By Vishvanath
History and politics are partial to winners. So is the media. It is therefore natural that the newly elected President Anura Kumara Dissanayake and his team have become the flavor of the season. The members of the new administration and others connected to it are receiving a lot of public and media attention, and, above all, hosannas are being sung for them.
President Dissanayake was seen at the Colombo International Book Fair, the other day, surrounded by young men and women, who were falling over themselves to take selfies with him. He is likely to be visiting other such events with mass gatherings, especially in view of the forthcoming parliamentary election.
Usually, the first few months of a new government that a political party succeeds in forming after a long time in the political wilderness or fortuitously happen to look like an extension of its successful election campaign that propels it to power. Hence, many similarities between the beginning of the UNP-led Yahapalana government in 2015 and that of the incumbent NPP administration. What is unfolding also reminds us of the early days of the SLFP-led People’s Alliance government in 1994 under the then newly elected Prime Minister Chandrika Bandaranaike Kumaratunga, who went on to become the President a few months later.
NPP supporters are all gaga over President Dissanayake using a cheap ballpoint pen for signing documents at his swearing-in ceremony on Sept. 23. Social media was full of posts praising his simplicity and asking other politicians to emulate him. Minister Vijitha Herath, who did something similar, has also received accolades. Prime Minister Harini Amarasuriya has also endeared herself to many people by avoiding pomp and circumstance, and travelling in a pick-up truck and cars without convoy security.
Besides such PR measures, the government has announced substantial subsidies for the farming and fisheries communities. President Dissanayake has ordered a fuel subsidy for fishers and a fertilizer subsidy for farmers. It also sought to create a media event and increase its ratings by exhibiting a large number of vehicles returned by the outgoing ministers, officials, consultants, and others. Scores of SUVs, cars, and vans were parked near Galle Face Green and the Sri Lanka Foundation Institute, and they attracted crowds. NPP stalwarts such as Wasantha Samarasinghe tried to use those vehicles to bolster their claim that countless vehicles had been misused under previous governments, and the NPP administration had recovered them. But it is doubtful whether their campaign yielded the intended results, for public enthusiasm and social media feeding frenzy did not peak, and the vehicles have been removed. The vehicle exhibition, so to speak, provided the defeated political parties and their apologists with a rallying point. Some of them such as former Minister Dilum Amunugama, and several other members of former President Ranil Wickremesinghe’s staff, lashed out at Samarasinghe and the NPP for resorting to what they called childish gimmicks to mislead the public.
Popularity is a prerequisite for gaining and retaining power in democratic politics, and why politicians and political parties strive for it is understandable, especially ahead of a crucial election. The NPP is all out to boost its image and expand its vote base expeditiously; unless it captures power in the parliament with a comfortable majority, it will have its work cut out to govern the country. A general election is a different ball game unlike a presidential election where a political party or an alliance fields its best and most popular candidate, who in most cases is a national figure.
What will make or break the NPP government even in the event of it winning a majority of seats in the parliament is how it will handle the IMF bailout program. There is no way the NPP can wish it away or translate all its pre-election rhetoric into action. It will have to come to terms with the harsh economic reality, and mend its ways or run the risk of facing trouble. It will have to address the key issues concerning the IMF programme sooner than expected, for IMF financing and underwriting is crucial for enhancing Sri Lanka’s creditworthiness, bolstering foreign exchange reserves, strengthening the rupee and reviving the economy.
So, the unnerving challenge that the leftist NPP is facing is the IMF-stipulated DSA or the Debt Structuring Analysis, the be-all and end-all of IMF financing. Before the Sept. 21 presidential election, the NPP pledged to renegotiate terms of the IMF program with special emphasis on the DSA. Dissanayake said that after being elected President, he would present a better alternative DSA to the IMF. However, given Sri Lanka’s situation, it is doubtful whether it will be able to renegotiate the IMF program or a part of it on its own terms.
The Finance Ministry, before the presidential election, rightly pointed out that the claim that Sri Lanka had not prepared its own DSA was unfounded, and it would not be possible to renegotiate the IMF-stipulated DSA. In the past, Sri Lanka was able to effect some changes to IMF programs, but on none of those occasions, debt structuring or public debt sustainability was crucial for IMF financing.
Interestingly, about two weeks before the presidential election, the Ministry of Finance, in response to arguments on the DSA, issuing a media statement, pointed out that any country could stand its ground and refuse to move forward based on the IMF’s DSA if it disagreed with the outcomes of the model and the IMF’s assessments, and in such an eventuality, the IMF would simply not be able to proceed with a financing program, given its inability to lend to a country with debt deemed unsustainable. Such a stand-off would only serve to delay an agreement on a financing program for several months if not years, the Finance Ministry said, stressing that while such scenarios may be interesting to debate in academic circles, government authorities responsible for the well-being of citizens had to act in a timely and pragmatic manner. It issued a dire warning: “This was particularly true of Sri Lanka’s situation in mid-2022 with no foreign exchange reserves, ballooning inflation, civil unrest, and a near breakdown of the socio-economic fabric of the country.”
The Finance Ministry is now under President Dissanayake, who is the Minister of Finance. So, either the Finance or the NPP will have to soften or change its stand on the DSA or reconcile their positions and formulate a workable solution, which cannot be anything other than sticking to the IMF recommended debt structuring model. Debtors are no choosers, and the success of a future NPP government and/or that of President Dissanayake hinges on obtaining the much-needed IMF financing and its other forms of assistance to put the economy back on an even keel.
