People usually do not take the Local Government (LG) elections seriously. They are popularly called kaanu–bokku (drain-culvert) elections because the local government institutions deal with only minor matters such as repairs to culverts, roads, drains, etc., although they are expected to do much for the public. The LG elections are also called mini polls, or punchi chande. But they could assume national importance at times, as they did in April 2018, when their outcome marked the end of the yahapalana government, which had no way of postponing them although it had succeeded in putting off the Provincial Council elections.
The present government is also afraid of facing an election soon because it has failed to get its act together on almost all fronts. What has mostly made it fear elections is its poor economic performance, which has angered the public including its ardent supporters, many of whom now regret having voted for it because of their economic woes.
The Covid-19 pandemic is mainly responsible for the weakened state of the economy, but the general consensus is that the government could have managed the situation much better if it had acted prudently. Corruption and inefficiency are among the other factors that have made the government’s popularity wane.
Govt.’s economic dilemma
It has been reported that the government is under pressure to suspend state assistance to five out of 527 State Owned Enterprise (SOEs)—SriLankan Airlines, the Ceylon Electricity Board, the Ceylon Petroleum Corporation, the Water Supply and Drainage Board and the Sri Lanka Transport Board. They are among 55 SOEs, which have caused a staggering loss of Rs. 1.2 trillion to the Treasury between 2006 and 2020. Reports indicate that in 2019 alone, the cumulative daily loss caused by the Ceylon Petroleum Corporation, the Ceylon Electricity Board, SriLankan Airlines, Sathosa and the National Water Supply and Drainage Board amounted to Rs. 384.5 million.
The government is not likely to consider restructuring any of the above-mentioned SOEs, at least at this juncture, given the political fallout of such a course of action. If it seeks assistance from the International Monetary Fund (IMF), it will be required to restructure most of the SOEs, especially the loss-making ones. Hence the government’s reluctance to turn to the IMF for a bailout package.
Anyway, it is now too late for the government to solve the immediate problems besetting the country even with the help of the IMF because it takes about six months to finalize a substantial aid package. However, the possibility of the government having to approach the IMF later cannot be ruled out, for the aid packages expected reportedly pledged by China and India cannot be used to pay back dollar loans. They may help Sri Lanka meet its other needs and perhaps save enough dollars for loan repayment, but in the long-run there will have to be a sustainable way of repaying external loans and paying for imports. The government as well as the people will be lucky if the country’s foreign exchange inflow improves significantly within the next few months.
The government insists that it will not seek any help from the IMF, but it is in two minds. It cannot be unaware that if its foreign currency goals do not materialize, it will be left with no alternative but to bite the bullet and go cap in hand to the IMF a few months hence.
Advocata Institute has pointed out the need to reform the SOEs urgently, and called upon the government to introduce a broad reform package targeting ‘strategically important’ SOEs numbering 55, according to the Treasury, to rekindle confidence in external creditors.
Pathfinder Foundation has urged the government to structure the country’s debt instead of looking for band-aid remedies, which will not work in the long term. It has said in a media statement: “There is now no choice but to restructure our external debt. The positive impact on dollar liquidity will be substantial and could be measured in billions of dollars. It is also timely as the negative social consequences are manifesting themselves in terms of ever-increasing hardships for the people, particularly the poor and vulnerable … Paying back debt at the expense of scarring the economy and imposing hardships on the people should not be seen as a badge of honor.”
Whether the government seeks a loan from the IMF or not, it will have to divest some strategically important state assets to raise dollars to settle foreign loan installments. It has already sought to sell the Yugadanavi power plant to New Fortress, a US-based energy firm, and is facing a political maelstrom with three of its Cabinet ministers opposing it. It has also been challenged in courts. Besides, there is the prospect of the entire Trincomalee oil tank farm being leased to India in return for help from New Delhi to pay dollar loan installments. The government says the tank farms will be developed as a joint venture between the Indian Oil Company and the CPC, but what the agreement will be really like remains to be seen.
Polls as a nightmare for SLPP
Not all the problems that the country is faced with are due to the current economic crisis. Gas explosions reported from many parts of the country during the past several weeks have taken their toll on the government’s popularity, and they obviously have nothing to do with economics. They have come about due to bureaucratic and political bungling and callous disregard for the safety of the public. The same goes for the fertilizer shortage, the resultant yield loss and the distribution of substandard fertilizers which farmers are dashing on roads in public. But the shortages of food items such as milk powder, kerosene, and imported raw materials for local industries, and severe restrictions on the outflow of dollars are due to economic factors, and they have turned public opinion against the incumbent government.
Whatever their origins may be, the problems troubling the people are sure to make it an uphill task for the government to win a midterm election in the short run. Hence its decision to postpone the LG polls and wait in the hope that the time will be opportune for it to face an election confidently.
It is baffling that the Election Commission (EC) of Sri Lanka has not been informed of the government’s decision to postpone the LG polls scheduled for March 2022. EC Chairman Nimal Punchihewa is reported to have said he is not aware of any such government decision. But State Minister of Provincial Councils and Local Government Roshan Ranasinghe has made a public announcement to that effect, according to media reports. His ministry has issued a press release, quoting him as saying at a recent meeting of local councilors that the government has decided to put off the LG polls by one year. He would not have made such a statement unbeknownst to the government leaders.
It is possible that the government had the State Minister send a trial balloon to gauge public opinion about its move to postpone the LG polls. Troubled by many problems, the people took no notice of his statement because an election does not figure on their list of priorities at this juncture. However, several civil society organizations including the People’s Action for Free and Fair Elections (PAFFREL) have already reacted; they have protested against the government decision, which they consider a blow to democracy.
Playing with fire
When a government postpones an election, it is seen as a sign of weakness, and boosts the morale of the Opposition, which is also given a rallying point. The leaders of the present government never lose an opportunity to boast of their popular mandates, and it will be unbecoming of such an administration to put off the mini polls.
The Opposition is already on the offensive, holding as it does protests against numerous issues. A polls postponement will provide it with more ammunition. The SLPP’s performance at the cooperative society elections has been under par; it has been left without majorities in most of them.
The government is planning to play with fire.
