Rameshwaran; all are members of the house representing various political parties – editors

Background

  • It was reported that malnutrition remained at a higher level such as 20%, for a period of 10 years for various reasons (poverty and some others).
  • It has been revealed by the FAO survey that in June 2022, 28% of the population (June 2022) suffers from food insecurity and people usually spend 75% of their income on food. It has been observed that this is an alarming situation in comparison with the percentage of 32% reported in the year 2019.
  • In terms of food, two major factors were considered: obtaining the minimum necessary energy (in kcal) and obtaining the necessary supplementary nutrients (proteins, vitamins, and others). According to the current World Bank poverty observations, the poverty in poor countries has risen to 6.1% in year 2022 (6.8% in year 2023), based on the poverty criteria of poor countries (US $ 1 per day), while poverty in middle income countries has risen to 25.6% in year 2022 (28.2% in year 2023), based on the poverty criteria of middle income countries (US $ 3.65 per day). Similarly, the unemployment rate also doubled during the period 2020–2022 while the annual average variance of inflation has gone up to a level of 34% and the variance between years remains at a higher level such as 66%.
  • All these facts indicate that there is a rapid increase in loss of income, loss of employment, and poverty (relative and absolute).

Short-term solutions and proposals

  • The social protection laws should be formulated with immediate effect for the benefit of the victims of poverty and unemployment
  • The Department of Census and Statistics should conduct systematic sample surveys on household expenses and income, poverty, and unemployment at least once every 3 months and accordingly the relief programs and economic programs of the government should be formulated in a manner in which social pressure is minimized. It has been reported that only 20% of the population consumes nutritious food of the correct composition. This indicates the fact that 80% of the population does not get proper nutrition as far as both nutrition and energy are concerned.
  • As the nutrition during the infant stage and the first 8000 days (up to the age of 20) decides the nutrition of the human being, the nutrition targets should be formulated in accordance with that. As the nutrition of adults has been given second place in a cultural perspective, the attention has to be paid to that matter.
  • It is suggested that it is essential to have correct data and give publicity on food and nutrition.
  • The varieties of yams, green leaves, and fruits that are not popular but give immediate results should be promoted having identified traditional knowledge and biodiversity. Even though food and other relief are provided by various institutions, there is no coordination among them. Similarly, there are accusations to the effect that the aid provided by the government is used for obtaining political gains. For that reason, a digital data platform and a benefit platform should be prepared for the creation of a systematic social protection net, and the relationship among international, private, and public institutions should be confirmed through it. It should be an open process with transparency and it is suggested that an electronic card or a mobile phone should be used for that.

Source: Sri Lanka Parliament

Sri Lanka: Food Crisis – Field Note 3

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3 mins read

This series is based on the excerpts of the first report of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council tabled in the Parliament by Patali Champika Ranawaka as the Chair.  Composition of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council,  Patali Champika Ranawaka (Chair), Naseer Ahamed, Tiran Alles, Sisira Jayakody, Sivanesathurai Santhirakanthan, Wajira Abeywardana, A. L. M. Athaullah, Rishad Bathiudeen, Palani Thigambaram, Mano Ganesan, M. Rameshwaran; all are members of the house representing various political parties – editors

Background

Following were considered as two basic criteria for Food Security:

  • Availability
  • Affordability

Here, it was observed that in comparison to the Maha season of year 2020-2021, the paddy harvest of the Maha season of year 2021-2022 had decreased by 1.2 million tons (700,000 tons of rice). In a situation where 2/3 of the annual rice requirement of 2.5 million tons is expected from the Maha season, it was noticed that the paddy harvest had decreased by about 40% in the year 2021-2022. It was noticed that the harvest of other crops also had decreased by a similar percentage.

At the same time, it was reported that the prices of paddy and rice had increased by 100% and the prices of other vegetables and fruits had increased by over 100% in year 2022 in comparison to year 2021.

The key issues identified are as follows:

1.    Farmers giving up farming.

It has been observed that out of the approximately 1.65 million farmer families, around 80% are small holders cultivating lands less than 2 hectares in extent.

The shortage of raw material required for cultivation, increase of production cost, reduced harvest and relatively low income, uncertain future and attitude issues have been the primary factors here. Even though the ban imposed on chemicals on 06th of May 2021 was lifted on the 9th of November 2021, the difficulty of obtaining inorganic fertilizer still remains. As 94% of the farmers use machinery such as tractors, they have been affected by the price of fuel, shortage of spare parts, halted importation of machines etc. The issues related to

shortage of weedicides, insecticides and imported seeds and exorbitant prices and the quality of seeds were also identified.

