Sri Lanka is currently making slow progress in recovering from bankruptcy and still remains under the control of international financiers. The leadership of the NPP seems genuinely committed to improving the lives of all citizens. They have not sought additional powers, which in the past has often led to lack of transparency and accountability in governance under the executive presidential system.
A budget is one of the most important policy statements a government can make regarding its expected economic development outcomes. Achieving these outcomes will be challenging if the government pursues an austerity program that further impoverishes working people. The critical question before us is whether the NPP Government has the ideological clarity and political will to deliver economic justice in the process. While there is currently a trend towards reducing corruption and wastage in government, the same cannot be said for the bureaucracy and the networks that carry out these programs. The government needs to redesign and relaunch mechanisms that will ensure social and economic justice for the people.
Many countries have struggled to achieve economic justice, not only because they are bound by the conditions of the IMF, but also due to their own lack of commitment to the principles of economic justice. The Government should recognize that operating under the strict control of the IMF can lead to a situation where it becomes a puppet of the IMF’s neo-liberal austerity program. This will result in a loss of support for the government from a significant portion of the population.
Honouring election pledges
From a systems perspective, a budget should allocate funds for the year to various ministries in alignment with the government’s economic vision. However, the scope for such financial allocations is heavily constrained by the fiscal austerity measures imposed by the previous government, which negotiated a debt restructuring deal with the IMF. The implementation of this deal is enforced by legislation the previous government enacted. Despite the high expectations of the populace, the 2025 budget has not addressed and cannot address the issue of income inequality. Thus, it cannot effectively tackle revenue redistribution problems.
The budget appears to have allocated funds to many sectors of society who are in need. However, several groups are expressing dissatisfaction, claiming that the assistance provided is inadequate and they need more support. Nevertheless, the budget appears to have been designed to keep the country in transition towards a better fiscal position. It aims to enhance production capabilities and improve efficiency while addressing issues of wastage, corruption, and the mismanagement of the country’s resources.
Several economists have noted that the budget heavily emphasizes social welfare provision and infrastructure development, which are likely to result in significant increases in government expenditure. However, it remains unclear how the gap between income and expenditure will be bridged. Additionally, the role of the private sector, particularly small and medium enterprises (SMEs), in transforming the economy into a digitalized and technology-driven one has not been adequately considered.
Certain members of the Opposition have claimed that former President Ranil Wickremasinghe was an effective manager and leader, suggesting that the new government is following in his footsteps. However, this claim ignores the fact that during his time in office, President Wickremasinghe and his associates implemented numerous drastic and misguided measures that were in direct contrast to the NPP’s people-oriented approach. Some of these measures included:
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- Utilising harsh legislation and unaccountable powers of the executive presidency to repeatedly and violently suppress the nonviolent ‘Aragalaya’ movement.
- Showing a lack of concern for the well-being of average Sri Lankans by stubbornly implementing unnegotiated IMF-conditioned austerity policies and programs that adversely affected most.
- Relying on a ‘Royal kitchen cabinet’ comprising of many economic plunderers, and pursuing a political agenda aimed at ensuring their long-term political survival rather than protecting the interests of the populace.
- Failing to implement measures for enhancing the efficiency, productivity, and effectiveness of the Sri Lankan Public Service, thereby perpetuating nepotism, cronyism, abuse of power, and economic pillage.
- Responding to economic challenges by undermining human rights and worsening the plight of the people instead of alleviating their hardships.
- Shielding corrupt individuals and surrounding himself with authoritarian figures from the previous regime, while neglecting to take practical steps to reduce corruption, wastage, and mismanagement of taxpayer resources.
- Denying tax benefits to wage earners and a salary increase of Rs 10,000 to public servants; cynically pledging to implement the latter closer to the presidential election.
The NPP presidency has demonstrated that it fundamentally differs from the Wickremesinghe presidency. The NPP did not come to power through repression or violence aimed at overthrowing the previous regime. It needs to be reiterated that the budget does not intend to establish socialism or promote an anti-capitalist political agenda. Instead, the NPP agenda advocated for a free trade and export-oriented economy that welcomes foreign investment. The NPP presidency will also support the expansion of private sector involvement in regulated private healthcare and educational services.
It should be noted that the NPP is not the JVP, which is a cadre-based party. It is a left-of-centre coalition of many progressives. They have pledged to develop the country, eradicate corruption, and enhance democracy with transparency and accountability. This reflects the desire of the electorate and the Aragalaya movement which desired a ‘systemic’ change, not a revolutionary transformation of the economy from capitalism to socialism.
