Now that President Gotabaya Rajapaksa made it clear that he would not quit and he would focus on fixing the current economic and financial crises during the remaining two years of his term, the energies of everyone must be directed at removing the grievances of the people instead of continuing with a futile protest campaign.
In November 2019, the people gave a mandate to Gotabaya Rajapaksa to govern the country for five years and he has every right to complete the term. He emphasized that he would deliver the goods during the next two years and pointed out, “I can’t go as a failed president.” The free and fair polls under the democratic electoral system of electing an Executive President gave him office and there is no reason whatsoever to change the mandate by unconstitutional methods. “I have been given a mandate for five years. I will not contest again,” the President said in an interview with economic news service, Bloomberg.
The first task of President Rajapaksa and Prime Minister Ranil Wickremesinghe is to arrest the economic tailspin, which spiraled into a political protest movement since May this year. As an immediate remedy, Sri Lanka sought US$ 4 billion in aid this year from the International Monetary Fund (IMF) and friendly countries including India and China.
As Bloomberg commented in its analyses, the President wants to replicate his previous successful stints as Defence Secretary and Head of Urban Development Authority serving the nation. Gotabaya Rajapaksa oversaw the Urban Development Authority and was Sri Lanka’s Defense Secretary under then-President Mahinda Rajapaksa, when they crushed a 30-year civil war in 2009 by defeating the dreaded terrorist outfit Liberation Tigers of Tamil Eelam (LTTE).
Foreign Exchange challenges
The Government has taken several steps to get over the economic and foreign exchange challenges. Although there was a delay in reaching out to the IMF due to an ill-advised decision taken by the then Governor of the Central Bank, Ajith Nivard Cabraal, his successorDr. NandalalWeerasinghe held talks with the IMF within days of his appointment. “We waited too long to seek help from the IMF. If we had gone at least six months or a year earlier, it would not have come to this state,” President Rajapaksa admitted in his interview with Bloomberg.
“We have appointed financial and legal advisers for a debt restructure but that is for the capital markets,” he said and pointed out that bilateral arrangements with other countries will have to be conducted at individual level. “Our major loans are from China, Japan, India and the Paris Club. I have requested help from India and China. I personally spoke to the leaders and wrote to them. Then I have spoken to Middle Eastern leaders personally like Qatar, UAE especially, and want to speak to Saudi and Oman to get help for long term contracts for supply of crude oil.”
President Rajapaksa also admitted that the government will have to take certain unpopular decisions to get over the crisis. “The subsidy system will have to go. We cannot cut down on public servants or the military, we can decrease by cutting down on recruitment.”
Referring to the system of Executive Presidency, he posed the question, “What is this Executive (powers) of the President? My personal opinion is that if you have a presidency he must have full powers. Otherwise abolish the Executive Presidency and go for full Westminster-style Parliament.”
As President Rajapaksa and Prime Minister Wickremesinghe stressed, the top priority is to get over the shortages of fuel and gas. Wickremesinghe said in Parliament on Tuesday that the shortages will exist for three more weeks and thereafter adequate supplies will be available.
The Prime Minister held another discussion on Tuesday with the Managing Director of the IMF, Kristalina Georgieva, regarding the current economic situation in the country where the latter had assured support to Sri Lanka during difficult times.
Wickremesinghe explained that negotiations regarding bridging finance were reliant on Sri Lanka and the IMF concluding a staff-level agreement and requested that the staff-level delegation from the IMF visit Sri Lanka as soon as possible to finalise an agreement.
New Ministers too work on speedy solutions to relevant issues. With regard to the possibility of food shortage if the next crop failed, the government took steps to import Urea for the next season. Sixty-five thousand metric tonnes of Urea will be obtained from India to distribute throughout the country this month, Agriculture Minister Mahinda Amaraweera said. Addressing the representatives of farmers from 25 districts, he said that High Commissioner in India Milinda Morogoda had negotiated this issue with the UAE via India. The Urea stocks ordered by India from the UAE will now be diverted to Sri Lanka. Forty kgs of Urea will be distributed per hectare under the programme at a cost of Rs. 10,000. The Minister also said that the compensation for the 2021 Maha Season too will also be paid. Petrol, Diesel and kerosene oil for the farmers will also be provided.
To deal with the currency crisis and debt restructuring, the President appointed a panel of eminent economists last month. The Presidential Advisory Group on Multilateral Engagement and Debt Sustainability includes Dr. Indrajit Coomaraswamy, former Governor of the Central Bank of Sri Lanka, Dr. Shanta Devarajan, former Chief Economist with the World Bank and Dr. Sharmini Coorey, a former Deputy Director at the IMF.
Speaking in Parliament, Prime Minister and Minister of Finance, Economic Stabilisation, and National Policies said that Sri Lanka’s system needs to be reset, for which the first step is to present an Interim Budget. “Our country is not working like a well-oiled machine. We are not sure as to what we should do first. This system needs to be overhauled. That is what we are doing now – resetting the system. The Interim Budget is the first step in rebuilding the system. Once we have taken that step, we will implement a modern system and install safeguards that will protect us from future calamities. But to do all this, we need to restart the system,” Wickremesinghe said.
Interim Budget
He said that the Interim Budget is to act as the “foundation” for the economy, allowing it to “stabilise and recover”.
“The Interim Budget will reduce unnecessary Government spending, while controlling other costs. We will also focus on revitalising many areas affected by the crisis. There is an urgent need to focus on many sectors such as the export economy, tourism, and construction.”
Sri Lanka informed the International Monetary Fund (IMF) that the focus should be on the economically weaker sections of the country, to which the latter had agreed. Accordingly, the Interim Budget was drafted. It covers six key areas: A food security plan; an increase of the annual expenditure on the economically backward to US$ 550 million from US$ 350 million; a 100% write off of the loans of farmers’ with less than two hectares of land; a programme to grant free ownership of Government land to their residents; a programme to grant the ownership of urban flats to the occupants on a concessional basis; and a programme to grant 1,888 flats, donated by China, to the public for free.
To give relief to farmers, a proposal to completely write off the loans obtained by farmers’ who own less than two hectares of land has been included.
The Prime Minister called on the IMF to host a conference to help unite Sri Lanka’s lending partners, adding that such a conference under the leadership of India, Japan, and China would be a great strength to the country.
As the Galle Face protestors who demand President’s resignation failed to come up with an alternative, there is an imperative need for the elected President and the Parliament to take effective steps to ride over the economic crisis. President Rajapaksa and Prime Minister Wickremesinghe jointly prepared a road map, and there is no alternative other than to patiently wait for its success. All the political and economic forces must extend support to these efforts for the sake of the people and the country.
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