"If only we were squirrels"

Sri Lankans have faced so many shocks that nothing surprises them anymore. The 26-year conflict (1983-2009) along with two violent insurrections (1971 and 1988-1991) insulated the country's people so much so that nothing shocks or startles them now -- even the struggle for power and greed by today's powerful politicians.

It was, therefore, a welcome respite from the daily drudgery of these bitter squabbles of politicians fighting for power (no more are they interested in the country) and intra-party fighting (while the country slips down the ladder of progress) faithfully recorded in the daily newspapers, when Kussi Amma Sera turned up earlier this week after a prolonged Avurudu holiday with her neighbour and comrade-in-arms in tow, Serapina.

And on this Friday morning, as the sun’s rays streamed through the leaves of the giant 'kos' tree in the garden creating patterns of light and shade on the ground, Kussi Amma Sera was angrily pointing to an article in a newspaper she was carrying during a conversation with Serapina. It was like a boisterous street market argument over prices between a female vegetable seller and a buyer.

KAS not only provides food for thought to these columns, but subconsciously engineers ideas for me and today her 'friendlybut-noisy' anger was directed towards the trajectory of the US dollar. The dollar has been on a roll in recent times at the expense of the 'poor' rupee and this sharp depreciation of the local currency has stirred widespread anger and frustration.

She was not the only one. Social media was on fire with the dollar hitting record highs (and record lows for the rupee) as it was pegged at Rs. 158 per dollar this week with the upward movement, even by a few cents, being a (hourly) record high. Suddenly, everybody was becoming an expert on the dollar from the mobile bakery ‘karaya’ (trader), street shoemaker, newspaper delivery man to the politician. Everyone had an opinion including once politically-powerful people who were coming out of the woodwork and gleefully pointing out the weaknesses of the current regime vis-à-vis the dollar.

In the past two decades public concern has grown when the dollar hit Rs. 75, Rs. 90, Rs. 100, Rs. 110, Rs. 125, Rs. 150 and now nearing Rs. 160. While nobody gave a damn about the dollar in the 1970-1980s, it is now on everybody's plate (literally) impacting on everything you buy including your usual vegetables, meat or dhal.

At this point, shouts from the garden broke my reverie. "Nangi, dollar-eka naginawa. Api evarai neda (Sister, the dollar is rising, we are finished, No)?" says Kussi Amma Sera with both hands on her hips, in a typical confrontational posture.

"Aei bung, eka prasnayak-de (So, is that a problem?)," responds Serapina

"Aney, mei .. mage kata avusaganne epa, apey badu mila wediwei, pol thel wediwei (Don't get me started with that response, prices of goods will rise)," said KAS.

"Hari, Uber gastuwath wediwei (Ok, so Uber taxi rates will also go up)," replied Serapina and then, both broke into laughter with the conversation mellowing into softer tones and becoming harder to catch what they were saying.

As I pondered on this conversation and whether or not KAS was passing some hints on increasing her wage, I recalled a remark by Central Bank (CB) Governor Indrajit Coomaraswamy the previous day about the bank not planning to intervene and artificially control the downslide of the rupee. The CB's position in recent times is that exports need to expand and grow for a proper dollar-rupee parity rate and ensure the value of exports will be equivalent or more than the value of imports. For ages, the cost of imports has been double that of export earnings and in such a situation a galloping dollar hurts essential imports and the rising cost is passed to the consumer.

Just to get a clearer idea of the dollar-rupee movement, we tracked the currency through CB data since 2005 when it was Rs. 102. In 2005/2006, the dollar appreciated by 5.5 per cent; just 1 per cent in 2006/07; 4 per cent (2007/08); just 1.1 per cent (2008/09) to a sharp 15.4 per cent at Rs. 127.60 in 2012. The dollar then stabilised to a 1.2 per cent hike (2012/13) and 4 per cent (2014/2015). By end 2016 it was pegged at Rs. 145.60 (showing a 7 per cent rise as against 2015) and 6.56 per cent the following year (2017) at Rs. 152.15.

Today the dollar is hovering at Rs. 157-59. There are many reasons for a marginal appreciation of the dollar in some previous years and that includes intervention in the money markets by the CB pumping in dollars to artificially keep the currency low. Such intervention also means borrowing dollars in the market at huge cost or selling bonds. The current administration is opposed to such artificial intervention and hoping (against hope) that exports will grow to balance the equation (enough dollars earned -- rather than borrowing -- to pay for imports).

Does this make sense? Maybe it doesn’t……. nothing makes sense these days for that matter. But at this point the phone rang …. "triiing …. triiing" as I was about to finish my column. I was in for another shock. It was ‘ Kalabala’ Silva, the often agitated academic, who abhors the mobile phone and prefers to call on my noisy, old landline.

"Machan, api evarai (we're finished). Have you heard … we are heading for another power crisis?"

I hadn't spoken to Kalabala for a long time and was pleasantly surprised at the call. "Why, what's happening," I asked after exchanging the usual "hi, how are you doing" courtesies. If we were meeting face-to-face, we would have stumbled through the new-found greetings of exchanging high-fives and probably missed the target!

Apparently the power gurus in the country say with demand sharply rising annually, Sri Lanka is losing Rs. 50 billion a year due to the inability to install new power plants. The losses are owing to using costly fuel-generated power as hydro-power generation is waning while solar power and other energy sources are still in their infancy (to match the demands) and there are protests against any more coal power plants.

Unlike in the late 1990s when Sri Lanka was forced to resort to power cuts due to a shortage of hydro power, today it is a case of switching to costly thermal power with the additional cost either passed to the consumer or added to mounting losses and debt by the state. On this crisis, I was reminded by an article by energy specialist Tilak Siyambalapitiya whose tonguein-cheek pieces are often a nice Sunday read. In a December 31, 2017 piece titled ‘Thank you Govt, for the mess in the power sector’, he wrote: "So when the electricity costs increase, the Government will say (and has already said) that electricity prices will not be increased. What they do not say is that costs of additional diesel power plants would be paid for possibly from telecom taxes or by cutting off expenses on health and education. Either way, the customer and the economy will surely be the losers. I do not have to explain who the winners are."

After the 'shocks' this week, it was relaxing to watch a couple of squirrels playing with the ubiquitous ‘ kurumbatti’ (the tiny preliminary stage of a coconut which sometimes falls off from the coconut flower) in the garden, with not a care in the world, not even the 'tick-tock, clockwise' movement of the dollar or the ‘electric shock’ from power realities. On top of Kussi Amma Sera's return to her 'city' home, the mischievous squirrels were soothing to the nerves and allowed me to relax, just like every Sri Lankan who gets excited over uncertainty but settles down to the evitable being inevitable. Story of our lives!