And miles to go …

Tuesday 16th November, 2021

Being in print for four long decades is no mean achievement for any newspaper. The Island passes that milestone, today. Ours has been an arduous journey amidst numerous obstacles, and future challenges are unnervingly daunting, but our long walk shall continue. It is time for reflection and not glorying in achievements. We, however, do not intend to reminisce, in this space, of what we have done during the past eventful 40 years. Instead, we wish to discuss some contemporary issues that warrant serious discussion, given their potential to have a devastating impact on the country.

Parliament is currently debating Budget 2022, whose focus is basically on medium to long term plans to revive the ailing economy. The success of these plans, however, hinges on the government’s ability to solve the current problems the public is beset with. Independent economists have warned that unless some major foreign exchange inflows occur within the next few weeks, it will be well-nigh impossible for Sri Lanka to service its external debt come January, and there will not be enough forex for essential imports such as petroleum, food and medicine. The Sapugaskanda refinery has already stopped operations for want of crude oil. The government insists that the country has enough oil stocks, but how does it propose to replenish supplies vis-a-vis the current forex crunch?

Unless the government tackles the burning problems such as the shortage of essential goods, the foreign exchange crisis and the soaring cost of living, social unrest is bound to find expression in widespread protests, and even political upheavals. Economic recovery and political instability never go hand in hand. It will not be possible for the government to implement even the good proposals in Budget 2022 in such an eventuality.

Public debt has passed the tipping point thanks to ever widening budget deficits, and Sri Lanka finds itself in a catch-22 situation. All governments have contributed to this sorry state of affairs generously during the past several decades, and the present dispensation’s contribution thereto has been significant. The current budget deficit (8.8 percent of GDP), will worsen the situation, independent economists have said, pointing out that Budget 2022 has not proposed a realistic solution to the public debt issue, and one-off taxes and the leasing of state assets will not help manage the problem in a sustainable manner.

It never rains but it pours, as they say. There are clear signs of coronavirus making a comeback, after a tactical retreat. Covid-19 infections are on the rise, and a similar trend is discernible where the pandemic death toll is concerned. The people are behaving as if the pandemic were a thing of the past; they seem to have left the fight against the pandemic entirely to the government and health workers.

Finance Minister Basil Rajapaksa did not try to paint a rosy picture of the economic situation when he presented Budget 2022, the other day––and rightly so. But the public does not seem to have got the message. They must be told in no uncertain terms that fist bumps or hongi with the virus will only accelerate the country’s slide into bankruptcy, the threat of which is looming.

One can only hope that the government will stop duping itself, wise up to reality and do what needs to be done urgently; it has to realise that there are no political solutions to economic problems, and papering over the cracks cannot go on indefinitely. It has to grasp the nettle instead of restoring to money printing, which will lead to further increases in the cost of living and exacerbate the foreign exchange crisis.

There is not much time left for the incumbent administration, those who consider themselves the government in waiting, and the public to make a concerted effort to prevent the country from facing the same fate as Lebanon.