Despite the challenging circumstances the government faces due to imposed restrictions, it expressed a willingness to renegotiate certain aspects of the deal while maintaining the previously agreed-upon debt sustainability analysis. The next review by the IMF is scheduled for this week. To implement its programs, the government must rely on the flawed programs and mechanisms established by previous administrations. The government intended to negotiate a fairer financial bailout to reduce the tax burden on low-income individuals, maintain public ownership of certain state-owned enterprises, and boost domestic industrial and agricultural production. Achieving these goals should facilitate fiscal consolidation.
Need for hard but fair and firm decisions
This need is a challenging task, made more difficult by the opaque nature of NPP’s decision-making processes, which are not subject to scrutiny. Some members of the bureaucracy are using familiar diversionary tactics. For instance, instead of repealing the Prevention of Terrorism Act (PTA), they are proposing new counterterrorism legislation, such as the Anti-Terrorism Act (ATA), which previous administrations have also suggested. This new legislation could grant authorities greater power to suppress dissent and conceal any extrajudicial actions.
Additionally, many discriminatory policies that exclude minorities are still in place; however, there appears to be a positive trend emerging that may change the status quo. Furthermore, the military continues to occupy land in the North and East that previously belonged to Tamil and Muslim communities. In an attempt to evade international pressure regarding human rights violations during the armed conflict, a ‘National Unity and Reconciliation Commission’ has been established. However, its ability to enact meaningful change remains uncertain.
Many remain hopeful that the new government will honour the pledges made during the NPP election campaigns. One of the main challenges the NPP faces is to relax certain aspects of the IMF austerity program, which will negatively impact the living standards of working people. At the same time, the government has to ensure that its economic strategy effectively curtails expenditure to avoid spending more than it earns. Failing to do so would mean continuing the old model of relying on constant borrowing to cover the gap between income and expenditure.
The country’s future will depend on how well people will understand the current socio-economic and political context. This understanding will largely rely on the extent to which the government consults, includes, and engages with the country’s diverse population, including the diaspora. It was this plural electorate that brought the NPP to power, and they expect the new government to strive to establish a people-oriented political culture that is free from corruption, wastage, and mismanagement. They also demand an end to the impunity that many politicians and bureaucrats continue to enjoy.
The pledges the President and the NPP made during the election campaign that the PTA would be repealed, and the private lands forcibly occupied during the war would be released are yet to materialise. Recent statements from certain Cabinet Ministers have raised concerns about their commitment to previously made pledges. They have reportedly claimed that there are no political prisoners and that the Prevention of Terrorism Act (PTA) will be amended to align with standards from the UK and South Africa. Naturally, those who advocate for and defend human rights are worried about these remarks.
Also, the government appears to suggest that reforms to laws concerning Muslim marriage will depend on achieving consensus within the Muslim community. This raises concerns about acknowledging the essential and problematic nature of these issues. We hope this will not be the case. If it is, it may lead to a repeat of the 1970 situation when the SLFP-led coalition discarded its manifesto, causing significant harm to the people of the country and viability of the left. The NPP needs to fully commit itself to the manifesto it presented to the electorate.
Conclusion
The first 100 days in office are often referred to as a government’s “honeymoon period”. After this time, the majority of people expect the government to actively implement its agenda. Despite the positive speeches and initiatives, the government has continued with a “business as usual” approach. Expecting the electorate to tolerate political inaction, naivety, poor leadership, and a lack of coordination could prove to be a fatal mistake. A government exists to regulate, control, and protect public interests—not to shield bureaucracy and administrative inefficiencies!
The electorate is hopeful for a better future because the government is committed to implementing the social-democratic program promised during the election. This program can succeed within a framework of good governance. To achieve this, the government must boost tradable investments and tax revenue, as well as address the significant trade gap.
President Anura Kumara Dissanayake in his Independence Day speech said: “Not only must we overcome the ethnic, religious, and caste divisions that have long fragmented and subjugated us as subjects, but we must also eradicate the entrenched prejudices that exist between political representatives and the populace … … We must recognize that in our quest to attain comprehensive economic, social, and cultural freedom, each of us is a warrior on the same battlefield. … … we possess no legitimate excuse to squander this magnificent opportunity bestowed upon us by history.”
Nation-building is a collective responsibility shared among the government, opposition parties, bureaucrats, and citizens. Political patience is needed as Rome was not built in a day. Let us encourage the novice government as it strives to achieve its stated goals with courage and conviction.
It is important to remember that the people voted for change, not for the regime to maintain the status quo; specifically, the legislation, procedures, and practices established during colonial and pro-colonial times to protect vested interests!
The end.
24 February 2025