30th December 2001

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Committees to ensure fair distribution of goods to North

Two special committees will be set up and officials from the Ministry will be posted to the Wanni District Secretariat to facilitate the fair distribution of essentials and other items, Minister of Rehabilitation, Resettlement and Refugees, Dr. Jayalath Jayawardene said.

Dr. Jayawardene said a new scheme has been drafted to differentiate between the items that could be released after the lifting of the embargo on supplies to the North and others that are prohibited, and stressed that the government wished to ensure the speedy supply of essentials to the people in the North.

Dr. Jayawardene observed that during the past few years, all supplies sent had not reached the people for whom they were meant, which is the reason for the appointment of the two special committees to ensure the smooth flow of goods to the North and to see they reached the beneficiaries and not others.

He added that there has been corruption in the process of distribution and there have been many an instance of goods not reaching the intended destinations.

Greens want coordination on environment

By Faraza Farook

The Green Party, an environmental NGO, has expressed concern over the allocation of three institutions that deal with environment to ministries other than the Environment Ministry.

The omission of three institutions, namely, the Coast Conservation Project, the Marine Pollution Prevention Authority and the Land Reclamation Corporation from the Environment Ministry could result in environmental problems, the Green Party warned.

It has suggested that if these institutions were to remain under different ministries, a plan to coordinate their functions was essential.

Earlier this month, in a letter to Prime Minister Ranil Wickremesinghe the Green Party requested that all government institutions dealing with the environment be brought under one ministry. The letter stated that many environment related problems at policy and managerial level have arisen in the past due to some state departments, statutory boards and authorities dealing with the environment being allocated to different ministries.

"This kind of errant allocation has created much confusion in the smooth functioning of these institutions, with the end result being chaos in environment management," Green Party Secretary Dr. Prasanna Cooray said.

In its letter the Green Party listed nine institutions that should be vested with the Environment Ministry in order to minimize the managerial disarray that prevails in the field today. However, three of the nine institutions have been left out from the Environment Ministry in the newly formed Government.

Dr. Cooray said the Land Reclamation Corporation (LRC) has been vested with the Housing Ministry, while the other two institutions have been allocated to the Fisheries Ministry.

He said, ideally, the LRC should come under the Environment Ministry as its work has a bearing on the environment. "The Housing Ministry is not going to consider environmental issues and the Central Environmental Authority has no say in certain issues," Dr. Cooray said.

He said the filling of wetlands to construct houses, which has been taking place in the past, poses a serious threat to the environment. Despite being a signatory to the RAMSAR Convention on conservation of wetlands, Sri Lanka continues to fill wetlands ignoring the consequences.

"It is not seen as an environmental problem and thus it has grown into a very serious problem in the urban and suburban areas," Dr. Cooray said.

According to Dr. Cooray, wetlands are of ecological importance and is a breeding ground for certain species of fish and birds. With dengue outbreaks being reported from various parts of the country, he pointed out that the mosquito density could be reduced if wetlands were conserved.

"Certain fish eat the mosquito larvae and can help to reduce the mosquito density. Thus it could be viewed in a health perspective too," he said.

Flooding is also a result of filling wetlands, Dr. Cooray said.The consequences of bringing the Coast Conservation Project and the Marine Pollution Prevention Authority under the Fisheries Ministry can result in similar environmental problems, he warned.

The Sunday Times economic analysis

2001—The economy's lost year

By the Economist

The year that is ending is best forgotten in as far as its economic performance is concerned. Internal and external shocks and lack of proper management and direction of the economy resulted in a very poor economic performance.

Consequently it will record a minimal economic growth. In reality all sectors of the economy declined. The economic performance of this year can only be compared with the very low economic outputs of the JVP insurgency years of 1971-72 and 1988-89. The economic difficulties arose from a multiplicity of causes. At first the global downturn had a decisive impact on the country's exports. The drought conditions resulted in lower agricultural output, a decline in paddy production, in particular. It also played a role in accentuating the energy crisis that had been developing over the years. Terrorist attacks in July were certainly a major set back to the economy.

The September 11 terrorist attacks on the US almost overshadowed our own terrorist destruction. The global impact on economies made our situation much worse. Owing to the political instability of the government, the possibility of a constitutional crisis and the electioneering, there was little economic management just at the time when good management was critical. Political expenditures and the dislocation of the economy owing to the elections and its pre- and post-election violence served to only compound these problems. The economic performance indicators for the ten months of the year bear witness to the very poor performance of the economy this year. The Central Bank estimated that the economy grew by only one per cent in the first half and that the overall rate of growth of the economy for this year would be 1 per cent. When the final figures are available, we could expect the growth rate to have plunged even below this. This is to be expected on the basis of the statistics of economic performance available for the first ten months of the year. The last two months far from revising these figures upwards are likely to disclose a further downturn. Agriculture, industry, tourism and trade performed badly. Exports declined. All major crops, except rubber, have registered a drop in production in the first ten months of the year. Paddy production decreased significantly this year. Tea production that has shown a significant up-trend on the last eight years declined by over 3 per cent, while coconut production declined by nearly 6 per cent. Industrial production in the private sector declined by nearly 10 per cent in the first nine months.

The most disappointing, as well as far reaching in its effects, was the significant decline in export incomes. Exports declined by 9 per cent. The decline in Industrial exports amounted to nearly 10 per cent, while agricultural exports declined by nearly 6 per cent. The decline in industrial exports was a reflection of the lower global demand owing to the slow down of developed economies. The decline on garment exports by as much as 11 per cent was also due to domestic factors, such as industrial unrest and higher costs of production. These factors have rendered some garment firms uncompetitive in the international market.

While the decline in imports by nearly 15 per cent is superficially advantageous to the trade balance and the balance of payments, it demonstrates very clearly the economic downturn. Investment goods imports declined by a massive 24 per cent, while intermediate goods or raw material imports have declined by 11 per cent. These figures imply that industrial production would continue to decline for sometime in the future.

The decrease in imports by nearly 15 per cent has helped reduce the trade deficit in the first ten months by as much as 33 per cent. Still the trade deficit is large at US $ 926 million and is a significant factor in the country's balance of payments difficulties. The domestic terrorism and international terrorism, together with the global recession, had serious impacts on tourism. Earnings from tourism declined by as much as 9.7 per cent, with tourist arrivals declining by 10.5 per cent in the first ten months of this year. This in turn resulted in loss of employment and incomes for those directly or indirectly dependent on tourism.

Government expenditure is running far ahead of revenues. In the first nine months of the year government expenditure exceeded revenues by about Rs 100 billion. This means that the fiscal deficit is likely to be higher than the budgeted figure and higher than last year's deficit of nearly 10 per cent of GDP.

This year will go down in history as a year without any real growth. Fortunately the year ends with a new government in power. The task of resuscitating the economy is made difficult by the economic legacy of the past year, the inhospitable global conditions and the energy crisis. We hope proper policy measures and international assistance would be able to put the economy on a growth path once again.

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