Turmoil in the kitchen
View(s):All hell had broken loose in Kussi Amma Sera’s kitchen. Amidst the clatter of pots and pans and a smoke-filled kitchen, there was a crisis. KAS had apparently got the condiments wrong, with some curries having too much chillie while the others had a liberal dose of salt, nay … loads of salt.
The chaos in the kitchen was akin to the chaos in the country. Kussi Amma Sera’s cooking this morning was a recipe for disaster.
“Sariyana karachchal (lot of problems),” was the comment from Mabel Rasthiyadu, who was practising the little Tamil she knows coming from a southern village with small tea plantations around. She and Serapina were also in the kitchen gossiping with Kussi Amma Sera, who had been preoccupied with cooking.
“Ammappa (Really!),” responded Serapina jokingly, as Kussi Amma Sera exclaimed: “Aaaaa …” showing a sour face while tasting the chillie-hot chicken curry.
The friends had gathered in the kitchen to have a cozy chat on the crisis in the country. While everything else in the kitchen had gone haywire – just like the state of affairs in the country following the sacking of Prime Minister Ranil Wickremesinghe and the installation of former President and Parliamentarian Mahinda Rajapaksa as the replacement PM — the strong cups of tea enjoyed by the three friends were the only sane thing around.
With the clatter in the kitchen which meant it was difficult to hear their conversation, I was preparing to write this week’s yarn when the phone rang. It was Karapincha Perera, the tea-kade gossip, on the line.
True to form, he was looking for some juicy tales on the chaos in the country. “I say, coming colours no good, no!” “What do you mean,” I asked, warming to a long conversation.
“President shouldn’t have dismissed the Prime Minister. He should have resorted to this process through Parliament,” he said. “While I am inclined to agree, this situation was also heading for the parting of the two main parties as there were constant battles between the President and the (former) PM. This was going to happen … though how it happened was unexpected,” I replied.
The conversation then meandered to the economy, concerns expressed by the international community and the blame game. “The President has gone back to the ‘enemy’, the man he said he feared when he broke away from Rajapaksa in end 2014 to contest the Presidential poll,” said Karapincha Perera, adding: “At this rate, trust is the least of the plus points for Sirisena.”
“I say this state of affairs is well captured in singer Sunil Perera’s ‘comedy country-yak’ song which talks about ‘joker-la set ekak’,” he joked and began humming the tune over the phone.
I laughed but then realising that time was also catching up for me to meet my column deadline, I promised to continue the conversation with Karapincha later and resumed my column on the impact of these political developments on the economy and business.
In a quick but smart move, the newly installed PM on Thursday announced a host of concessions including reducing fuel prices, taxes and other sops targeting the middle class and lower segments of society. These populist measures, while putting structural reforms on hold and creating deepening problems in the economy with revenue levels not up to expectation, will go a long way to appease sections of the population which have been burdened with rising consumer prices.
Also likely in the works are steps to halt the rapidly appreciating dollar which on Wednesday hit the Rs. 177-level. The new regime is expected to ask the Central Bank to intervene more vigorously in the market and bring down the rate. Dipping into foreign reserves for this purpose is not the best option with the resources sufficient to meet four months of imports. However, in any populist regime, the focus is on easing the problems of the people first before tackling medium to long-term crises. Most likely, the reforms driven by the International Monetary Fund would be placed on hold, for the moment.
The economy has been in a sort of a pickle in recent times. It was only last month that the Central Bank said there has been a slowdown in manufacturing activities in September, mainly due to a slowdown in new orders and production, especially in the manufacture of food and beverages. Consumer spending was low and most of the quarterly results of the listed companies in the stock market, particularly those selling consumer goods, reflected these trends.
Apart from the cost of living, the depreciating rupee was heavily impacting on the economy. The Central Bank quoted manufacturers as saying that they had to increase their prices due to an increase in input cost of imported raw materials with the rupee depreciation. This led to a decline in demand for their products which, in turn, resulted in a decrease in new orders and production.
This week, international rating agencies – Fitch and Moody’s – warned that the country’s credit rates were at stake with the turn of events in the political arena, as they would affect foreign investment sentiment and delay critical structural adjustment reforms. A more negative sovereign credit rating makes it more expensive for Sri Lanka to borrow funds from the international market. This is a hard but inevitable choice for, if the Central Bank is persuaded to intervene more vigorously in the foreign exchange market to halt the rise of a galloping dollar, foreign reserves have to be used. If this happens, more funds have to be borrowed in the international markets to keep foreign reserves within the four months of imports. Two weeks ago, economists at a Colombo forum on the economy said the danger signal is if the reserves drop to the three-months-worth-of-imports level. Ahead (in 2019-2022), the country owes US$4 billion in payments per year from its international borrowing commitments. All these point to the new regime opting for early parliamentary elections since these crises would worsen as the months go by.
While there was some indication on Friday, as this column went to print, that Parliament was meeting tomorrow November 5, it was unclear whether the budget would be presented on this day or whether a vote on account would be presented or whether both – one or the other — won’t be presented. Over the past week, the situation has been fluid in the country amidst horse trading, with the main political parties wooing parliamentarians to cross over and add to the number of either the President’s SLFP-led United People’s Freedom Alliance or Ranil Wickremesinghe’s United National Party.
While Wickremesinghe has refused to budge from the Prime Minister’s residence Temple Trees, declaring that he was unconstitutionally dismissed, the President was also cautious enough not to eject him. But this is likely to happen eventually.
The stock market on the other hand was on a roller coaster ride, rising in two days of trading, then easing but picking up again with traders overall in favour of the changes, though there was speculation that prices were artificially being pushed up in support of the political change.
As I wound up my column, the clatter in the kitchen had ended. Kussi Amma Sera had finished her cooking and I heard her saying: “Dang hari….….miris-tika adukara (Now it’s okay. I reduced the chillie)”. That was followed by laughter in the kitchen, notwithstanding the country’s crises. On my part, I dreaded having lunch with a fiery chicken curry and a salty future in other curries and most likely, ending up with a wobbly stomach!