Photo courtesy of Verité Research

The young Sri Lankan cricket team has done the impossible and beaten the powerful Australian cricket team several times in the shorter formats of the game, giving Sri Lankans some much needed respite and cheer. The games have been played to packed crowds, notwithstanding lingering Covid spread threats, with TV viewership also reportedly high, demonstrating that people understandably seek some avenue of relief from the misery which Rajapaksa rule has plunged our nation.

In contrast, the Gotabaya Rajapaksa/Ranil Wickremesinghe administration has only managed to guide our ravaged economy to a near crash landing and an effective standstill. Government servants are asked to stay at home and school children are again online due to non-existent fuel supplies in the country. During the five weeks of Ranil’s government, its only role has been in coordinating the scare foreign aid, almost exclusively from India, and not in effecting many of the significant and required reform measures, economic or political. It sought to argue that political reforms are not required and only emergency management of the economic crisis was needed. There was a basic game plan, backed by a politically naïve business elite, which was to get the white knight IMF in as soon as possible and until then use political contacts to get bridging finance to keep the economy moving.

Well, this plan has not worked for reasons which the young people of Sri Lanka correctly understand but our political and business elites continue to want to ignore, which is that we have an economic crisis on our hands precisely because of and due to our politics. After all, the coming calamity was not sudden but forecast and warned about, most famously by former Finance Minister Mangala Samaraweera. Even more recently as the proverbial writing was on the wall, using foreign reserves to defend the rupee at a ridiculous over valuation, printing money, not going to the IMF and not commencing early negotiations with our international creditors was the bombastic claim to fame of the lunatic leadership of our politicized Central Bank. It was relatively recently that we turned down a half billion-dollar grant (not loan) from the American Millennium Challenge Corporation (MCC) and opposed another half billion in Indian investment into the East Container Terminal (ECT). A billion dollars we can desperately use now. That is our politics that drive our economics. The majoritarian ethno-religious nationalism that won big in 2019 drove our politics and brought us to our knees. We were advised by those who should know better to get a Hitler like administration (as opposed to a Mandela) and we voted for one, which has now resulted in our own defeat at Stalingrad, leading to the eventual destruction and fall of Berlin.

The IMF white knight

There is great hope in the business community because of the naïve belief in the IMF as a white knight that will bail us out of trouble. That is because the business community does not fully appreciate the political constraints to the implementation of the required economic reforms; reforms which are more painful now because the economy has crashed, rather than when we were healthy. Any bailout/bridging finance by the IMF and/or bi-lateral lenders require our debt to be sustainable. In other words, that we can come out of bankruptcy and start honoring our obligations, including the bridging finance we are seeking now.

We not only need to raise revenue but we also need to rationalize government expenditure. We cannot as a nation afford to spend more on peace time defense than we do on both education and health combined. But that is Rajapaksa politics. We cannot afford badly targeted generally subsidies although we can and must have a social safety net that takes care of those most vulnerable among us, whose number is growing daily. We need to privatize our loss making state owned enterprises. Rajapaksa politics was to re-nationalize Sri Lankan Airlines and kick out Emirates Airlines. Our politics have brought our economic collapse. We need to remove the anti-export bias in our economy and regulatory framework and the failed import substitution of the 1970s towards which the Viyathmaga and Eliya crowd was dragging us in order to diminish the role of local oligarchs and replace rent seeking wheeler dealing with internationally competitive businesses following best practices as drivers of economic growth.

Elections are the only solution

Ranil’s interim government has not been able to elect a woman deputy speaker, pass the 21st Amendment and most likely will not even pass a genuinely reforms oriented interim budget. It has, on the contrary, given a major reprieve to the Rajapaksas, taken the steam out of the aragalaya and sought to solidify the status quo. We need the new, not the status quo ante. The reason is because Ranil is now prime minister of an essentially SLPP Government, of which he is nominally the vice-captain, but does not lead. The Rajapaksas still call the shots. An internal family reshuffle and image makeover, denying any course correction, does not provide the reforms that make our debt sustainable, which is what the IMF and all our creditors require. We would not be able to go there and do that with the leadership that brought us to this ruin.

Self-realization of failure dawns slowly, if at all, for some people. The Rajapaksa administration and the SLPP are in denial mode and a fractious opposition has not helped the nation by easing up the pressure for the Rajapaksas to go. The opposition should challenge the interim government to present to parliament a cabinet approved minimum common program that can garner bi-partisan support from the opposition or move a motion to dissolve parliament and go for a general election because Sri Lanka requires a government with political legitimacy and a mandate to deal with the mess created by those elected in 2019 to create vistas of prosperity but who bankrupted us instead. As a recent Verite Research report pointed out, we would spend less on an election than we are spending on a new defense ministry headquarters or barely more than just the loan, interest component only, for the Kotelawala Defense University’s teaching hospital.

Sri Lankans are inordinately proud of their state, and we have much we can be proud of. Regular elections have been a big social safety valve of releasing pent up political frustrations, empowering the people, and they reinforce the legitimacy of governments. We can and must go for parliamentary elections sooner rather than later.