Business

Sri Lanka: Transportation – Field Note 6

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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

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

Ceylon Chamber makes clarion call for independence of Central Bank

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1 min read

The Ceylon Chamber of Commerce is firmly of the view that institutions like the Central Bank of Sri Lanka should be allowed to function independently in performing its mandate as in most other countries, particularly at this stage when the country is grappling with a major economic crisis. We emphasize the need to reintroduce the Central Bank Act which was proposed in 2018 when the current President was Prime Minister to enable an independent Central Bank, prioritize price stability and limit the monetization of the fiscal deficit.

The Ceylon Chamber reiterates the need for a strong and independent Central Bank which is paramount in driving Sri Lanka’s economic revival. Over the decades, Sri Lanka has been hampered by weak institutions and poor governance that has deteriorated the efficiency of the public sector and led to sub-optimal policymaking on the economic front. The present plight of the country has been attributed by many experts to weak institutions that have not been able to perform their role in line with expectations due to excessive political interference. The success of the journey taken on by the Government to move out of the current debacle with the support of development partners and the international community will undoubtedly rest on the commitment it demonstrates towards better governance and adoption of best practice.

The Chamber recently published a set of proposals to ensure an independent, productive and efficient public service. These proposals are aimed to ensure formal checks and balances within the public sector, and improve efficiency in order to transformthe public sector into a people centric arm of the state.It is vital that proposals such as these are implemented so that national development can be accelerated through efficient and independent service delivery by the Government.

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: 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

Inflation is a Bigger Danger Than Red China

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A few billion here, a few billion there – and suddenly we are looking at real money.  Even more important, real inflation.

Governments all over have been spending like drunken sailors in a desperate attempt to counteract the ruinous effects of the Covid pandemic and resulting closures. 

We have seen panic spending accelerate as governments threw away all sensible financial guidelines after unemployment rose sharply and banks took fear.  Markets swooned and financial markets issued storm warnings. 

Everyone remembered 2009 when ATM’s began to run out of money. Panic was in the air.  And all this in a mid-term election year where the Democrats appear to be trailing significantly.  Lurking not so far off is a giant storm cloud belching fire and smoke named Donald Trump and his legions of hillbilly Republicans, Christian evangelists and suburban gun owners.

Economists assured TV viewers that the sharp inflation being experienced by Americans was due to various sorts of arcane mumbo jumbo, wicked Red Chinese, menacing Muscovites, and even labor or supply chain shortages.

But the real culprit – certainly in the case of the US – is the federal government in Washington sitting atop a monster $30.5 trillion national debt that keeps growing larger and larger.  Economists have previously assured us that our ability to print unlimited quantiles, and the world’s willingness to accept this fiat money, meant that our huge deficits and run amok borrowing did not really matter.

But they do. In my native New York City, I went for my usual breakfast of eggs, turkey bacon and a toasted bialy (a sort of Jewish English muffin). It cost $19.10.  The next morning, I had the identical breakfast – and then it cost $21.10.  That’s inflation – which Hermann Goering rightly observes can bring down governments faster than revolutions.

Governments create inflation and benefit from it.  Inflation is a form of taxation that increases their revenue and lowers their debts (they pay back borrowing in depreciated currency).  They get more from taxes.

Republicans used to keep the lid on inflation until Donald Trump came along. He blew the lid off and appeared heedless of the dangers of overspending.  Farmers, a party bedrock, got huge subsidies and grants.

The Democrats have always been the party of overspending.  Many Democratic voters don’t even pay taxes.  Many others receive subsidized food, rents, education and health care.

Forty percent of Americans pay no income tax, meaning that sixty percent must support them.  America has ended up, like France, with a permanent underclass that lives off the fat of the land.  France was crippled by having to support a large, non-productive class that always threatened to explode into violence.

In a similar sense, America’s big cities have also fallen prey to a permanent welfare class that holds the urban areas hostage.   I vividly recall the New York City power failure of 1977.  Soon after the lights went out all over town, mobs of looters poured into the dark streets, smashing, stealing or burning. It was the heart of darkness.

My father, a Manhattan liberal, told me, ‘if we don’t keep giving them money, they will come and burn down our part of town.’

Trump supporters claim the last presidential election was stolen.  This is not the case.  But their claim of theft is really code for the mobilization of black voters that propelled Biden into the presidency.  Without the big turnout of black urban voters in big cities, Trump would have won.  But neither he nor his supporters dare assert that they mean black voters. Any more than Democrats dare claim that extreme Christian right-wingers form Trump’s base.