Proposals and Solutions

  • Following 3 issues were identified to be addressed immediately.
  • The damage caused to cultivations by wild animals, damage caused during harvesting, transporting and marketing and wastage of food.
  • The legal provisions to minimize damage to harvests, reestablishing agriculture extension services and using technology for harvest conservation (promoting freezing and dehydration) were identified.
  • It was identified that state intervention was not sufficient and efficient in purchasing of harvest and distribution of food and providing incentives to the small and medium entrepreneurs to control the monopoly of the private sector (paddy and rice)
  • Through the report on fertilizer utilization, it became evident that the new ratio (70:30) for inorganic and organic fertilizer inputs was not practical.
  • At the same time the danger of the paddy harvest getting destroyed as a result of not receiving sufficient stocks of urea (requirement is 123,000 metric tons) for the season yet, the decision taken not to use TSP (60,000 metric tons), not receiving MOP (36,000 metric tons) and the season being protracted causing the harvest to be caught in the north-east monsoon was emphasized.
  • It was emphasized that even though US $ 110 million from the World Bank, US $ 40 million from the Asian Development Bank, US $ 40 million from US Aid etc. were provided, the money received (including the Indian Credit Line) had not been utilized in a regular manner for importing fertilizer due to irregularity in procurement etc.
  • The situation of not receiving the fertilizer requirement of the plantation industry sector (annual requirement of 96 metric tons of urea for tea cultivation) was also emphasized. It was also observed that the area that could be brought under maize cultivation had been limited due to lack of

required seeds and fertilizer and that it had affected chicken and egg production and the livestock industry in general.

  • It was evident that at least US $ 450 million was required for the seeds, fertilizer, and inputs sufficient for one year for the farming and plantation fields. It was identified that it is essential to open up the opportunity to provide the raw materials required by the exporters in addition to the foreign grants for this.
  • It is suggested that an expeditious and systematic process is required for procuring chemicals.
  • It is emphasized that a systematic process is required for certifying the standards of the chemicals and seeds.
  • It is suggested that government intervention and a systematic distribution methodology are required to control the prices of fuel and inputs.
  • It is suggested that it is essential to create a digital platform for fuel, input, and harvest as well as disseminate that information among farmers and sellers.
  • It is suggested that the process of providing kerosene oil to the fishing community should be streamlined and the fish farming system should be popularized
  • It is suggested that special tax relief be sought in order to keep farmers, planters, and agro-producers in the field and motivate them, and that this be done through a systematic discussion.

Source: Sri Lanka Parliament

Sri Lanka: Medicinal drugs crisis and Health – Field Note 2

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5 mins read

This series is based on the excerpts of the first report of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council tabled in the Parliament by Patali Champika Ranawaka as the Chair of the Sub-Committee.  Composition of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council,  Patali Champika Ranawaka (Chair), Naseer Ahamed, Tiran Alles, Sisira Jayakody, Sivanesathurai Santhirakanthan, Wajira Abeywardana, A. L. M. Athaullah, Rishad Bathiudeen, Palani Thigambaram, Mano Ganesan, M. Rameshwaran;  all are members of the house representing various political parties – editors

Background

  • There have been reports of the physical resources challenge of maintaining a proper health service owing to the dearth of medicine, equipment and accessories.
  • A human resource crisis is emerging with the professionals at different levels of the medical fraternity leaving the service or migrating.
  • It is also reported that the opportunity for the public to receive a continuous health service is getting limited owing to the deficiencies found in the supply of food, fuel and electricity.
  • It is the opinion of many experts that we are faced with the long-term risk of losing the relatively high health indices that we have achieved as a middle-income country.
  • This shows that a health crisis that is intertwined with the shortage of foreign exchange, financial crisis and the energy crisis is looming large.
  • It was the opinion of the Expert Committee that the current cost on medicine can be significantly reduced through the adoption of a practical scientific methodology. A programme that ensures medicinal drugs security should be implemented with the participation of the public and private sectors and the pharmaceutical manufacturers.

Solutions and Proposals

  • The preparation of a “Common Programme” with the concurrence of both the public and private sectors is proposed upon declaring an emergency situation similar to the one during the Covid-19 period, in the face of the current economic breakdown.
  • Further, considering the following facts;
  • It is reported that a sum of approximately Rs. 160 billion is spent on importing pharmaceuticals annually and 85% of that is spent on imports (US $ 380 million). Out of that nearly 45% is public expenditure and 55% is private expenditure (WHO Report – 2016). There are 15 local manufacturers of pharmaceuticals (including the State Pharmaceutical Manufacturing Corporation (SPMC)) and they manufacture 15 % of the total value of medicines thus providing 35 % of the medicine requirement of the country. The local medicine sale through private pharmacies is 4% (96% is imported). In government hospitals, it is 24% (76% is imported).
  • The import cost on the manufacturing of pharmaceuticals locally accounts for 70% of the total value on imports (An expenditure of US $ 45-50 million) The added value is 30%.
  • The private manufacturers are faced with the problems of the government not making payments to suppliers (Rs.28 billion), issues relating to issuing letters of credit and taxes on raw materials for medicines.

