Pudding ready

Friday 9th December, 2022

The government is preening itself on the passage of Budget 2023 with a majority of 43 votes. That the ayes would have it was a foregone conclusion. The SLPP-UNP combine has got engineering crossovers down to a fine art. There are many MPs of easy virtue, as it were, and they are ready to provide their services to the powers that be, provided they are adequately rewarded. However, it is one thing to have a budget ratified; it is quite another to realise the goals stated therein. The proof of the pudding is said to be in the eating.

Several conditions need to be satisfied for Budget 2023 to work, as planned and for the ongoing efforts to straighten up the economy to reach fruition. Unless the IMF bailout package is delivered soon with the forex inflow improving significantly, the proper implementation of the budget will not be in the realm of possibility. Most external creditors have shown their willingness to consider restructuring Sri Lanka’s debt, but China remains noncommittal. There seems to be no workaround either, and the government of Sri Lanka is operating on a wing and a prayer.

The Rajapaksa-Wickremesinghe government is busy undoing things it has done to the economy, over the years, instead of doing anything tangible to enable the country to come out of the economic crisis and keep pace with the rest of the world. It has to stop bellowing rhetoric and pursuing its political rivals and address itself to the current forex shortage, which is due to the laxity of foreign exchange control laws, among other things.

Maithripala Sirisena never misses an opportunity to claim that during his tenure as the President, the country was free from forex woes, shortages of essentials and soaring inflation. President Ranil Wickremesinghe also would have the public believe that the economic situation was much better under the Yahapalana rule, the implication being that the current crisis is of recent origin. But it was under the Sirisena-Wickremesinghe administration that tough foreign exchange control laws were abolished, and the current Foreign Exchange Act No. 12 of 2017 was introduced. The new law has stood forex racketeers in good stead; cases against about 30 of them were dropped during the Yahapalana rule! It has enabled unscrupulous exporters to park their dollars overseas. This was the Yahapalana government’s contribution to the present economic crisis, besides several foreign loans obtained between 2015 and 2019; those borrowings amounted to USD 12 billion, according to the SLPP!

It is believed that about 80% of Sri Lanka’s export proceeds are not repatriated, and thanks to the new foreign exchange laws, nothing can be done about it. Central Bank Governor Dr. Nandalal Weerasinghe has also frowned on this practice, and urged the exporters to bring in more forex and help the country pay for essential imports and strengthen foreign exchange reserves. But there is no way one could reason with the greedy.

Justice Minister Dr. Wijeyadasa Rajapakse, PC, is of the view that Sri Lankans have parked as much as USD 53.5 bn overseas. He said so recently during the committee stage debate on Budget 2023. It is ironic that the government, under President Wickremesinghe’s stewardship, is planning to amend the Foreign Exchange Act No. 12 of 2017!

Meanwhile, Sri Lanka invites trouble by ignoring disaster warnings. In December 2004, many lives could have been saved if people had heeded the ominous signs of the approaching Boxing Day tsunami, such as the unusual recession of the sea water level. The Easter Sunday carnage could have been averted, in 2019, if the then rulers, the police and the intelligence outfits had taken the warnings of impending terror strikes seriously and acted thereon. The Gotabaya Rajapaksa government ignored the signs of the present economic crisis and expert advice, plunged the country into chaos before resigning.

Former Secretary to the Treasury Dr. P. B. Jayasundera urged that administration to ration fuel in July 2021. He stressed the need to put in place a mechanism for that purpose, according to a report published in this newspaper. He may be faulted for many things, but if his advice in respect of petroleum imports had been heeded and rationing begun last year itself, the fuel crisis could have been managed and a great deal of much-needed forex saved. The government has to hasten its pace and tighten the exchange control laws to ensure that the country’s export proceeds are brought back.