The country is yet to heal from its economic ills. Though the International Monetary Fund (IMF) has handed down a rescue package according to its terms, do we have the political will to accept it? Can we lead the people to a promised land where there is contentment in every aspect of life? It seems to be an illusion. The government is taking the people on a course where there could be pitfalls rather than solutions on the way for the recurring problems.
Then the question is, where do we go from here? The country’s economic situation has been in a downward spiral for quite some time, and it has been difficult for the people to cope. Should the country place its utmost hope in the IMF and manage the economy according to its terms and conditions? This would mean that the country would be dependent on the IMF which could lead to long-term financial instability. The IMF’s rescue package is not a long-term solution, and it may not be accepted by the people due to its stringent terms. It is important to create policies and programs that will create sustainable economic growth and create job opportunities for people. Focusing on fiscal reforms and developing local industries to create sustainable economic growth are crucial. We must also work to reduce inequality and improve access to basic services to create a better quality of life for all citizens. Both options carry risks and must be carefully considered. Or do we have to find our way according to the vicissitudes and vagaries of the people?
At present, Sri Lanka is trying to turn from its middle-path economic model to a more right-wing stance on economic issues, where the government is considering shedding all its responsibilities for managing businesses. The clear and loud answer by President Ranil Wickremesinghe to the question is where in the world governments are involved in businesses. He and the government are hell-bent on selling off the Treasury’s stock to the private sector and eliminating government responsibility. The era where Prime Minister Sirmavo Bandaranaike embarked on a nationalist spree that began with her husband, Prime Minister S.W.R.D. Bandaranaike, has ended. Bandaranaike had a socialist element to his governance style, which was inherited by his spouse, Mrs. Sirimavo Bandaranaike, in later years. Mr Bandaranaike, the founding father of the Sri Lanka Freedom Party (SLFP),led the country towards socialist policies which were the trend in the first half of the 1950s and thereafter. He nationalized the entire transport system, the port, and various other businesses, infusing state ownership into many entities that would have been successfully managed by the private sector. It is difficult to overturn what was virtually owned by the people as employees and administer the affairs of these institutions, with some of them making huge profits.
For instance, Sri Lanka Telecom, the Sri Lanka Insurance Corporation, and Lanka Hospitals all ran their affairs as independent ventures while remitting huge sums of money to the Treasury for the well-being of the country. When the government decides to sell off its shareholding in these ventures, it is natural for employees to agitate against them. The questions asked are: Why are we selling off profitable and viable ventures when they make a sizeable contribution to the government coffers in the form of profits and taxes as well?
The other side of the question as to why we have to sell off profit-making concerns is: who wants to invest in loss-making entities? Sri Lankan Airlines has been on the waiting list for some time, seeking an investor to take over its operations. Previously, during the Chandrika Kumaratunga era, Emirates Airlines took over its operations. Mahinda Rajapaksa had differences with the local management of Emirates, which prompted them to end the contract they had with Sri Lanka. Although it makes an operational profit, the accumulated losses of Sri Lankan airlines run into billions of rupees, which no investor dares invest in with the airlines debt. The investors would be willing to take over the operations if the debts were taken care of by the government of Sri Lanka.
If the government does business, it opens the floodgates for corruption in the state sector. That was the view expressed by the President while talking to media heads. Getting rid of the businesses and regulating the investments and the inflow of foreign direct investment into the country is one way to minimize corruption in the state sector. However, it is imperative to check and regulate corruption in the private sector too. This is also causing issues for the government and the private sector institutions themselves. One condition handed down by the IMF with the bailout package is that Sri Lanka adopt an effective anti-corruption law in line with United Nations norms. The government is now drafting a new law to replace the Bribery Commission laws and several other laws. This would encompass all the legal requirements of these laws as well as make it a composite piece of legislation. The President invited the opposition benches to study the law and help the government fight corruption. This is to resurrect the country from a quagmire of corruption that has dragged it to an economic precipice. What is critical in this development is the implementation of anti-corruption laws so that they can effectively round up those indulging in acts of corruption.
Right now, the government is saddled with the problem of inviting three international retailers to join in the distribution of petroleum products throughout the country. The new players are from China, Australia, and the United States. They will be given 150 outlets each, virtually reducing the Ceylon Petroleum Corporation’s monopoly. The move will make them just one player in the fray. It will help establish healthy competition, and the consumer will benefit sans trade union action, which would otherwise hamper government activities. At the same time, the government will not have any control over the industry other than regulating it to guarantee efficiency and fair play. This will create an environment of fair competition and transparency. This will ensure that prices remain stable and consumers benefit from quality products at affordable prices. The government will be able to ensure that the industry operates efficiently and ethically while providing the necessary oversight to prevent monopolies.
The government is also planning to restructure the Ceylon Electricity Board to deliver a more efficient service to the people. It has already agreed to work together on a joint venture to embark on a solar power project in the Sampur area of Trincomalee. This will be done in two phases with a 135 MW capacity. The next crucial project the government wanted to get rid of was Sri Lanka Telecom. This is where the government will face stiff resistance from workers and the opposition.