Interestingly, all the banners seen during the mob attack on the US Congress hailing Trump and Jesus have been scrubbed from TV news reports. 

Recall the warning, ‘When fascism comes to America, it won’t be wearing jackboots. It will be wrapped in the stars and stripes and carrying a Bible.'” Attributed to author Sinclair Lewis. 

I went to school with the son of Charles Lindbergh, a leader of the US anti-war right. His memory still quietly inspires some Americans, particularly in the Midwest, South and Western states. History could be coming full circle.

Copyright Eric S. Margolis

Christell Luxury Wellness launches revolutionary new own-brand skin and body care line

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Christell Luxury Wellness has unveiled an exciting newskin,hair, and body care line, under its own brand name “CHRISTELL”– its first-ever product offering, anda breakthrough expansion by the country’s leading cosmetology centre into the regenerative aesthetics space. At the launch event held on Saturday 29 October at the Shangri-La Hotel in Colombo, invitees were treated to an exclusive look into the uniquenew skin and hair care collection and also learn of how eachproduct holds the potential to answer some of the most pressing beauty quandaries.

All products in“CHRISTELL” featureonly the freshest and most superior ingredients, combining the natural healing properties of indigenous Sri Lankan herbswith the science of modern integrative medicine to produce the most effective results.Free of contaminants and synthetic elementsthat harm skin and overall health, all ingredientsfor the entire line are harvested at their peak, with only the most potent and active part of the plant incorporated into the traditional product making process.While supporting Sri Lanka’s economy through local manufacturing, this product line also empowers thelocal farming community as a result.

Skin care isn’t just targeted towards the skin, but alsoplays a crucial role in influencing our overall health and wellbeing. “We have come across many clients who have developed adverse side effects by using unsafe skin care products, and unfortunately the numbers keep increasing everyday,” said Dr Shanika Arsecularatne, Medical Director of Christell Skin Clinic.

“Over the years, our loyal clientele have been asking for products that we endorse for them to add to their beauty regime,”said Prof. Ramani Arsecularatne, Director of the Christell Skin Clinic, speaking at the event.“Christell Skin Clinic has been a pioneer in the Sri Lankan beauty industry, offering cutting-edge, non-invasive medical treatments for all skin, hair, and body care needs for over10 years now, and we decided that it was time we combine our deep expertise and clinical knowledge to formulate our own product range- as a take-home extension of our world-class cosmetology services.”

The CHRISTELL line of products will now be available for purchase from Christell Skin Clinic’s online store and as from all of its clinics across Sri Lanka.

[ Nadiyah Akram – Corporate Communications & Public Relations]

Following images were captured during the event;

Sunak: What He Doesn’t Want You to Know

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8 mins read

Prime minister Rishi Sunak – reportedly the richest MP in Parliament – would be a boon for the financial lobby, tax justice campaigners have warned.

As talk turns to the next Conservative leader, the man trounced by Liz Truss just weeks ago is now the favourite to replace her. But experts say Sunak has not been transparent with his finances and that his hedge fund background raises questions about his commitment to fighting tax avoidance.

His profile has risen sharply since he became chancellor in early 2020, just weeks before the first lockdown began. But critics say a slick public marketing campaign has disguised a man with an ultra-privileged background, who is a committed Thatcherite ideologue.

Here’s the openDemocracy guide to the man who might just end up as the UK’s next prime minister, originally published in January 2022.

He went to private school

Sunak marked his first year in the Exchequer by tweeting two photos of himself: one as a child in school uniform, and one as the chancellor, standing outside Number 11.

He wrote: “Growing up I never thought I would be in this job (mainly because I wanted to be a Jedi) […] It’s been incredibly tough but thank you to everyone who has supported me along the way.”

The message carefully tip-toed around his privileged upbringing. Until the age of 11, Sunak attended Oakmount Preparatory School and then the Stroud Independent Prep School,  the latter of which now charges fees of up to £18,500 a year.

From there, he studied at King Edward VI School in Southampton (now £17,000 a year) before moving to Winchester College (now £43,335 a year).

Five chancellors and one prime minister have attended Winchester, one of England’s oldest public boarding schools and a long-standing rival of Eton, before Sunak.

“[Sunak’s] tweet made me smile,” said Richard Beard, an author whose latest book ‘Sad Little Men: Private Schools and the Ruin of England’ assesses the private education system and the many politicians that have been through it.

“The idea that, while studying in Winchester College, he would have never thought he would be at the top of government is very unlikely to me. Leadership qualities are one of the things that they teach you and you’re bound to think of your future in those terms.

