'WE ARE JEALOUS' NOT A CRITIQUE OF THE ECONOMY

The Central Bank annual report is so sanguine, that it will inevitably invite wry comments from the detractors who would say it is too good to be true. That's normal, but first let the facts come under the crosshairs. The growth rate has been nudging an impressive seven and inflation is single digit -- and the President observed that the economy is doing well in spite of a global downturn due to the strong fiscal fundamentals.

But the Cassandras will be legion. The Harshas are rearing to go with their pet theories that the nation is heavily in debt, and that the growth rates offer little comfort to the common man. The economy however, can in the circumstances of a near total collapse of national economies worldwide, advance only at a steady gallop. We can run, we cannot fly.

But the self-anointed economic Czars say that there is near asphyxiation of the body politic here in Sri Lanka, with debt figures mounting.

On all of these issues, the cynics could be thrown an open challenge, and this is what this newspaper wishes to do. On the issue of debt, the Central Bank governor says categorically that the relevant index shows we are less indented that we ever were, in the last forty years or so. It is not the Mattala loan or the Urban Development loan or a specific adjustment facility that should determine the status our indebtedness.

On the contrary, the overall debt picture is reflected via the indices. If the indices are strong, what are the Cassandras prattling on about?

A rough analogy could be the household budget. Somebody could take a look at how Citizen Perera handles his finances, and say that this man Perera is getting the family into debt because he took a significant loan for the purpose of building an extension to his house.

But Perera can show the details of his finances to his brother-in-law and say 'Look, I can afford to take this loan, because over the years, I have built up the financial reserves necessary to make the servicing of this debt possible.'

On the same lines, if the debt to GDP ratio is at the lowest level for the past forty years or so, the canard that the government is plunging the nation in debt is badly exposed.

That's the first challenge, the one on debt, but the next could be on the issues of growth and on inflation. The growth figures have been sustained at around 7 per cent for the third year in succession, and that is an incontrovertible figure. If the experts have anything they can come up with regarding these numbers, they could do so -- or hold their peace forever.

These growth rates can hardly be contradicted; they are independently verified, and these are the same figures that are cited say in the CIA Factbook on Sri Lanka, or any U.N data file. A detractor who cannot challenge these figures cannot come up with horror stories about profligacy, because, as in the example cited above on debt, one off stories about 'profligate projects' cannot be held to be representative of the performance of the economy at large.

The other challenge is on inflation. The shadow economic Czars of the opposition who cannot get out of the critique-narrative simply because they are never going to be policy implementers -- but always policy critics -- have for long been saying that the inflation figures are not reliable.

But they are down to single digit. The fact remains that these critics cannot make a substantial dent on that figure even with their own estimations. Single digit cannot even by the most exaggerated stretch, be made into say a figure of twenty plus. Compared to most world economies that are suffering from meltdowns and resultant economic chaos, this is a sanguine picture.

Three major challenges, and the economic Czars in waiting cannot possible take on one of them. If they could, they should - or hold their peace, but in the very unlikely scenario that they can offer any cogent contrary reasoning with regard to these queries, it is best that they desist from measuring economic progress in terms of one off examples of apparent profligacy, which is a lazy way of saying 'we are jealous.'