Loan ecstasy and harsh reality

Friday 2nd September, 2022

The government is cock-a-hoop that it has been able to reach a staff-level agreement with the IMF for a 2.9-billion-dollar loan to be released over a period of four years. Something is certainly better than nothing, but Sri Lanka needs much more to be able to straighten up its ailing economy. Most of all, it has to get its macroeconomic fundamentals right while curtailing waste and corruption.

While the government is crowing about its agreement with the IMF, it is coming under increasing pressure to hold a snap general election. This time around, the call for early polls has come from no less a person than SLPP Chairman, Prof. G. L. Peiris, who has voted with his feet together with a group of ruling party MPs. The SLPP is now like a temple whose head priest has disrobed himself! Could there be a worse indictment of a ruling party than its Chairman leaving it, sitting in the Opposition and calling for an election? The rebel SLPP MPs maintain that the government has lost its mandate to rule the country.

The SLPP has retained its hold on power despite the resignations of President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa. SLPP General Secretary Sagara Kariyawasam, MP, has, in a recent television interview, bragged that the SLPP is still governing the country. His argument holds water; the SLPP has a parliamentary majority, which it used to have UNP leader Ranil Wickremesinghe elected President and appoint MEP leader Dinesh Gunawardena Prime Minister. But what the government is doing is against the SLPP’s election manifestos.

A cursory look at the composition of the government will reveal that the SLPP is without any legitimacy and a moral right to rule the country. The number of SLPP MPs in the government has dropped to about 103, according to the Opposition, and the SLPP is retaining power with the help of other political parties whose policies are diametrically opposed to its. The SLPP would never have been able to secure the support of the voters who made its victories possible at the 2019 presidential election and the 2020 parliamentary polls if they had known that it would seek the TNA’s help in Parliament, appeal for economic assistance from pro-LTTE groups, make Wickremesinghe the President, and privatise state institutions, especially profitable ones.

Above all, those who ruined the country’s foreign currency reserves to the tune of several billions of dollars by defending the rupee in spite of expert advice, refused to ask for IMF assistance, opted for disastrous tax cuts, created a rupee crisis and resorted to excessive money printing, thereby worsening the currency devaluation and inflation, are still in the ruling SLPP. How advisable is it to entrust these elements with the task of managing the much-needed dollars to be received from the IMF? One of the main conditions the IMF has laid down is that a robust state mechanism be set up to fight corruption. The SLPP has become a metaphor for corruption due to its involvement in mega rackets such as the sugar tax scam. So is the UNP, which suffered humiliating electoral losses mainly due to the Treasury bond rackets. Can there be a bigger boost to corruption than the coming together of the SLPP and the UNP as partners in governance!

Meanwhile, Japan has undertaken to help Sri Lanka with external debt restructuring, and all Sri Lankans must be grateful to that country for leaping to their defence despite the current administration’s hostile actions such as the cancellation of the Japanese-funded Light Rail Transit project. The SLPP has also caused an affront to Japan by refusing to conduct a proper investigation into a complaint a Japanese diplomat made against a minister in the current Cabinet. In early July, the then President Gotabaya Rajapaksa asked Minister of Ports, Shipping and Aviation Nimal Siripala de Silva to resign following a complaint that the latter had solicited a bribe from a Japanese company. President Wickremesinghe, true to form, appointed a three-member probe committee, which exonerated de Silva, who has since been reappointed to the Cabinet. That the ad hoc committee would whitewash the tainted minister was a foregone conclusion because he had backed Wickremesinghe to the hilt in the presidential contest in Parliament. It may be recalled that, in 2015, a three-member committee appointed by the then Prime Minister Wickremesinghe to investigate the Treasury bond scams cleared Central Bank Governor Arjuna Mahendran. So much Wickremesinghe’s probe committees!

It is being argued in some quarters that the current situation is not conducive to an election, and Chairman of the Election Commission Nimal Punchihewa has also subscribed to this view, which was widely endorsed a few moons ago because an interim all-party government was apparently on the anvil at the time. But the situation has since changed; the government is not interested in forming an all-party administration, and the SLPP leaders are doing more of what they did at the expense of the economy. Corruption, waste and the abuse of power continue unabated. Government politicians and their cronies are enriching themselves through corrupt petroleum and coal deals while the economy is screaming. What they are doing to the economy in distress is like the rape of a disaster victim. If the people are made to wait until all other issues are sorted out to exercise their franchise, there will be nothing left of the economy or democracy by the time of the next election. A clean break with the corrupt SLPP administration has to be engineered without further delay. An early general election seems to be the only way out whatever the practical difficulties it may entail.