Therefore, it is proposed to increase the manufacture of those medicines to the level of at least 30% within the next three years, after identifying the problems faced by the local pharmaceutical manufacturers upon the constitution of a High Level Steering Committee in which the Ministry of Health, Ministry of Finance and the local pharmaceutical manufacturers are included.

  • It is reported that the National Medicine Regulatory Authority (NMRA) regulates 14000 different medicines. An Independent Expert Committee should analyze these approved medicines and make arrangements to reduce their quantity. The importation of different varieties of medicines belonging to the same brand should be limited on the recommendations of an Expert Committee. The recommendations of the World Health Organization can be used in this regard (WHO Anatomical Therapeutic Chemical (ATC) classification system). It is emphasized that the current standard tests should not be limited to approval steps but also the samples should be tested at distribution of goods (the standard is tested only in relation a very few medicines issued at present)
  • It is proposed to appoint an Independent Board of Experts as a matter of urgency and make the National Medicine Regulatory Authority more independent. It is also proposed to correctly identify the vital, essential and non- essential drugs and prepare a priority list with the focus on their results, quality and price.
  • It is proposed to prepare a new methodology by making a formal investigation on the supplementary food and supplementary drugs based on their quality, market factors and health implications in order to limit them.
  • It is proposed to issue guidelines on emergency procurements by bringing the government procurement to 2-4 weeks. The aforesaid guidelines should be rescheduled to fall in line with the standards of various international institutions such as the Indian Line of Credit by which the provisions have been received, World Bank and the Asian Development Bank.
  • It is proposed that a large amount of foreign exchange is spent on the importation on non- medicinal equipment and accessories (US $135 million per year). A management that is based on a proper audit of equipment is proposed for controlling such expenses.
  • Even though it is reported that proper data is available about stocks of pharmaceuticals, it was reported that a huge amount (Rs.15 billion) is spent on local purchases done by hospitals at certain times. It is essential to take steps to prevent such purchases as much as possible. The action taken by the directors of hospital should be recognized.
  • Considering the wide gap between the prices of generic drugs and brand name drugs, a management audit should be conducted regarding the amount of brand name drugs and with the approval obtained for that from the said Panel of Experts, a methodology should be developed for every doctor and pharmacist to abide by that. The cost effective treatment guidelines should be developed for the common diseases and pharmaceuticals should be imported accordingly.
  • Considering that stocks of various drugs and equipment are donated by certain organizations, it is proposed that guidelines focused on their standards should be developed by the Ministry of Health. The donation of substandard drugs should be discouraged.
  • It is proposed that a new mechanism is required for proper coordination between the State Pharmaceuticals Corporation and Medical Supplies Division (MSD) of the Ministry of Health.
  • It is proposed that the establishment of joint ventures of State Pharmaceutical Manufacturing Corporation (SPMC) and local private manufactures is the most suitable strategy. The money could be saved by facilitating private pharmaceutical manufacturers to function as direct suppliers instead of supplying through SPMC.
  • It is proposed to establish a trade zone for pharmaceutical manufacturing in a semi urban environment. (It was reported that the proposed Anuradhapura Zone was not suitable for that.)
  • It is proposed to increase the number of tests through a joint mechanism involving the laboratories of the Ministry of Health, laboratories of universities and private laboratories. An additional practical education will be incorporated into educational institutions through that.
  • It was observed that a certain amount of foreign exchange is spent annually for indigenous medicine as well. A methodology of joint public and private herb gardens and medicine manufacturing facilities is proposed for the manufacturing of indigenous medicine. The direct contacts should be maintained by Ayurveda Drugs Corporation with Ayurveda hospitals to alleviate the existing drug shortage.
  • It is proposed that laboratory facilities should be improved and that public private joint research should be conducted to ensure the quality and efficiency of indigenous drugs. The Ayurveda Formulary Committee and the Department of Ayurveda too should be strengthened for that.
  • It was observed that food and life styles to prevent non-communicable diseases should be promoted as drugs for such diseases in the top of the list of the most used drugs. A joint programme of western and indigenous medical systems is proposed for that.

Source: Sri Lanka Parliament

Sri Lanka: Restructuring of Public Debt and Fiscal Policy – Field Note 1

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10 mins read

This series is based on the excerpts of the first report of the Sub-Committee in identifying short and medium term programmes related Economic Stabilization of the National Council tabled in the Parliament by Patali Champika Ranawaka as the Chair.  Composition of the Sub-Committee in identifying short and medium-term programmes related Economic Stabilization of the National Council,  Patali Champika Ranawaka (Chair), Naseer Ahamed, Tiran Alles, Sisira Jayakody, Sivanesathurai Santhirakanthan, Wajira Abeywardana, A. L. M. Athaullah, Rishad Bathiudeen, Palani Thigambaram,Mano Ganesan, M. Rameshwaran; all are members of the house representing various political parties – editors