“So he would definitely have thought that that is the kind of job that he’d be in, even if he didn’t explicitly think of chancellor of the exchequer.”

In media profiles, Sunak’s allies describe him as “immaculate”, “calm” and “organised”, qualities befitting of a former Winchester head of college. None volunteer that he is empathetic or compassionate. When given examples of people who are experiencing hardship in Parliament or press interviews, as he was on ‘Good Morning Britain’ last year, Sunak listed policies in response, but offered no consolations.

Beard, whose book is partly based on his own experiences, believes all-male boarding schools emotionally harden their students. To survive, he says, boys cannot show any vulnerability among their peers.

“If you repress emotion for yourself then ultimately it becomes very easy to repress feelings for other people,” he argues.

And while boarding schools like Winchester may prepare students well to advance in politics, Beard says they instil a worldview that is far from ordinary.

“Money is at the centre of it all because everyone knows it costs a lot of money, including the boys, but the actual money is abstract. The needs of everyday life are simply taken care of for you,” said Beard.

“How can you actually then think in terms of people struggling for five pounds and ten pounds?”

He cut benefits

Last year, Sunak was heavily criticised for axing a £20-a-week increase to Universal Credit that had helped some of the poorest families through the pandemic. More than 200,000 would have been pushed into poverty as a result of the cut, according to research by the Joseph Rowntree Foundation.

Just weeks before the cut was confirmed in July, the chancellor requested planning permission to build a private swimming pool, gym and tennis court at the Grade II-listed Yorkshire manor that Sunak and his wife, Akshata Murty, purchased for £1.5m in 2015.

After several MPs from his own party spoke out against the Universal Credit cut, Sunak increased in-work benefits in his Autumn Budget – but not by enough to offset the cut.

He has a lot of money

The Sunaks’ Georgian mansion, where locals described attending parties with liveried staff pouring champagne from magnums, is not the only property they own. There is also the £7m, five-bedroom house in Kensington, west London; a flat, also in Kensington, that the couple reportedly keep “just for visiting relatives”; and an apartment in Santa Monica, California.

The chancellor’s extensive property portfolio is just one source of his wealth. After studying at Oxford University, Sunak went on to work for US investment bank Goldman Sachs for four years. He left to pursue a business degree at Stanford University in California, where he said meeting influential figures in the multi-billion US tech industry “left a mark” on him.

From there, Sunak had a stint working at hedge funds back in London. He was a partner at the Children’s Investment Fund (TCI) where he is believed to have made millions of pounds from a campaign that helped trigger the 2008 financial crisis.

Sir Chris Hohn, the fund’s founder paid himself a record £343m in the first year of the pandemic. TCI is ultimately owned by a company registered in the Cayman Islands, according to its accounts. Its philanthropic arm, the Children’s Investment Fund Foundation (CIFF), donated £255m to charitable causes last year (full disclosure: openDemocracy has received funding from CIFF since 2019).

Sunak then left to co-found his own firm Theleme, which had an initial fund of £536m – and is also registered in the Cayman Islands.

His financial interests aren’t very transparent

The Cayman Islands are one of the world’s top offshore tax and secrecy havens. When an investment is made through a hedge fund in the Caymans, “nobody can possibly know where the money has come from”, said Alex Cobham, the chief executive of the Tax Justice Network.

Not all the money that goes through the Caymans is dirty, and hedge funds argue that they need to keep their investment strategies secret to be competitive.

Nevertheless, “it is probably the best, certainly the most reputable, way of allowing fairly questionable money in large volume to go into mainstream financial markets,” said Cobham.

An estimated $483bn (£357.62bn) a year is lost in cross-border tax abuse by multinational companies and by individuals hiding assets in havens like the Cayman Islands, according to the Tax Justice Network.

“Somehow, in the financial sector, we still have this idea that it’s basically smart to game the system. If these are the people, and the culture, that is coming into public life then we’ve got a real problem,” said Cobham.

When Sunak became a minister in 2019, he placed the investments he held from his years of working in finance into a ‘blind trust’. Such agreements are intended to avoid conflicts of interest by handing over control of assets to a third party, but whether that works in practice is questionable.

“These trusts don’t necessarily come with any legal mechanism to prevent the owner of the assets actually dictating what happens, or indeed seeing through any claimed blindness,” said Cobham.

“If politicians were willing to make the arrangement transparent, including the legal documents, we might have some confidence in them,” he adds.

Sunak has declared the trust in his entry on the Register of Ministers’ Financial Interests, but not the contents of it. The rest of his disclosures are remarkably minimal for a man with an estimated net worth of £200m.

