One of the fallacies surrounding the present economic predicament facing Sri Lanka is that the island is somehow alone in this and that the phenomenon is uniquely ours.
But if one analyses the economic trends in the wider world, it is crystal clear that both developed and developing countries are facing much the same conditions, though the former camp is more resilient. In fact, many developing countries including neighbouring Pakistan and Bangladesh have joined Sri Lanka in seeking an International Monetary Fund (IMF) bailout.
Inflation is galloping ahead in many countries and so is the cost of living. Many countries are facing a food crisis (as well as a fertiliser crisis) mainly due to the Ukraine War and also supply chain constraints caused by shipping bottlenecks. An energy crisis has enveloped much of Europe, again due to the Ukraine War and problems with energy and oil supplies.
The recently announced production cut by OPEC+ could also send oil prices on an upward trajectory by November or December, though crude oil prices remain low now. This could hit net oil importers such as Sri Lanka hard, given that they will have to cough up more foreign exchange to purchase petroleum products. This won’t be easy given the dwindling levels of forex in many developing countries including Sri Lanka.
All this time, Sri Lankan leaders have not been entirely honest with the public. They painted a rosy picture of the economy when it was down in the dumps. They often took wrong decisions and then tried to cover them up or lay the blame on someone else. We all know that this had led to disastrous consequences on previous occasions as the masses are also not infinitely patient or gullible.
This, of course, was the genesis of the recent political transformation that resulted in the election of six-time Prime Minister Ranil Wickremesinghe as the country’s eighth Executive President. President Wickremesinghe has always believed in taking the public into his confidence and telling them the bitter truth. This is much wiser than deceiving them with fairy tales.
Even before becoming the President, during his brief stint as Prime Minister under former President Gotabaya Rajapaksa, he became the face of the Government on TV and explained the dire economic situation to the public, giving no overnight solutions. Being the pragmatist that he is, he told the Nation that it would take at least 18-24 months to come out of the woods.
Making another special statement in Parliament earlier last week, President Wickremesinghe pointed to 2024 as a turnaround year, where one could expect the Rupee to gain over the Dollar and witness other improvements in the economy. “The Government is ready to overcome the challenges even in the face of global economic and food crises,” the President said. He warned that although fuel and LP Gas queues have gone away, the undercurrents of the economic crisis still exist.
The President introducing a fourfold strategic plan to recover from the crisis said that the first step has already been successful. The foundation is being laid to make the second step a success.
Accordingly, as the first step, the Government has reached a Staff-Level Agreement (SLA) with the IMF.
The second step is reaching a common agreement on debt restructuring with countries like Japan, India and China and private creditors who have given us loans. Thereafter, the third step will be stabilising the economy by obtaining loan assistance from the IMF and other countries after certification from the IMF and finally, working to raise the country’s economy to a developed level through a general plan after stabilising the economy.
As the President explained in his speech, the success of each of these steps from the second one onwards depends on the proper implementation of the previous one.
But this is not an endeavour that the President and the Government can accomplish alone. President Wickremesinghe has repeatedly invited all political parties represented in Parliament and even those outside of it to join the country’s rebuilding program irrespective of their personal or political grudges of the past.
His first proposal in this regard was the formation of an All-Party Government (APG) at least for a limited duration, though the Opposition did not show much enthusiasm. However, the delay in appointing the rest of the Cabinet could mean that attempts in this regard have not been given up. Even at this late stage, an APG will have more recognition and clout than a single-party Government as Sri Lanka negotiates debt restructuring and further borrowings.
The next proposal is for the formation of a National Council, whose first meeting was held recently. Parliament has endorsed its establishment with an initial 37 Members of Parliament. Again, most Opposition parties have stayed away from the National Council on various pretexts. But this is a wrong approach, given that the multitude of problems facing the country cannot probably be resolved if there is no unity in the political establishment.
There is also a proposal for a People’s Assembly, which was one of the demands of the non-violent sections of the Aragalaya, which was later hijacked by certain political parties with an extremist or violent bent. This is an idea worthy of perusal, as it is likely to include professionals, academics, entrepreneurs and others who could make a positive contribution to economic development.
If this gets the green light, more women professionals should be included in this body as our Parliament and indeed, most other political bodies, lack adequate representation by women. What matters at this stage is a united approach to the crises confronting us, not divisive politics and debate.