It is a well-known fact that our country is currently facing an unprecedented economic crisis. The public debt is no longer sustainable owing to the absence of public financial discipline over a prolonged period and reliance on highly risky foreign commercial loans. The payment of loan installments without taking necessary steps to restructure the debt in spite of the understanding that the debt is not sustainable anymore had emptied the official reserves and the net foreign assets in the banking system. Due to the lack of foreign exchange reserves, the essential imports such as fuel, food, and medicine and import of raw materials required for the manufacturing process have to be restricted. The burden of cost of living has risen to an unprecedented level and real income and food security of people have deteriorated. According to the official data, total inflation in September 2022 stood at 69.8% whilst food inflation was recorded at 94.9%. The transport inflation was 150.4%. Furthermore, the World Bank has predicted that poverty, which was 13.1% in year 2021, will increase up to 25.6% by the end of year 2022. It has also been predicted that the economy, which contracted by 4.8% in the first half of 2022, will further be contracted by 9.2% in year 2022 and 4.2% in the year 2023.

According to the World Bank Report issued in October 2022, it has been emphasized that the cause of the economic crisis is not Covid-19. There had been shortcomings in the economic structure and economic management policies for a long time. It has been reported that the weaknesses in the competitiveness of the export market, Central Bank Monetary Policies that have been maintained without discipline from time to time and the exchange rates that have been forcefully maintained were fatal blows to the economy of the country. The decline of the government revenue is the main reason for the fiscal instability and the increasing indebtedness of the country. Owing to all these factors and the unnecessary tax concessions given in year 2019, the amount of public debt and government-guaranteed debt as a percentage of Gross Domestic Production which was 89% at the end of year 2019 has risen up to 110% at the end of year 2021.

The amount of public debt stood at 122% of the Gross National Production by the end of June 2022.

Debt Restructuring

  • The International Monetary Fund has declared that Sri Lanka’s debt is not sustainable. The fact that the International Monetary Fund has declared in March 2020 that the debt is unsustainable and urgent action is needed has now been revealed.
  • The Rating Agencies have declared that Sri Lanka is still in bankrupt state. (Downgrade from Selective Default (SD) to Restricted Default (RD))
  • After the Ministry of Finance declared the interim loan repayment arrangement (suspension of loan repayments) on 12th April 2022, assistance has been obtained from the International Monetary Fund.
  • Lazard Freres STS and Clifford Chance LLP have been appointed as financial advisor and contract law consultant respectively in order to have negotiations with creditors.
  • The negotiations were commenced in March 2022 with the International Monetary Fund and a staff-level understanding has been reached in September 2022. The Central Bank of Sri Lanka and the Ministry of Finance have expressed confidence that the approval to the understanding concerned will receive the approval of the Board of Directors of the International Monetary Fund in December 2022. If it is proved successful, the assistance of the International Monetary Fund will be available for the next four years (2023–2027) and funding amounting to US $ 2.9 billion is to be received in tranches based on progress.
  • During the final quarter of 2022, basic information is shared with all creditors (Under non-disclosure agreements) and discussions will be held with the International Monetary Fund with regard to obtaining their technical assistance (DSA – Debt Sustainability Analysis).
  • It is expected to conclude the negotiations and implement the agreements officially during the second quarter of year 2023.
  • The principles accepted during the negotiations with the creditors are Transparency, Good faith for a Collaborative Process, Fair and Comparable Treatment to all Creditors.
  • Furthermore, most of the Economic Analysts point out that the restructuring of domestic debt is mandatory to confirm the debt sustainability.
  • At the first glance this seems like a difficult task and, in light of the stance taken by the government not to restructure domestic debt, the target is more difficult to achieve.

New Economic Equilibrium

  • At present, the government has achieved a difficult, unstable, temporary and unsustainable financial equilibrium through strategies such as the imposing of strict restrictions on importation, foreign exchange conditions and controlled exchange rates.
  • The financial equilibrium has been achieved on the basis of the decision taken for non-repayment of debt and the debt concessionary package amounting to US $ 3.8 billion granted by India. This cannot be done in the long term. The importation of investment and intermediate goods including the fuel has also been restricted. (The fuel consumption has been decreased by 40 %.) This affects adversely to the industries and the services in mid-term, and, as a consequence, to the employment and economic growth. The restrictions have been imposed on imports in the western world and in Europe as a result of the economic recession, which affects the remittances in turn. On the other hand, higher fuel prices can be expected in short term in time to come (especially in the winter).
  • The policy on shrinking the foreign trade by the Ministry of Finance and the Central Bank could adversely affect the domestic trade, domestic job market and particularly the income level of the low-income earners in the mid and long term and also the period spent for the recovery of the economy would be prolonged.