The Leader of the Opposition has already prepared a questionnaire asking the government for the basis on which the decision was made. There could be legal action and various forms of protest against the privatization of Sri Lanka Telecom, stating that it has sensitive data and a bid to privatize it could put national security in jeopardy. The Sri Lanka Insurance Corporation will also be put under the hammer soon, along with Lanka Hospitals. The Sri Lanka Insurance Corporation was once privatized and, after a lengthy legal battle, was divested to the government. This was under the direction of a Supreme Court order delivered by a bench presided over by then Chief Justice Sarath N. Silva. So this is the second attempt by the government to sell off Sri Lanka Insurance Corporation. This is a profitable venture, and it also manages various other concerns, including Lanka Hospitals.
Those who oppose the privatization of viable ventures argue that the consumer or citizen will eventually be at the mercy of private sector exploiters. This is when they run a monopoly and the whole system loses its balance. The counterargument is that the government should step in with its regulatory arm to guarantee fair play. This is while affording all competitors a level playing field. This will ensure that prices remain competitive and that no one company can charge prices that are too high or offer services that are not of acceptable quality. Additionally, it will also ensure that all companies are held to the same standards and there is no exploitation of resources.
Minister of Power and Energy, Kanchana Wijesekara said that seven investors have submitted expressions of interest (EOIs) for the proposed oil refinery in Hambantota. The companies are Grants and Shearer Ltd., Lagos, Nigeria. Chinese Petroleum and Chemical Corporation (Sinopec), Petrichor Capital Sdn Bhd Malaysia, Vitol Group Singapore, Harree Management Services (Pvt) Ltd. with Marka Investments Abu Dhabi and Sri Lanka,and Dandeniya Engineering Sales and Services Syndicate Sri Lanka. The Technical Evaluation Committee and other procurement committees will evaluate the EOIs and issue Requests for Proposals (RFPs) to proceed with the project. Of course, it will take some time to complete complex negotiations before launching the project. The ministry should also at the same time take meaningful steps to verify its capacity and financial and technical ability before embarking on negotiations. Some of these prospective investors sound familiar to Sri Lankans as blacklisted fuel suppliers. Hence it is the minister’s responsibility to shed cronyism in such deals and make a transparent bid with the shortlisted investors. It appears that several of the prospective bidders have lost their standing in the international market. Therefore, the government should exercise utmost care since the minister, and in this case it is the minister,who is accountable to the people.
There are so many other projects in the pipeline, but people wonder whether the time is right and whether the political climate is conducive for big investments since the country is still trying to put its house in order after the awful economic crisis since independence.
In the meantime, delivering the keynote address at the conference titled ‘Economic Dialogue—IMF & Beyond’, President Ranil Wickremesinghe said that the ethnic issue could not be divorced from the main economic issue. It must be resolved if the country is to progress. Since there is potential to build a green economy, the country must start it as soon as possible, he said.
President Wickremesinghe said money is needed for education, health, and social safety of the poor and vulnerable and not to support the CPC, Sri Lanka Airlines, or the CEB, where too much of the country’s resources have been wasted on them already.
The President highlighted missed opportunities in Sri Lanka’s development, including not building on D.S. Senanayakesproposals and not implementing the Shenoy Report in 1965.
“The ethnic issue in 1978 slowed progress, and the country missed an opportunity to regain its footing.” “This is the last chance for Sri Lanka to make a decisive choice and move forward, or risk falling back again,” he said.
Former President Chandrika Kumaratunga also expressed similar sentiments regarding the ethnic issue. She advocated the implementation of the 13th Amendment to the Constitution and even went beyond that. However, she lamented that there was no democracy in the country and that people’s rights were trampled on and violated. She said that the government should ensure the fundamental freedoms of the people.
When one talks about the fundamental freedoms of the people, there is much concern about the newly drafted anti-terrorism bill. People allege that powers have been usurped arbitrarily by the Executive. This forces the people to agitate for a more fair law where there should be a wide discussion among the political parties and across the country before moving the bill through the parliamentary portals. It is alleged that even peaceful protests could be construed as terrorist acts as the new law lacks coherence, justice, and fair play.
One legal expert quipped that the democratic world will not approve of this kind of legislation where enormous power is arrogated to a single person. This is contrary to any legal principle.
In the political realm, there is a lot of buzzes about the three economic experts in the Samagi Jana Balawegaya. These experts are Harsha de Silva, Eran Wickramaratna and Kabir Hashim who are contemplating a move to the Wickremesinghe government. According to Kabir Hashim, he is ready to make a decision concerning the country. Whatever the case, Hashim has opportunistic tendencies to desert the soil that nurtured him in the first place. The other two are pondering how to make it against a backdrop of growing resentment against the government. Harsha de Silva stated that party politics are not relevant at this stage. Eran has not answered specifically. However, he answers ambiguously.
All three of them were in Galle recently with SJB leader Sajith Premadasa unveiling the party’s economic blueprint.
In the near future, many experts are predicting that Sri Lanka will experience a political topsy-turvy. Is it the Wickremesinghe government’s grand plan to divide the SJB right down the middle and profit from its exploits?
