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Tuesday, January 31, 2023

Sri Lanka in 2023: IMF for the Govt, elections for the Opposition – M.S.M. Ayub

Image: A general view of city’s skyline, amid the country’s economic crisis in Colombo, Sri Lanka, April 19, 2022. REUTERS/Dinuka Liyanawatte

Sri Lankans are leaving one of the most tumultuous years in the history behind today –December 31, 2022. The country saw two Presidents, three Prime Ministers, three Finance Ministers and two Central Bank Governors in this year, not due to anyone having voluntarily retired according to the law, but as a result of economy and politics facing unprecedented turbulences.

More importantly, it was in this year an executive President who had earned a name for him before for his tough and highhanded actions fled the country in the face of an unprecedented unarmed public uprising involving hundreds of thousands of angry ordinary people. They occupied offices and official residences of the President and the Prime Minister within a matter of a day, July 9, without being incited by any political party. Also we saw the second Prime Minister who had to resign owing to a political upheaval triggered by an economic breakdown, after being hailed for victoriously ending a thirty-year long civil war, a decade ago. Dudley Senanayake was also forced to resign as Prime Minister 69 years ago in 1953 under similar circumstances.

 

The SLPP and the President’s party, the United National Party (UNP) are now planning to contest future election in unison, without reversing any of their policies

Interestingly, it was in 2022 that Sri Lanka which is said to have once been called  the granary of the East declared it to be bankrupt, by way of announcing its international debt default of about $ 51 billion on April 12. The then Prime Minister Ranil Wickremesinghe unequivocally and officially stressed then in Parliament on July 5 “Sri Lanka is bankrupt and acute pain of its unprecedented economic crisis will linger until at least the end of next year.”

The year 2022 will go down in history as the year in which a leader of a political party which failed to secure a single seat in Parliament at the last general election was appointed by the same Parliament to the top most post in the country. The Presidency of Ranil Wickremesinghe was fathered by the worst economic crisis Sri Lanka saw since the Independence and mothered by the arch rival of his party, the Sri Lanka Podujana Peramuna (SLPP) which in fact brought the crisis situation to a head. It created a comic situation of his party and the SLPP which were thus far accusing each other for ruining the country economically and betraying it politically to foreign powers joining hands in ruling the country. An ironic setting emerged then where the President who encouraged the public unrest just two months ago as the Prime Minister unleashed a harsh clampdown on the same public uprising that catapulted him first to the position of Prime Minister and then to the position of President.

After all these, what is in store for the people of this country in the year that is to dawn tomorrow? Have the politicians of this country learnt lessons from this chaotic and riotous turn of events to guide the country in the right path? Have the people similarly learnt that it was their ignorance of politics and blinding themselves with a degenerated political culture that they have ruined their own future. Are they prepared to take their destiny in to their own hands abandoning their decades-long savior-seeking political mindset?

President Ranil Wickremesinghe is totally banking on the programme involving the International Monetary Fund (IMF) that was initiated by his predecessor Gotabaya Rajapaksa to resolve all economic and sociopolitical maladies. Sri Lanka and the IMF reached a staff-level agreement on September 1 under which the international lender had agreed to provide an Extended Fund Facility (EFF) of about $ 2.9 billion for a period of 48 months.

Sri Lanka is to get only $ 750 million a year from the IMF if the agreement is approved by the lender’s Executive Board. Compared to the $ 3 billion that was received from India during this year, this amount is not big.

The agreement is subject to the approval by IMF management and the Executive Board which was earlier expected to be achieved at the end of this year and later was said to be granted in the first quarter of the year dawning tomorrow. It is also contingent on the implementation by the authorities of prior actions, which are described by the Opposition parties as IMF conditions.

Besides, it depends on receiving financial assurances from Sri Lanka’s official creditors. The thorniest issue the country has been facing in this process is China’s stand on restructuring loans Sri Lanka owed to that country. However, China seems to have slightly relaxed the hard line it maintained earlier in this regard. Yet, it is not clear even to the educated people in this country as to how the Government – in fact the President – and the IMF have planned the things.

Despite the President’s claims that Sri Lanka would have a primary surplus of more than 2 percent of GDP in 2015 and Sri Lanka would be a fully developed country by 2048, when the country celebrates its 100th anniversary of Independence, a road map is to that end is missing and hence the Opposition parties called his budget a concept paper.

Sri Lanka is to get only $ 750 million a year from the IMF if the agreement is approved by the lender’s Executive Board. Compared to the $ 3 billion that was received from India during this year, this amount is not big. On the other hand, even if the country fulfilled IMF conditions – pruning public expenditure, raising taxes and prices – it will raise only local funds to run the country. The only exception is the move to “restructuring” public institutions by which the government expects to raise $ 3 billion, according to Foreign Minister Ali Sabry.

In fact, Sri Lanka’s current economic meltdown is primarily a foreign exchange crisis. It is up to the country’s leaders to implement projects that would generate much needed foreign currencies using the breathing space given by the IMF by way of a loan and an interval to repay foreign loans. The government has to implement such projects with the meddling by highly dishonest leaders and using similarly corrupt officialdom.On the other hand, the Opposition is fully banking on early elections, local as well as national, to come to power, but without any viable plans for economic recovery. They rightly claim that the mandate given to the ruling party at the last Presidential and Parliamentary elections is no longer valid, as they have themselves accepted that they ruined the economy.

President Gotabaya Rajapaksa’s request to any group to take over the country in April after “sacking” his Cabinet and the SLPP’s move to appoint Wickremesinghe to the Presidency claiming that he is the only person to save the country from the current mess are the proofs to this acceptance. The SLPP and the President’s party, the United National Party (UNP) are now planning to contest future election in unison, without reversing any of their policies. This is also an important development in 2022, which is food for thought for the people.

However, the leaders of the main Opposition, Samagi Jana Balawegaya (SJB) ironically claim that the President is attempting to implement their economic plan, while lashing out at the government for increasing prices of essential items as well as electricity and water tariffs. SJB too owes a road map to be presented to the people for the recovery of the economy, before being elected to power.

This is applicable to the Janatha Vimukthi Peramuna (JVP) / Jathika Jana Balawegaya or the National People’s Power (NPP) as well. Support expressed by mainly the Sinhalese and Muslims in the Sri Lankan diaspora which is evident during the recent visits by the JVP leaders to Europe alone would not resolve the foreign exchange crisis. Besides, the country has to depend on systems, rather than the affiliations of a group of people to a political party.

Yet, JVP seems to be the only party that has thought of tapping the local natural and human resources in order to develop the economy in the long run, despite the practicability of those plans. Whether the JVP has a network of untainted professionals under its command to rein in the officialdom from top to bottom which has the ability to sabotage anything that stands in their way to corruption is also not clear. It is against this backdrop that the people who must have learnt an extremely bitter lesson from the current economic and political mess have to decide their future.

Courtesy of Daily Mirror.

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