Budget (as per Appropriation Act 2023)

  • The new taxes (direct and indirect) have been introduced with a view to increasing government revenue. However, no proper process has been introduced for the control of recurrent expenditure and capital expenditure of the Government. The purpose of increasing revenue is the meeting of expenses. As a result, in addition to the social strata already affected during the first round, the middle income earners are also subjected to tremendous pressure. This will lead to short-term social apprehension and loss of trust, accompanied by the risk of disruption of large-scale industries and services (due to increase in financial expenditure, tax expenditure, fuel expenditure and other expenses) in addition to the medium scale industries and services as well as a trend of poverty, unemployment and emigration. Therefore as to whether the expected incomes from them will be accrued is something which must be taken into consideration.
  • According to the proposed Appropriation Act (presented on 5th October 2022) the revenue is estimated at 3456 billion (11.4% of Gross Domestic production (GDP). Out of the expenditure of Rs. 5860 billion (19.4% of Gross Domestic Production), Rs. 2441 billion is for interest on loans while Rs. 1220 billion is for capital expenditure of the government. Similarly, the overall loan installment is Rs. 2025 billion, which brings the total expenditure to Rs. 7885 billion. When the revenue of the government for the preceding years, the new taxes and the present GDP contraction is taken into consideration, it is doubtful as to whether the expected revenue target can be met and unless a saving of 10% can be exerted on the recurrent expenditure of Rs. 2441 billion exclusive of interest payment together with a cut down of 60% on the capital expenditure of Rs. 1,220 billion the year 2023 will not see an approach leading to government fiscal stability even in a backdrop where debt repayments have been suspended.

Control of inflation, interest rates and businesses

  • A record inflation is reported to have resulted due to a rapid increase in the new money supply into the market (nearly three trillion in 2020 – 2022) and the slowdown in the production of goods and services. The interest rates have been increased by the Central bank to control the inflation and the treasury bills are sold in the primary market at increased rates over 30%. The high interest rates, new taxes (Value Added Tax (VAT) –, Social Security Levy and high personal and corporate taxes along with the inflation have almost destroyed the local businesses. As a result, there has been a situation of non-payment of loan installments, non-payment of lease installments, dismissal of employees, closure of companies and institutions. The high interest rates for deposits, non-issuance of new loans and the inability to recover loan installments have endangered the banking sector. The risk of defaulting of public debt is another threat faced by the banking sector.

Solutions and proposals

A change in the existing system

The need has arisen to change the legal and undeveloped systems, radically in every sector. It is a necessary condition for economic growth and a prime condition for building public confidence. Although financial stability is essential at this time, there is a danger of collapsing the economy in an attempt to establish strict financial stability. Therefore, a balance must be struck between financial and economic stability.

  • A collaboration of both the diplomats and the officials to accelerate the process of debt restructuring is essential.
  • The changing of the maturity periods of loans, the loan interest and the initial loan payments by paying attention to the factors such as the total debt amount compared to the GDP, the Gross Financial Need (GFN) rate to the GDP, foreign debt repayment to the GDP in keeping with the international standards on the debt and debt repayment ability of Sri Lanka at least during the next three years and the next decade is necessary in restructuring the debt.
  • The income and expenditure, foreign exchange earnings, control of balance of payments and a full financial and managerial restructuring of the public sector is mandatory to Sri Lanka in order to fulfill the difficult task of obtaining the concurrence of the creditors for the debt restructuring.
  • It has been reported that the government had taken a decision to restructure domestic debts. The liquidity of domestic debt had been contracted by over 60% due to the inflation. If the debt restructuring is continued in spite of the above situation, it is emphasized to reach a collective agreement among the depositors of the local banks and of the Employees’ Provident Fund and the

local investors after having formal negotiations whereby the trust will be built up among the foreign creditors on the restructuring of the foreign debt.

  • It is necessary to amend existing laws and bring new laws to establish responsibility and accountability in the financial sector to prevent the recurrence of the economic bankruptcy that occurred.
  • A new Public Finance Management Law must be adopted immediately, which binds the responsibility and accountability of the Ministry of Finance and its authorities for the stability of income, expenditure and debt, and the provision for debt management and Fiscal Management (Responsibility) Act (2003)) should be updated. .
  • A new Financial Regulation Act (Monetary Law Act 1950) which ensures accountability of inflation and financial supply should be prepared in line with the old Act and thus the independence of the Central Bank should be assured.

The Monetary Board and the Governor of the Central Bank and the top management should be made responsible and accountable for the financial situation.

