Features
2024: An election year and global trends
In the global political landscape of 2024, Reuters provides a comprehensive overview of key elections shaping the economic and geopolitical landscape across diverse regions. From Europe, where the rise of Eurosceptic far-right parties poses challenges to the European Union’s integration, to Russia, where Vladimir Putin is set for another term amid heightened tensions with the West, the report navigates through critical elections in Turkey, India, Mexico, South Africa, the United States, Britain, and Venezuela. The analysis underscores the potential market risks associated with each election, ranging from currency fluctuations, inflation and government bond concerns to geopolitical ramifications affecting international relations. As voters cast their ballots, the Reuters brief illuminates the intricate intersections of politics and economics, offering valuable insights into the potential trajectories of these nations and their impact on the global stage.
To evaluate the potential impact of these global elections on Sri Lanka’s upcoming political landscape, it is imperative to delve into the economic trajectories pursued by the primary political entities participating in the elections. Contrary to past practices where Presidential elections took precedence, there are speculations that the impending general elections will precede other electoral events. Four predominant political forces have emerged on the forefront, namely the United National Party (UNP), Sri Lanka Podujana Peramuna (SLPP), Samagi Jana Balavegaya (SJB), and Jathika Jana Balavegaya (JJB). Each of these forces holds distinct economic policies and visions, making a thorough comprehension of their respective stances crucial for anticipating the potential repercussions on Sri Lanka’s political and economic landscape.
A slight distinction exists between the United National Party (UNP) and the Sri Lanka Podujana Peramuna (SLPP), with their current collaborative governance with shared portfolios and a lack of overt contradictions. Both parties, led by experienced leaders, advocate for similar economic policies, although the SLPP adopts a nationalistic facade. Notably, the key disparity lies in the SLPP’s adeptness in making emotional appeals, strategically leveraging Sinhala votes and invoking a sense of ultra-nationalism. In contrast, the UNP, under Ranil’s leadership, takes the lead in courting minority votes. The intricate dynamics of emotional appeals and voting strategies distinguish the UNP and SLPP in the current political landscape. While the Samagi Jana Balavegaya (SJB) aligns closely with these economic management policies, all three forces, UNP, SLPP and SJB reflect a broader right or center-right outlook.
In a departure from traditional approaches, the Jathika Jana Balavegaya (JJB) stands on its head when expressing a willingness to collaborate with the IMF. Their ideological outlook tilts towards the center-left, rather than the extreme left, despite the significant influence of the Marxist JVP within the coalition. Although their differences from other political entities have diminished, a distinctive feature remains their limited administrative experience, having not governed beyond the council level.
Consequently, voters are likely to prioritize candidates with a proven track record of minimal corruption and a strong focus on effective economic management. Thus, the hands-on experience of candidates is expected to carry considerable weight in the eyes of the electorate.
Source: Reuters
Europe: Elections are scheduled in Portugal, Belgium, European Parliament, Croatia, Romania, and Austria. According to analysts, Eurosceptic far-right parties are gaining momentum, potentially impacting the European Union’s legislative decisions. Market risks include potential effects on Italian stocks and bonds if eurosceptic parties gain influence, affecting European integration.
Russia: Presidential election is scheduled on March 17, with Vladimir Putin expected to secure another term. Putin’s stance on the war in Ukraine may influence international market sentiment. Potential risks include Western governments considering seizing frozen Russian assets, leading to retaliatory measures from Russia.
Turkey: Local elections are scheduled on March 31. Economic reforms have started to attract international investors, but concerns exist about a weak Lira (Turkish currency), and high inflation. Potential risks include political uncertainty, given President Erdogan’s history of personnel changes in economic positions.
India: National elections are expected in April-May (exact date to be confirmed). Narendra Modi expected to win a third term, with potential market risks related to persistent inflation and fiscal policies.
Mexico: Presidential election is scheduled on June 2, involving a full Congress reshuffle. Incumbent party (Morena) and its candidate have a double-digit lead, but increased spending could impact the Peso (Mexican currency) and government bonds.
