Thus spake Prez

Thursday 9th February, 2023

President Ranil Wickremesinghe, who presented his government’s policy statement in Parliament, yesterday, sounded like a seasoned insurance sales agent with glib phrases rolling off his experienced tongue; he sought to scare the public and infuse them with hope, at the same time, to sell his policies. The knee-jerk reaction of the Opposition was to denounce the President’s address as snake oil, but it, in our book, is not devoid of substance and deserves critical appraisal and not cynical dismissal.

The President’s speech touched on many things. It contained a promise to build a secure future for the youth, and a boastful claim that when Wickremesinghe took over as the President there had been queues for essential commodities but now there was economic stability and the people were comfortable. This ‘improvement’ is not due to the government’s competent handling of the economy. Thanks to the country’s shameful debt default, some forex is now available for essential imports, and fuel rationing has helped contain the petroleum crisis to some extent. This cannot be considered an achievement by any stretch of the imagination.

President Wickremesinghe also preened himself on the fact that the government had been able ‘to increase the foreign reserves which had fallen to zero up to USD 500 million’. This certainly is no mean achievement, but the blame for the present forex crisis should be apportioned to the President and his party. The Exchange Control Act of 1953 helped prevent questionable forex outflows; it made violations thereof non-bailable criminal offences. Exporters were required to bring back an equivalent of foreign exchange of the worth of their exports, or more, via the banking system, and the properties of the offenders were confiscated. In 2017, the UNP-led Yahapalana government replaced that law with the Foreign Exchange Act much to the detriment of the country’s interests, and the new law has stood foreign exchange racketeers in good stead and contributed to the current forex crisis. If the country’s foreign reserves are to be built significantly, the Exchange Control Act will have to be restored. It is hoped that the IMF will pay attention to this pressing need.

President Wickremesinghe, yesterday, tried to justify the controversial tax increases that have driven workers to protest. He would have the public believe that the measures his government had adopted to increase its tax revenue were in keeping with some recommendations made by the Sri Lanka Administrative Service Association—reintroduction of PAYE, making all officers of state enterprises pay taxes from their salaries and not through their institutions and employers, reintroduction of withholding tax, suspension of all tax exemptions and revision of the income slabs for taxation and the level of turnover subject to VAT.

Those who are protesting against tax increases are not refusing to pay taxes. Given high inflation, after tax deductions and the payment of loan installments, they are left without any money to feed and clothe their family members. They are demanding that taxes be brought down to affordable levels. Another reason for their protests is rampant corruption as well as the culture of impunity, which enables politicians and their kith and kin to help themselves to public money. Members of the political families are living the high life without any legitimate sources of income while the people are paying taxes and struggling to dull the pangs of hunger.

The President, yesterday, dangled a carrot while claiming that he did not engage in populist politics. He said the government would be able to ‘give an additional allowance to public servants in the third and fourth quarters of the year, and grant concessions to the private sector’. The public sector has about 1.7 million workers although the country can manage with half that number. The President is offering to grant them an allowance despite the economic crisis!

It is widely believed that the present economic crisis could have been averted if IMF assistance had been sought in time. President Wickremesinghe’s policy statement endorses this view. The President said: “We left the IMF in 2020. That short-sighted decision has also affected the current situation. Bangladesh was able to obtain IMF assistance early, as they had continued to be in that process. We had to initiate the process from the beginning. However, amidst all the difficulties, we started this journey.” Interestingly, the President has contradicted former Finance Minister Basil Rajapaksa albeit unwittingly. Rajapaksa said in a recent television interview that the SLPP government had been in touch with the IMF throughout, and there had been no delay in seeking the latter’s assistance.

President Wickremesinghe also promised less government. He said the strategy of the government should be to guide the private sector in business activities while being in the background. He will not find it difficult to sell this idea, given people’s resentment at the ever-burgeoning public sector, and the sheer number of loss-incurring state-owned ventures.

One wonders whether President Wickremesinghe, who should remain maniacally focused on reviving the economy, has sought to bite off more than he can chew. He has undertaken to implement the 13th Amendment fully, introduce a host of other laws and set up countless institutions. Yesterday, he promised maximum devolution within a unitary state. This can be taken as a pledge to implement the 13th Amendment fully, and the government is bound to have more problems to contend with on the political front.

The President called for unity and a concerted effort to expedite economic recovery. It behoves everyone to heed this call. But the government, for its part, ought to abandon its confrontational approach, learn to tolerate dissent and, above all, extend the hand of friendship to its political opponents, warring trade unions, etc.