  • A new independent agency should be set up for public debt management. The Central Bank and the Treasury can work together in its front office and back office functions and the debt management strategy should be managed by the middle office.
  • A new strong Act should be introduced to prevent corruption and it should ensure:
  • Professionalism for investigations.
  • The confidentiality of the complainant.
  • Efficiency and impartiality of investigations and litigation.
  • Independence, impartiality, and non- partisanship in litigation.
  • Active relationships with international parallel organizations.
  • The assets and liabilities of politicians and higher-ranking officials in Ministries should be declared to the public.
  • An independent, impartial, and efficient National Procurement Commission should be appointed for regulation and appeal with regard to procurement. It should consist of professionals who have experience in every field.
  • The Department of Census and Statistics should conduct a formal census on the social impact of economic reforms (closure of industries and services, foreclosure of property, losing employment, losing income, poverty, malnutrition) in every three months and economic reforms should be changed as necessary based on that data.
  • There should be an independent Bureau to identify civil groups, families and persons subject to social pressure, based on census data, and to direct local and international donors to projects aimed at them.
  • The prices of all food items, essential services, medicine and health care should be brought to a digital platform and any service supplier and consumer should be given the facility to access it. The consumer will receive the best service for the lowest cost and market competition.
  • The public entities should be restructured to gain the public’s confidence.
  • 2200 number of public entities audited by the Auditor General should be subjected to a proper management audit.
  • The nominal institutions should be closed.
  • The public entities should be amalgamated and separated under the theme
  • “one institution for one task.” Separate institutions should be amalgamated. (Eg:- Research institutions to universities)
  • To conduct a Work Audit in the institutions, and non-essential workers should be allowed to go abroad, self-retire, take no-pay leave or resign from the service after obtaining an allowance.
  • The public sector recruitment should be done only for the essential service category and should be done only on a competitive basis.
  • The professionals with proven capabilities should be appointed to the Chairmanship and the Board of Directors of strategically important public institutions after an open call.
  • Every state institution should be given annual, monthly, technical, and financial targets in the supply of their services. The work efficiency and financial efficiency of the public sector (recurrent expenditure savings) can be improved through that.
  • The Key Performance Indicators (KPIs) should be introduced to all public entities including Ministries.
  • The promotions and salary increments for the higher- ranking officials should be based on their performance evaluations as well as seniority.
  • Those who violate procurement procedures and are connected to corruption should be deprived of their right to hold a post again.
  • A new system should be introduced to pay dividends for commercially successful enterprises.
  • After a proper Assessment of Needs and Finances:
  • Public enterprises that should be alienated;
  • Public enterprises that should be made into joint ventures with the private sector;
  • Public enterprises that should be subject to private sector management with the state owning the enterprise;
  • Public enterprises in which public management should be restructured

Such Public Enterprises should be identified, and the necessary strategies should be implemented after an open discussion with the employees.

  • The Department of Inland Revenue, Excise Department and the Sri Lanka Customs which are the main institutions of collection of public revenue, should be digitalized and restructured.
  • All professionals who provide their services on cash basis should conduct their transactions on an open internet platform and they should be open for public revenue institutions of the government.
  • No large-scale project should be commenced outside of the National Physical Plan. Moreover, no capital expenditure should be made without the approval of the National Planning Department.
  • As there is no war situation in the country, the following things should be done by a Special Public Security Management Committee;
  • Preparation of strategies on public security
  • Preparation of basic criteria on the number of soldiers, equipment and training,
  • Introduction of new economic activities for the soldiers, who are not essential for the service,
  • Preparation of an expeditious Programme for manufacturing military equipment and accessories locally and for finding foreign markets for trained soldiers and equipment.

Source: Sri Lanka Parliament

Sri Lanka: Chamber says budget is in right direction

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The Ceylon Chamber of Commerce observes that the National Budget for 2023 contains many laudable reform proposals which, if implemented in a timely manner, will complement the ongoing fiscal reforms outlined prior to the Budget. It is refreshing to see that the direction of the budget is toward reforms as compared to unsustainable relief measures seen in past budgets. However, the budget for 2023 falls short in outlining specific and concrete measures to curtail discretionary recurrent expenditure and provide greater accountability for government spending, which the Chamber has highlighted in its recent statement in response to the proposed tax hikes. The reduction in allocation towards discretionary expenditure could have also facilitated a greater allocation towards social protection programs.

The lack of implementation of budget proposals in successive national budgets has reduced the credibility of the national budget process and limited the reform process only to the speech. The implementation of the National Budget 2023 with set timelines and goals will provide credibility to the budget process as well as the success of reforms. We hope the proposed Presidential Task Force established to monitor the implementation of budget proposals will be proactive in sharing updates on a timely basis with the public providing accountability and transparency.

The Budget aims to address many of the issues faced by entrepreneurs and investors related to land, labour, productivity and tariffs. We welcome the plans to establish several new economic zones to attract foreign investment and suggest that infrastructure development and management of these zones are entrusted to the private sector under a PPP framework. Leasing out unutilized and unproductive land belonging to JEDB, SLSPC and LRC to grow exportable crops is also a positive move to release more land for economic activities that can boost forex inflows.