Aside from the trust, he has listed his London flat and the fact his wife, Akshata Murty, owns a venture capital investment company, Catamaran Ventures, which the couple founded together in 2013.

Murty, who Sunak met at Stanford, is the daughter of Indian billionaire NR Narayana Murthy, who co-founded the IT company Infosys. Her shares in that firm are worth £430m alone, a fortune larger than the Queen’s and enough to make her one of the richest women in Britain.

The Murthy/Murty family (Narayana’s children have dropped the ‘h’ from their name) is reported to have invested part of their wealth through Catamaran Ventures, though how much is unclear. Sunak resigned his directorship of the company in 2015.

Ministers must declare the financial interests of their close family – including in-laws – which might give rise to a conflict, but Sunak has declared only one of the companies that his wife owns. A host of other family assets – including a £900m-a-year joint venture with Amazon in India, owned by his father-in-law – are not mentioned, according to the Guardian.

Sunak is said to have met with the government’s then head of propriety and ethics, Helen MacNamara, before becoming chancellor, to review what interests should be declared. MacNamara said she was satisfied with what had been registered at the time.

He has strong links to right-wing think tanks

Sunak reportedly led the hawks within the cabinet who opposed taking action when scientists recommended a circuit-breaker lockdown in September 2020, arguing that restrictions would be too economically damaging. Johnson delayed the decision and infections spiralled leading to a more punitive and lengthier lockdown in November.

“Sunak’s been the voice most consistently pushing for watering down of COVID restrictions in the cabinet. So, if you like, he is a kind of a logical continuation of that Thatcherite impulse within the Tories,” said Phil Burton-Cartledge, the author of ‘Falling Down: The Conservative Party and the Decline of Tory Britain’.

Soon after becoming an MP in 2015, Sunak wrote a report calling for the creation of ‘freeports’ around the UK for the right-wing think tank, Centre for Policy Studies (CPS), which was co-founded by Margaret Thatcher.

The policy idea – that tax-free, deregulated outposts will revitalise post-industrial coastal cities – was fittingly tried by the former PM in the 1980s, before being dropped by David Cameron in 2012 after proving unsuccessful.

Sunak also worked for another right-wing think tank, Policy Exchange – which, like CPS does not declare its donors – before becoming an MP, and has spoken at the Institute of Economic Affairs since becoming chancellor. All three think tanks have been consistently ranked among the least transparent in the UK.

He has a slick PR operation

During the pandemic, billionaires such as NR Narayana Murthy saw their wealth increase – Murthy’s fortune was up 35% to £2.3bn in 2021– while inequality between the richest and poorest grew. What, then, explains the seeming popularity of a former hedge fund manager like Sunak at a time in midst of a cost of living crisis?

Part of the answer might be the way Sunak has presented himself. Unusually for a chancellor, he hired the co-founder of a social media agency to manage his public image after he was appointed.

Since then, the content on his social media channels – from casual ‘ask me anything’-style YouTube videos to puppy pictures on Instagram – have more closely resembled a celebrity influencer than a frontrunner for Tory leader.

Jonathan Dean, an associate professor of politics at Leeds University, says this reflects broader political trends: “Forms of celebrity are increasingly prominent within politics, and that can either take the form of people who were conventional celebrities entering electoral politics, or it can also take the form of politicians trying to ape the publicity and performance traditionally associated with celebrity culture.”

Politicians draw on tactics from the world of celebrity influencers, Dean suggests, partly because they can mask their political views.

“A lot of politicians don’t have a particularly coherent or well-thought-through set of ideological commitments or kind of policy ideas. And I think certain forms of celebritisation allow them to circumvent that,” he said.

In Sunak’s case, it seems he has been even more successful in influencing journalists than the public. A picture of him working from home in a hoodie became a media frenzy after columnists from Vogue and GQ complimented his looks, which, in turn, spawned mockery on social media. It wasn’t long after that Sunak was being asked how he felt about being described as ‘Dishy Rishi’ in an interview with LadBible.

While Sunak may be the most popular Tory politician among the public, among party members he is second to the foreign secretary Liz Truss, his main rival for Tory leader if Johnson goes.

Burton-Cartledge suggests that this might be because he has not demonstrated the same zeal as Truss for pursuing a ‘war on woke’.

“He is of the same mould as Cameron: economically Thatcherite, but socially liberal,” said Burton-Cartledge. “That said, I can’t see him rowing back on the tough rhetoric about migrants in the Channel.”

Views expressed are personal

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