by Rohantha N.A. Athukorala.
Sri Lanka is grappling to balance between the reforms required to extricate the country out of its economic collapse whilst ensuring minimum disruption to households, but the data does not reflect the same. Seven million people are in poverty as per research by LIRNEasia.
According to the Department of Census and Statistics, 53% of children’s education is disrupted with 44% of them struggling to buy their stationary, whilst 108,330 micro and small enterprises have shut down. It is also reported that 544,488 households have not paid their electricity bills resulting in the supply being disconnected, resulting in a challenging situation at grassroot level.
In this backdrop, we see the book launched by former President Gotabaya Rajapaksa titled ‘The Conspiracy’, which goes into an ideology on why he believed he was ejected out of the hot seat. However, the book fails to capture the analysis on the bad decisions made during his tenure that led to the economic crisis and what Sri Lanka and the world can learn. I also did not see any key insights as to why such decisions were made that can be amazing learning points for future leaders to be cognisant of.
Supreme Court ruling
For perspective, let’s revisit the most neutral analysis done on the economic crisis and the verdict given. In a landmark decision by the Supreme Court of Sri Lanka, a ruling was given by a five-bench eminent panel stating that former President Gotabaya Rajapaksa, the then Finance Minister, two Central Bank Governors, the President’s Secretary, and Monetary Board Members at that time had violated the public trust and breached Article 12(1) of the Constitution in their governance of financial matters, leading to the economic crisis in the country.
The key observations highlighted by esteemed Supreme Court judges, as reported in the media, emphasise that the respondents significantly contributed to the circumstances that led to the situation. They were expected to be aware of these issues and take proactive steps to address them, rather than exacerbating the adverse effects on the economy.
Public officials are entrusted with the duty to fulfil their obligations in the public’s best interest. The Respondents, entrusted with significant authority to maintain public trust, are obligated to execute their duties in accordance with constitutional directives. They cannot evade responsibility by simply categorising their decisions as policy choices. The Respondents were aware of the prevailing circumstances and had a duty to avert potential disasters. Regrettably, they failed to take appropriate actions in the public interest to rectify the situation. Ultimately, their inaction contributed to the economic crisis.
The 119-page judgement was conclusive, but the main question asked by many was what action can be taken from the Respondents today, as there are seven million in poverty, 73% of the population have only two meals a day, and 108,380 companies have shut down. A point to note is that we hail the five people from civil society who decided to fight the system and bring to book the people who were responsible for the economic collapse in Sri Lanka. I guess a few good men still exist that are willing to fight for a righteous society.
The conspiracy ideology
In this backdrop we have a totally new perspective that has been given by the former President Gotabaya Rajapaksa announcing the publication authored by him titled ‘The Conspiracy to oust me from the Presidency’. This presents an alternative viewpoint regarding the events leading up to Sri Lanka’s current dire economic situation, and highlights that despite the nation’s experience during the 30-year war with the LTTE, the current economic crisis stands as one of the most severe challenges ever faced by the country.
Gotabaya Rajapaksa stated in his book that Sri Lanka faced significant foreign intervention following his victory in the war against the Liberation Tigers of Tamil Eelam in 2009. He further asserts that since his election as President in November 2019, both foreign and local entities had intentions to remove him from power.
He goes on to say, “The entirety of my two-and-a-half-year tenure in power was spent combating the COVID-19 pandemic that swept through Sri Lanka and the whole world shortly after I took office. Thereafter, conspiratorial forces commenced the political campaign to oust me from the Presidency at the end of March 2022. This occurred at a time when the pandemic had been brought under control, the vaccination campaign concluded and the economy starting to show signs of recovery.”
The statement also highlighted that foreign intervention and the manipulation of internal politics have become prevalent in Sri Lanka in a manner unprecedented during the first 60 years of independence. “The political campaign aimed at removing me from office introduced a new dynamic into Sri Lankan politics, which, since independence, had only witnessed peaceful transfers of power following elections. Therefore, the events of 2022 carry significant implications for the future of the country.”
What the book explains was the first-hand experience of an internationally sponsored regime change operation, prompting a closer examination of what was left unsaid in “What Gota did not tell.”
What Gota did not tell
There is no reference to the Supreme Court’s decision that came after a careful deliberation of the five-bench Supreme Court panel on who was responsible for the economic collapse in Sri Lanka.
The 119-page deliberation is directed to three reasons why the economic crisis happened: the tax break that cost the Treasury Rs. 681 billion, the decision on the payment of the $ 500 million ISB, and the delay in going to the IMF led to Sri Lanka having to declare bankruptcy.
Sadly, the book titled, “The Conspiracy to oust me from the Presidency” does not give us any insights to the logic of these decisions that the landmark judgement pointed to. Whilst it’s interesting to hear the former President’s side of the story, it is an ‘internal’ point of view that is academic in nature without the support of facts. The book does not give the logic for the three questionable decisions that led to the economic collapse. What Sri Lanka requires is depth of analysis and not just rhetoric. For instance, we talk of a system change that the current president highlights post his appointment but we don’t take actions that support this rhetoric.
Sri Lanka yet to learn
Let’s do a deep dive on the Budget 2023 implementation progress. As per the study done by Verite, 68% of the projects in the Budget 2023 that was passed in Parliament has no data to demonstrate a movement forward whilst 48% of the projects had zero data to show progress.
A deeper analysis revealed that of 25 key projects that had an allocation of over Rs. 49.3 billion, there was no data on the impact. There was an accountability issue and responsibility which is very sad for a country trying to grow out of the economic crisis. Going into the specifics of the report if I may take one such budget proposal ‘Developing export processing zones’. This has been in successive budgets way back as 2014, but has not been implemented for years. Though we talk of system change, how is it that such proposals were included in the 2023 Budget and not acted upon when the IMF very clearly says that Sri Lanka needs to come out of the economic collapse by driving exports via a manufacturing approach. But what we see is just rhetoric to this challenge rather than a much talked about ‘reform agenda’.
Verite Research goes on to state that in the organisation’s history of reviewing budget proposals since 2017, the worst performing year has been 2023 which does not augur well for a country fighting to recover. But sadly, we have not captured why such badly implemented Government action plans have not happened, and what are the lessons for 2024.
Pragmatic reform
Another classic case in point where pragmatic reforms were not seen and only rhetoric we see in the media was where it was reported that the Ceylon Electricity Board had made a Rs. 61.2 billion profit in 2023. As a group, a profit of Rs. 75.7 billion was made with the other investments as per the unaudited interim financial statements for the year ended 31 December.
The question that everyone is asking is how the CEB was allowed to make profits as a state-owned entity that exists to serve the people of Sri Lanka where almost 800,000 people’s electricity connections were disconnected due to the non-payment of bills.
The private sector was crying out that their businesses were not viable financially due to the escalating cost of electricity that was said to be highest in South Asia. Some companies were relocating their businesses to other parts of South East Asia especially in the sectors like Apparel. How could the policy makers not understand the reality and not take action to readjust the electricity prices? Is this the policy reform that the President advocates to build the economy that was the talking point at a ‘business conference’ last week?
Conclusion
Whilst it’s interesting to read the many books that authors release in Sri Lanka on a weekly basis, the only lingering thought regarding the book by the former President is ‘What Gota did not tell’. Perhaps the second edition will address this aspect.
Courtesy of Daily FT