Editorial

The petrol crisis was something the Finance Minister could have done without as a forerunner to what he famously called his ‘designer Budget’. The shortages hit all parts of the country throwing grave doubts over the management skills of the Government.

When Sri Lanka’s economy was in the doldrums in the 1970s, it was referred to as ‘ship-to-mouth existence’ i.e. the economy had freight exchange and the people had food only when a ship arrived at the Colombo port. Buffer stocks were bare, it was said.

The week-long fuel crisis was a ‘ship-to-petrol tank’ existence; the people getting a rude shock to discover that the country’s state-run Petroleum Corporation (CPC) did not have sufficient buffer stocks when a single shipment of fuel and that too to its rival Indian Oil (LIOC), had to be rejected as poor quality — and that no contingency measures were in place.

Conspiracy theories were aplenty. They came from the beleaguered Minister in charge — and against him. The Minister was hitting round the wicket, to use cricketing parlance, accusing LIOC for the disruption of supplies. There was no ‘mea culpa’ on his part. He went still further throwing fuel to the fire and accused his political colleagues of applying pressure on him to have the substandard oil vessel released. That amounts to a serious charge against his own Government.
He must have thought, like in sports, attack is the best form of defence, but his pitch was not bought by the seething citizenry.

Clearly, much of this problem goes beyond what happened and lies entirely with the Government hierarchy. For one thing, this is not the first time sub-standard fuel has come into the country. The last time it actually seeped in and clogged many vehicle carburetors, including that of the then Leader of the Opposition, now Prime Minister. No one was punished and though the Minister in charge was discreetly given a different portfolio later, he continues to be a Cabinet Minister in this Government as well, with a bribery case pending for years.

The other point is the appointment of the Chairman of the CPC. He goes wherever his ministerial brother goes, to head big Government institutions. When the Prime Minister said soon after the 2015 elections that appointments would be made to corporation jobs on a ‘scientific basis’ under their good governance policies, this must be the fine art of the science of relative merits.

The Government has a standard policy when things go wrong and the wrath of the people descends on it. Be it natural causes like floods and droughts, or man-made causes like the collapse of garbage dumps to the fuel shortage; it appeals for foreign aid and appoints a committee to look into what went wrong.

It is clear that with the rise in fuel consumption, the CPC does not have the facilities for storage, the cash to construct new ones or the pipelines to transport fuel. So, there’s the ‘convenience’ of going for purchases on the ‘spot market’ usually at higher than the usual price. That is where money can be made. It might be useful for the Government to announce the details of such urgent purchases, if it wants to fend off allegations of corruption.

Notwithstanding the fuel crisis competing for the headlines, Finance Minister Mangala Samaraweera managed to salvage the situation for the Government with his “clean, lean and green” Budget 2018 on Thursday. Initial reactions see the shipping industry up in arms (see Business Times Page 10). The Minister has responded with an exclusive article to the Sunday Times (Page 16).

In the weeks leading to the Budget, the two other key players tasked with the management of the economy, the Prime Minister and the Governor of the Central Bank also made their pitch, the PM with his Vision 2025 document and the Governor at the CMA (Australia) Hall of Fame induction and later the Gamani Corea Memorial Lecture.

They spelled out plans for the future, but the problem as they themselves know only too well is that drawing up plans and implementing them are worlds apart. That is why the Governor said, that at the end of the day the three priorities are “execution, execution, execution”. Otherwise, all plans are simply Utopian.
Economic plans are nothing new. Back in the late 1960s there was a ‘Grow More Food’ campaign and in the early 1970s, a Five-Year Plan, both introduced with much fanfare, but those Governments faced disaster at the ensuing polls.

Not that there must be no plans and road maps for the economy, but how much of central planning is archaic, is the question. The Government’s economic thinkers make one thing clear — the importance of the private sector in driving the economy forward. Whether this is in variance with their coalition partner, the SLFP, is a matter for concern, but PPPs (Public-Private-Partnerships) is the future in the UNP’s book.

That’s all well and good but where is the private sector capital of the top companies going? It is going to purchase other companies in the consumer goods and services sector. Those companies that are entering into PPPs are the same companies that entered into Government contracts under the previous Government and largely through dubious means.

Sri Lanka has had economic swings from socialism to capitalism, with a kind of mixed economy that cushions the public. Every state venture – the CPC, CTB (Ceylon Transport Board), SriLankan Airlines, whatever, was run on a political agenda.That was why even Marxist Finance Ministers had to pay homage to the World Bank and the IMF seeking loan after loan — aptly called the debt trap. That has hit alarming levels with Chinese loans.

China, the world’s fastest growing economy has learned its lessons from socialism and seen how World Bank/IMF prescriptions have triggered the downfall of governments. It has its own form of ‘authoritarian-capitalism’ with its private sector companies a front for the State. Its Exim Bank is there to support these companies when doing business abroad, helping to undercut opposition.

The Sri Lankan public will not want the Chinese model of authoritarianism through a one-party State, but there is much to learn from its controlled economic foresight.