The government’s myopic attitude to public spending and lack of transparency in their dealings have created an irreparable dent in the economy
INSIGHTS of RAVANA
A comprehensive plan is underway by the government of President Gotabaya Rajapaksa to keep the disillusioned backbenchers intact, especially after the sacking of two key ministers responsible for the government’s victory in 2019 and 2020, respectively.
The two ministers were credited with the creation of a new political spectacle in the “Mahinda Sulanga“(Mahinda Breeze) to put a hapless Mahinda Rajapaksa back on his feet after a noteworthy defeat at the 2015 presidential elections.
Notwithstanding their contribution to keeping the government intact under trying circumstances, the ministers better known as musketeers of the administration, were ignominiously dumped on the wayside by President Gotabaya Rajapaksa.
It is not a public secret that the President came under severe pressure from Finance Minister Basil Rajapaksa to get rid of them.
Not only Basil Rajapaksa but a majority of the intelligentsia loathed the nerve of these two politicians.
Nevertheless, Prime Minister Mahinda Rajapaksa was uncomfortable with his inner self, although he coped with the situation by making statements as the situation demands. Now an innovative plan is underway with the help of former President Maithripala Sirisiena to rope in the duo after they vowed in Kandy to bring the government to its knees as the misery of the people, languishing in various queues and grappling with a sky rocketing cost-of-living, aggravated.
The two ousted politicians seized the opportunity to make a scathing attack on Finance Minister Basil Rajapaksa and coined the derogatory nickname “ugly American” to describe the younger Rajapaksa sibling as the people’s wrath assailed the finance minister.
During the meeting with the prelates of the Malwatte and Asgiriya chapters, the two ousted ministers and representatives of eleven otherpolitical parties, handed over to them the draft proposal to put the country back on track.
The chief prelate of the Asgiriya Chapter had an exciting and gripping remark to make. Thevenerable thero said in no uncertain terms that people are poised to reject governmental affairs with contempt because the suffering of the masses have also affected parliamentarians from the hinterlands in a big way because their influence on electorates is diminishing faster than they expected.
It is against this backdrop that the contradictory statements made by every cabinet minister makes the people further bewildered that theyhave lost patience with the rulers. The government’s myopic attitude to public spending and lack of transparency in their dealings has created an irreparable dent in the economy.
Samagi Jana Balawegaya (SJB) parliamentarian Harin Fernando brought to the notice of the people the questionable proposal to purchase fuel which was put forward to the Cabinet of Ministers by Petroleum Minister Gamini Lokuge. The proposal explored ways of buying petrol and diesel at concessionary rates. Lokugestates that the government can utilise Sri Lanka rupees to settle 50% of the cost and the rest in US dollars. The proposal demands the immediate payment of Sri Lanka rupees and the dollar payment within 200 days of the shipment. In the cabinet paper which was submitted the minister stated that it is an unsolicited proposal done on a trial basis.
‘The people do not understand the logic behind the payment of 50% in rupees and the rest in dollars’, Harin Fernando exclaimed.
“This is an outright deal the government is indulging in while the people are sweating out in long queues for essentials,” he said. “It is yet another sinister plot to rob people’s money when the country is going through dire consequences of financial mismanagement “.
In parliament, SJB parliamentarian Dr Harsha De Silva scorned the Governor of the Central Bank of Sri Lanka (CBSL) Ajith Nivard Cabraal and the members of the Monetary Board for their failure to appear before the Committee on Public Finance to answer critical questions on behalf of the people of Sri Lanka. He said the CBSL had committed a financial misdemeanouron the people through a dollar swap at a negative premium.
The CBSL artificially created an anomaly that made banks get into agreements where the expectation was that the rupee would appreciate.
Hence the rate at which the agreement came into effect was flawed. The move has compelled the banks to buy dollars at 280+ and honour the agreement they entered into at some point.
However, the expectation was that the transaction was supposed to go at 180-190. The present rate has caused an enormous loss to the banks, amounting to around Rs 100 per dollar. If this said loss is actual, that would be a massive hit on the banks.
Harsha De Silva’s grievance was quite justified when he said neither the finance minister nor the state minister of finance are not available in parliament to answer questions. ” This is a pathetic situation,” he added.
The government displayed its ignorance and arrogance to the people quite harshly by not presenting themselves in parliament to answer questions. The opposition political parties were hitting hard at the government for their insensitiveness to recurring issues involving the masses. They sit aloof in their comfort zones without lending an ear to the people’s woes.