South Africa: Elections are scheduled between May and August 2024 (exact date to be confirmed). Ruling African National Congress faces challenges, and economic issues may lead to a coalition government. Market risks include concerns about debt levels, social spending, and currency weakness.
United States: Presidential election is scheduled on November 5, with predictions of a Trump-Biden rematch. Potential market risks include social unrest, impacts on consumer sentiment, and currency fluctuations based on election probabilities.
Britain: Elections are expected by the end of 2024. Labour party leading in polls, potential risks related to economic stagnation, fiscal policies, and changes in planning rules.
Venezuela: Presidential election is expected in 2024 (exact date to be confirmed). Incumbent Maduro has an advantage, but potential market risks include U.S. sanctions, debt restructuring, and the impact on Venezuelan stocks and bonds.
The outcomes of these elections are poised to unleash a political storm, characterized by a wind of right or center-right ideologies. This impending wave of political change is anticipated to exert influence not only on the economies, policies, and international relations of the respective countries but also on the broader geopolitical landscape. As investors and markets keenly observe these global events, the potential shifts in political landscapes and policy directions are likely to reverberate, significantly impacting the political situation in Sri Lanka and nudging it more towards a center-right position, diminishing chances for leftist politics.
Impact of IMF’s stand
The International Monetary Fund’s (IMF) assessment and recommendations for Sri Lanka’s economic recovery hold significant implications for the country’s upcoming elections. The $2.9 billion bailout loan agreement from the IMF signals a step towards recovery from Sri Lanka’s worst financial crisis in decades. However, the IMF emphasizes the need for the swift finalization of agreements with official lenders and a resolution with external private creditors.
As Sri Lanka navigates economic challenges, including the introduction of a progressive property tax and VAT adjustments, these measures could become central issues in the electoral landscape. The IMF’s call for fair burden-sharing, sustainable reforms, and strengthened tax administration underscores the importance of fiscal policies that directly impact citizens.
Sri Lanka’s ability to stay the course on economic reforms will not only impact its financial stability but could also play a pivotal role in the broader narrative of political leadership and governance during the elections.
Cost of living
Sri Lanka’s consumer price inflation rate rising to 4.2% year-on-year in December, driven by increasing food prices, can have several impacts on the upcoming elections. The inflationary pressures, particularly in food prices, may contribute to economic anxieties among voters. The government’s decision to raise the value-added tax (VAT) to 18% from 15% to meet revenue targets could become a contentious issue. The decision of the central bank to leave key policy rates (SDFR 9% and SLFR 10%) unchanged is significant and may be a point of discussion in the electoral context, with voters assessing the government’s economic strategies and the effectiveness of monetary policy in controlling inflation.
Conclusions
To assess the potential impact of global elections on Sri Lanka’s forthcoming political landscape, an exploration into the economic trajectories of key political entities becomes imperative. Unlike past practices where Presidential elections took precedence, speculation surrounds the prioritization of impending general elections. Four prominent political forces—UNP, SLPP, SJB, and JJB—emerge as influential players, each harboring very similar economic policies and visions. UNP and SLPP have a subtle difference, and SJB closely follows their economic policies, collectively reflecting a broader right or center-right outlook.
In a paradigm shift, the JJB, expressing a willingness to collaborate with the IMF, stands on its head ideologically, leaning towards center-left despite the Marxist JVP’s significant influence. Despite diminished differences with other entities, their limited administrative experience remains a distinct disadvantage.
Potential market risks associated with worldwide elections, spanning currency fluctuations, government bonds, inflation, and geopolitical ramifications, underscore the intricate connections between global politics and economics. The IMF’s bailout signals a recovery path, with an emphasis on finalizing agreements and addressing private creditor issues becoming pivotal. Government commitment to fiscal reforms, including a progressive property tax and VAT adjustments, shapes electoral discourse.
Central themes of economic concerns, policy decisions, and inflation debates take center stage, with voters scrutinizing the government’s economic management. The Central Bank’s role and recovery narratives add layers to the discussion, emphasizing the intricate relationship between economic indicators and political outcomes.
Finally, voter priorities should be in favour of candidates with a corruption-free track record and a focus on effective economic management.
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and www.researcher.com)
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
