UNP slams Rajapakse ‘single currency’ proposal

[TamilNet, Wednesday, 04 April 2007, 23:55 GMT]
Sri Lanka’s main opposition party Wednesday attacked President Mahinda Rajapakse’s proposal this week for a common currency for South Asia as not only a breach of Parliamentary privilege but, ironically for a self-described defender of Sri Lanka’s sovereignty, a surrender of the independence of the country’s economic policymaking.

Addressing the South Asian Association for Regional Cooperation (SAARC) on Tuesday, President Rajapakse suggested the multilateral grouping become a Union and adopt a single currency.

“I strongly believe that SAARC must become a Union where we will endeavour to achieve our political and economic pursuits. It is also high time that we adopt a single currency,” he said.

He said that adopting a single currency would enhance the productivity of the region and improve trade without barriers.

“While countries, particularly in Europe, have formed regional blocs despite major differences in language, culture, religion and income levels, SAARC has not realized its potential,” Rajapakse said.

United National Party (UNP) leader and Parliamentary opposition leader, Ranil Wickremesinghe, said the issuance of currency was a power and privilege of the House.

Mr. Wickremesinghe said there was also an aspect pertaining to the sovereignty of the country. The UNP leader said his party was for a free flow of currencies in the region but not a single common currency.

“We also support free flow of goods, services, people and ideas,” he was quoted by the Daily Mirror as saying.

The UNP is the most enthusiastic advocate amongst Sri Lanka’s political parties of neoliberal economics and free markets.

Economists say a single currency means that would no longer be separate national monetary policies by each of the countries, and instead a new central bank would have to be set up.

And that means that countries wishing to stimulate their national economies, cannot set their own economic policies.

The European Central Bank, for example, conducts Europe wide monetary policy, in particular the setting of interest rates.

Whilst several countries in the European Union have adopted the Euro as the common currency, Britain is a prominent exception.

Amid a sense of strong public opposition to UK joining the Euro, the government says that “in principle, [we are] in favour of UK membership of the euro but in practice the economic conditions must be right.”

A few months ago the UNP warned that a collapse of Sri Lanka’s currency was only being stymied by heavy intervention by the Central Bank.

Former Deputy Finance Minister and UNP parliamentarian, Bandula Gunewardene, charged that senior bureaucrats in charge of Sri Lanka’s economic policy were deceiving President Rajapakse, who is also the finance minister, and hiding their incompetence.

“Inflation has now gone up to 17.2 percent,” he said in November. “[But] oil prices are falling. They can no longer say inflation is caused by rising oil prices. It is because [the government] is printing money to finance the budget deficit.”

Responding to the UNP leader this week, Sri Lanka’s Education Minister Susil Premajayanth attacked Mr. Wickremesinghe, asking whether he had consulted Parliament when he proposed to construct a bridge connecting Sri Lanka to India.

Senior government minister Nimal Siripala de Silva also joined the fray, querying as to why Mr. Wickremesinghe did not get the permission from the legislators when he signed the Ceasefire Agreement (CFA) with the Liberation Tigers in 2002.