There is a significant focus on tax administration in line with the Chamber’s pre-budget proposals such as the appointment of a Tax Ombudsman and the introduction of a Charter covering the rights and obligations of taxpayers. We feel the output from the proposed Presidential Taxation Commission as recommended by the Chamber will assist in avoiding ad-hoc changes in taxation as seen in the last few years. Proposals on rationalizing the tariff structure including the phasing out of para tariffs will also be key in driving trade and investment.

The reiteration of the commitment made in the interim budget to introduce a new, updated and unified labour law balancing the interests of both employers and employees is noteworthy. We also welcome the proposals to establish an unemployment insurance scheme and a health insurance scheme for private sector employees through the Employees Trust Fund. Reintroduction of paying wards in government hospitals is also a step in the right direction.

The proposed growth of 64% in Government revenue will require economic activity to rebound and complement the improvement in tax administration and higher tax rates. As such, proposals with a view of enabling growth to reach a sustainable path and improving capital formation would have been desirable in the budget.

As the premier body representing the private sector, the Ceylon Chamber of Commerce stands ready to assist the government in driving a progressive reform agenda and engaging with the proposed Taskforce for the implementation of the budget. We hope that many of the reforms outlined in the budget will move forward the discussions with the IMF and creditors as well as drive economic growth and development trajectory of the country.

Colombo Chamber of Commerce

Sri Lanka: False promises at the cost of working people

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The following statement issued by the Feminist Collective for Economic Justice Statement on Sri Lanka’s Proposed National Budget for 2023

The Government’s budget presented on 14th November, 2022 is incredibly callous. It fails to acknowledge the suffering Sri Lankans are enduring due to the economic crisis. The budget speech refers to ‘rapid economic growth’ and ‘economic modernization’ as the way forward, which are unrealistic in the current scenario. While many Sri Lankans are experiencing hunger, it received no mention in the budget speech. At a time when proposals ought to be overtly people centered to mitigate the humanitarian impact of the crisis, the budget reflects a serious disconnect from the realities of ordinary people of this country.

We are appalled that while admitting to the failure of economic policies since the late 1970s, there is a direct laying of blame with the people. Demonstrating a complete lack of awareness of people’s lives in the past and present, the budget speech says, “We got lazy day by day. People got used to getting everything from the government,” casting hardworking people as lazy and discrediting their contribution to the economy. It is timely to recall that the shift to the liberalisation model pushed Sri Lankans into employment under harrowing working conditions to be exploited as cheap labour. The Sri Lankan economy has and continues to survive upon the shoulders of the workers, primarily women, in these sectors of unfair labour – garments, migrant labour and plantations.

It is an abject failure of the government to take responsibility for the crisis that the working poor in Sri Lanka find themselves in today. The crisis is a direct result of ill-conceived economic policies over the years by the ruling class, including by investing foreign debt into projects that did not benefit the working people.

Women’s Labour

The proposed budget fails to acknowledge the burden of the crisis on women and only refers to the elusive category of ‘young women entrepreneurs’. Thousands of women are leaving as migrant workers to send hard earned remittances to the country. Where are they in this budget?

An entrepreneurship model based on microfinance loans is already established as deeply problematic. For years, this country has failed to provide solutions to the widespread and overwhelming household debt cycles that the poor have been thrown into, as a result of these loans. Those affected by microfinance loans, some of whom have taken their own lives, have made the horrors of these loans well known through long standing protests. The budget also fails to recognize the increase of violence against women this year. Women are bearing the brunt of this crisis and this budget attempts to transfer the burden of economic recovery squarely on to women as well.

Unemployment

Given the contraction of the economy by almost 10% of GDP is expected this year, widespread unemployment is inevitable. The solution to the looming unemployment cannot be resolved by entrepreneurship and foreign employment. Instead, in order to stimulate the local economy, the Government should be committing to investing in key sectors such as agriculture, fisheries and local industries and strengthening public services. No such commitment is reflected in the budget.

Dependence on attracting foreign investments amidst a rather bleak global economic scenario is risky. Furthermore, plans for more economic zones signals expansion of precarious, cheap labour that particularly targets women. We are well aware of the disregard for labour laws by employers in export processing zones. The budget proposes more labour reform which raises alarm bells for workers’ rights.

Food security

Food security has not been given priority in the budget, even though recent reports suggest one third of the population are food insecure, over 70% of households have changed food intake habits and harvests have reduced by 33.7% (a 50 year low). We are not going to emerge from the serious food crisis without a robust plan to recover the food production and distribution system.

An allocation for nutritional supplements for children in risk of malnutrition is a welcome aspect in the budget. However, we note that the amount is inadequate to address the severe malnutrition reported among children. Given the very real danger of starvation deaths, the budget should have prioritised a food distribution system and a universal school meal programme.