Elsewhere at the presidential secretariat President Gotabaya Rajapaksa presided over the All-Party Conference (APC). Several party leaders, including the former Prime MinisterRanil Wickremesinghe were present.
At the APC, Nivard Cabraal outlined the economic situation and the current issues that plague the country. He presented some statistics apportioning the blame on the previous regime which irked former Prime Minister Ranil Wickremesinghe.
Wickremesinghe took the floor and slammed Cabraal, saying the objective of the APC was to discuss the financial crisis we face and not to point fingers at political differences. “I can reply, then somebody else will respond to it and it will spontaneously go back to the days of King Vijaya,’ he said.
‘Nobody had to suffer in long queues during our time’, the former Prime Minister said taking a swipe at Cabraal.
He implied that people had everything they wanted, unlike the present predicament of the people. The President at that stage intervened to tender an apology to Ranil Wickremesinghe on Cabraal’s behalf, saying there was no intention to hurt anybody.
There was a brief exchange of words between Finance Minister Basil Rajapaksa and Ranil Wickremesinghe on the draft report submitted by the International Monetary Fund (IMF).
Former Prime minister Wickremesinghe asked for the IMF report, but Rajapksa said they had not received it. Eventually, Rajapaksa admitted that he had received the draft copy of the findings. Nevertheless, he declined to make it available to parliament.
The opposition parliamentarians continuously harped on the report arguing that financial matters relating to the state should be discussed in parliament and not at the APC, which is perceived by many as a talk shop.
The final version of the IMF report is now on its website.
The IMF report gives details of the financial status of the country. According to its observations, Sri Lanka’s debt is unsustainable and has to be restructured. Another of its key observations is that the government has to stop printing money. In the last two years, the government has printed a record 1600 bn rupees.
During a press conference earlier today, Dr De Silva accused the government of trying to steer the narrative of the IMF report to portray that Sri Lanka is on the way to debt unsustainability. But the IMF observation is that Sri Lanka has already reached this distressing juncture.
The participation of the Tamil National Alliance (TNA) in the APC opened a new window for both the government and the TNA to iron out residual matters. The TNA’s demand is that the 13th amendment to the constitution should be implemented fully with land and police powers, hitherto withheld by successive governments, devolved to the provinces. It will be a demanding task for Gotabaya Rajapaksa, being an ardent Sinhala Buddhist who is backed by Sinhala hardliners, especially the Buddhist monks.
Under the circumstances, it will be hard to fathom that he will agree to the full implementation of the 13A. It could be a distant dream still for the TNA.
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The TNA spokesperson and parliamentarian MA Sumanthiran who was at the APC, made an interesting comment about the financial influence of the Tamil diaspora overseas beinglarger than the Sri Lankan economy and that he could responsibly assure investments in the North which will be a fillip and a stimulus for the Sri Lankan economy. However, he put forward one condition which is that the government should show some flexibility in resolving the long-drawn ethnic question.
President Rajapaksa has only one step ahead to forge a closer bond with the Sri Lankan Tamils for the well– being of the country. President J.R Jayewardene, under the Indo-Lanka Accord which was signed in 1987, laid the foundation and accomplished more arduous work in this direction.
The onus is now on the present government to resolve the crisis that will negate all foreign involvements relating to the issue. The US Assistant Secretary of State Victoria Nuland’s visit was also significant. Ambassador Nuland expressed her satisfaction over the decision to seek IMF assistance to overcome the present economic meltdown. She also encouraged the government to hold the long due Provincial Council elections, a pre-requisite for democratic governance.
In yet another development, the President had consulted Shantha Devarajan, former Chief Economist of the World Bank for Asia, Africa and the Middle East.
Devarajan had told the President that the Sri Lankan economy might end up like Lebanon without a road map and restructuring of debt.
The economy is in dire straits for two reasons.
The foreign exchange reserves are at a historic low (estimated at $800 million at the end of January 2022), while debt service payments over the next few months amount to $2 billion and $6.9 billion for the remainder of the year.
The second point is that Sri Lanka’s debt is unsustainable.
Realistic projections of economic growth in the future show the government will not bring in enough money to repay its debts.
The country in the circumstances is both illiquid and insolvent.
Without course corrections the country will suffer a hard default, being unable to meet its debt service obligations. At this point the country loses access to international markets .
Shantha Devarajan has already painted a grim picture of the economic situation of the country with a warning to act expeditiously.
The government has to move swiftly to correct the situation, which otherwise will lead toanarchy.
