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A consensus on economic policies to resolve the country’s severe economic crisis is not possible due to the country’s political culture and political milieu.

Each political party exploits the economic crisis to gain political advantages. The national interest is mere rhetoric.

National effort

The severity of the current financial and economic crisis requires a national effort based on an economic consensus to resolve it. This is not possible due to the country’s political setting.

Mature democracy

The economic crisis has reached such severe proportions that a mature democracy would have responded with a united all-party response to it. In Sri Lanka, political parties see in the crisis an opportunity to discredit the government and enhance their support base with each having expectations of gaining power.

The APC

Therefore, the call for an All Party Conference(APC) to resolve the crisis was destined to be a failure. Important parties in the opposition did not attend the APC as they said it would not serve any purpose. They were proven to be correct. Yet, such an attitude is not in the national interest.

Keynote

The ‘keynote speaker’ had no idea of the objectives of the All Party Conference (APC) and began on the wrong note to be shot down by Former Prime Minister Ranil Wickremesinghe. He reminded the participants of the conference of the purpose and objectives of the conference. He said blaming each other for the current economic crisis was to no purpose. An embarrassed President apologised for the Governor’s inappropriate address.

Failed conference

The President’s All Party Conference (APC) not only failed to bring all parties to the conference but was derailed by the irrelevant and partisan opening remarks that derailed the conference’s objectives. It did not address the economic issues it was meant to discuss.

Minor gain

Although the APC did not serve the intended objective of developing a national consensus to resolve the economic crisis. It did have a few minor gains.The Finance Minister, Basil Rajapaksa, who had not attended parliament for about three months was there to answer a vital question. Where is the IMF report on the recent Article 4 consultations? Finance Minister Basil Rajapaksa admitted that the IMF had submitted a draft report and that comments on it had been sent. Soon after, the IMF report of 42 pages was released.

No national unity

The unfortunate fact is that the country’s political culture is incapable of a national and united response to fundamental problems. Each political party exploits the situation to gain political mileage for itself rather than resolve the country’s problems.

Scarcity

The severe problems of unavailability and scarcity of essentials and the daily soaring prices are excellent fodder for the opposition to gain popularity and power at the next election. Therefore, the national interest is subjugated to their political interests.

No pragmatic solution

Another feature of current politics is that several of the opposition parties have no solutions to the economic crisis. They are opposed to any foreign assistance the country was receiving to resolve the scarcities due to foreign currency shortages.

Opposition

This political culture of opposition to any policy and lack of pragmatic solutions is a serious flaw in the country’s political culture. Our political culture is ideological rather than pragmatic and practical. Consequently, regime changes invariably result in policy changes that have been an important reason for retarding the country’s progress.

Economic consensus

Recent political developments do not indicate any progress in forging an economic consensus or of any cooperation among the political spectrum to unite to resolve the crisis. In fact the recent effort of the APC to find a consensus that ended in an irrelevant debate is illustrative of our political behaviour.

Only a debate

All we witnessed was a debate on the economic crisis with no solution proposed to resolve it. Much of the polemics is one of blaming others for the crisis rather than proposing a solution or getting together to iron out one.

Anti IMF

Unfortunately bashing the IMF and opposing foreign assistance from whatever quarter we receive it, gains popularity. There is no alternate viable policy framework on how opposition parties would resolve the crisis. Their plea is that if given power they will develop the economy by increasing production. How?

No pragmatism

The politics and economics of parties lack pragmatism. This is in contrast to erstwhile communist countries such as Vietnam, which have adopted market-friendly policies, obtained international assistance and foreign investment and adopted trade policies to propel their economies to high rates of growth.

Not COVID

Another feature of our policy is the regular refrain that the country’s plight is due to COVID-19. No one denies that the country’s balance of payments suffered a set-back owing to the extra expenditure on COVID-19 prevention and a dip in tourist earnings. On the other hand, merchandise exports recovered and import prices declined to benefit the country’s trade balance.

Other countries

Other countries that also faced COVID-19 have recovered. Sri Lanka is the country with the lowest economic growth, highest inflation and severe scarcities of essentials in South Asia. It is the pursuance of wrong policies, poor administration, and corruption that has created this crisis.

National unity

In the face of the severe economic and financial crisis when national unity and an economic consensus is needed to avert bankruptcy and replenish foreign reserves, there are no signs of parties getting together and ironing out a solution. All we hear is opposition to the country going to the International Monetary Fund(IMF) to restructure our debt repayments and obtain balance of payments support. There is no hint of any other alternative economic strategy.

Most vociferous

Interestingly, the most vociferous critics of accepting an IMF programme are those with few or no elected members in parliament. Their political stance is indicative of their outdated and impractical economic policies.

National effort

What is needed is a genuine national effort to avert a national economic catastrophe. A national government consisting of members of parliament from whatever party that understands the severity of the problem and have a   pragmatic economic approach must form a government under an acceptable leader. A multi-party cabinet consisting of not more than 25 members should be formed to steer the recovery programme.

IMF

The Sri Lankan economy is in such dire straits that foreign assistance is imperative to resolve the crisis and lay the foundations for economic stability and growth. The country has no option other than to seek IMF assistance to restructure our debt obligations and liberalise trade and the capital account to ensure a better balance of payments outcome.

Those opposed to seeking IMF assistance cite the onerous conditions that would be imposed. These include fiscal consolidation by increasing government revenue and decreasing public expenditure by curtailing wasteful expenditure such as on a large number of ministers and cutting down losses of state owned enterprises.

Do those who oppose the IMF assistance not want these reforms? What are their alternate economic policies to resolve the crisis?

Final word

Now that the government has more or less decided to seek IMF assistance and undertake its reforms, it is vital that there is an effective implementation of the reform programme to stabilise the economy and usher in an economic recovery.