We are concerned that the language of ‘underutilised’ and ‘unproductive’ land has led to displacement and eviction of the poor and workers in the past. We are well aware, the fertiliser ban in 2021 and increased costs have led the farmers to abandon cultivation. There is an urgent need to revitalise farming by supporting small farmers as a way to build sustainable futures for themselves, their families and for the food needs of the entire country. On the contrary, the budget enables formalising and justifying land acquisition by multinational corporations. This will further deteriorate rural economies by turning farmers, especially women into daily wage earners and no progress will be made in finding sustainable solutions to fulfill Sri Lanka’s food needs.

No relief has been provided to fisherfolk who are hard hit by sharp increases in kerosene prices in the budget, leaving the main source for protein Sri Lankans rely on in a precarious state. The plantation sector workers, who have been deprived by the state for decades, are yet again ignored in the budget.

Social Security

The budget proposes a ‘social security and open economy’ approach which is nonsensical. Looking at the social security items of the proposed budget, it is clear that there is no expansion of social security. Analysis of the exponential increase in poverty and an acknowledgement of the impact of inflation on the cost of living is absent. Even the inadequate relief can only be viewed with skepticism, given that registered beneficiaries are yet to receive the relief promised in the interim budget of September.

The budget refers to the meager amounts of relief provided to specific categories identified as vulnerable groups. Such an extremely limited focus on social security is illogical when even conservative predictions are that almost half of the population are in danger of falling into poverty. The failure to consider universal social protection in these dire circumstances is a stark gap.

Education and Health

The budget has no mention of the major disruptions to schooling due to Covid-19 and thereafter, the economic crisis. It does not address learning loss or propose a plan for education to help an entire generation that has been impacted. The proposal to introduce paid wards to government hospitals is deeply concerning. Instead of addressing the frightful conditions of hospitals, such as lack of essential equipment, infrastructure, and trained staff in rural districts, the proposed paid wards will allocate the remaining limited resources to the people who can financially afford them, further marginalising the poorest. We are well aware that these are initial steps towards eventual privatisation of the health system in Sri Lanka, thus, ridding the country of its proud accolade of being the only nation in South Asia with a functional public health system.

The allocations made to vital sectors in comparison to the allocation for Defence is telling of the Government’s priorities. The budget allocation for Defence is Rs. 539 billion while Health is allocated Rs 322 billion and Education Rs 232 billion.

Revenues

The Government is relying heavily on indirect taxes (VAT) for revenue generation. We can expect the cost of living to continue to remain high in the coming year, given no wage increases are in sight. It is the ordinary people who have to bear the burden of the proposed tax scheme and be expected to shoulder economic recovery. Demands for a wealth tax have gone unheard. We, as FCEJ, have called for redistributive justice via a wealth tax to increase government revenue without making the lives of ordinary citizens even harder.

Economic recovery?

The budget does not address the immediate humanitarian concerns of preventing a food crisis. Nor does it put forward an economic recovery programme that is people centered. Instead, disjointed policy prescriptions that hark back to the failed policies of an earlier era have been regurgitated. The budget, no doubt, will deepen the impact of the crisis for ordinary people. It is time for people to rise and demand for economic justice.

The Feminist Collective for Economic Justice is a collective of feminist economists, scholars, activists, university students and lawyers from across the country that came together in April 2022 to understand, analyse and give voice to policy recommendations based on lived realities of communities they work with in the current economic crisis in Sri Lanka. 

Nothing can Substitute Face to Face – Xi to Joe

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Chinese President Xi Jinping said on Monday here during a meeting with his U.S. counterpart, Joe Biden, that as leaders of two major countries, they need to set the right course for bilateral ties.

From the initial contact and the establishment of diplomatic relations to today, China and the United States have gone through 50-plus eventful years, with gains and losses as well as experience and lessons, Xi said.

Noting that history is the best textbook, the Chinese president said that the two sides should take it as a mirror and let it guide the future.

Currently, the state of China-U.S. relations is not in the fundamental interests of the two countries and their people, Xi said, adding that it is not what the international community expects from the two countries either.

As leaders of two major countries, Xi said, the two presidents need to play the leadership role, set the right course for the China-U.S. relationship and put it on an upward trajectory.

A statesman should think about and know where to lead his country. He should also think about and know how to get along with other countries and the wider world, he added.

Emphasizing that in this time and age, great changes are unfolding in ways like never before, Xi said that humanity is confronted with unprecedented challenges.

“The world has come to a crossroads. Where to go from here? This is a question that is not just on our mind, but also on the mind of all countries,” Xi said, noting that the world expects that China and the United States will properly handle their relationship.

Noting that his meeting with Biden has attracted the world’s attention, Xi said that the two sides should work with all countries to bring more hope to world peace, greater confidence in global stability, and stronger impetus to common development.

Xi said that he stands ready to have a candid and in-depth exchange of views with Biden on issues of strategic importance in China-U.S. relations and on major global and regional issues, adding that he also looks forward to working with Biden to bring China-U.S. relations back to the track of healthy and stable growth to the benefit of our two countries and the world as a whole. 

Source: Xinhua

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