Editorial

Yesterday’s mass protests against the incumbents in Government remind one of the one-time LTTE codeword “Unceasing Waves”, which itself took its cue from the tsunami of 2004, for what the terrorists felt would be their final assault on Government Forces.

These days, the Armed Forces have been pitted against the masses on a mission to topple the Government through ‘People Power’. Yesterday’s protests led to the storming of the President’s House, the Secretariat, Temple Trees and, last but not least, burning the private residence of the Prime Minister while the security forces turned a Nelsonian eye, refusing to turn their guns on the agitators, as the country plunged into the verge of anarchy.

The President was under siege yesterday, his whereabouts unknown throughout the day, and the equally beleaguered Prime Minister took over the reins of Government, but briefly. Party leaders desperately came up with a formula to avoid a constitutional catastrophe, but a great deal of uncertainty and an eerie silence remained overnight. A statement by the Speaker that the President will step down next week should bring about some steadiness, but one cannot bet on it. The goal posts may get shifted.

That a Minister barely a week in office, could uninhibitedly slam the Prime Minister and call for his resignation as the Finance Minister and to hell with the niceties of Cabinet’s ‘Collective Responsibility’ were tell-tale signs the Government was on its last legs, imploding.

Or was he, and his handlers, taking a cue from the British ruling party that mutinied this week against their own Prime Minister? While the infighting continued there were clear signs of a weak Government within a weak State. The end game was sneaking upon them and predators were waiting to strike and strike hard as they did yesterday in the culmination of a protracted political guerrilla campaign.

Even in the face of the public outcry caused by the collapse of the economy, hijacked by radical elements that want not merely the overthrow of the Government, but also the overthrow of the bourgeoisie, and to change the political system, the incumbents in office were far too slow to recognize the writing on the wall. They pussyfooted with constitutional reforms, circumventing the decades-long call for the abolition of the Executive Presidency, and a demand for accountability and consequences for those who dragged this country into the economic abyss it is in now.

The Parliamentary oversight committees were merely going through the motions over and over gas tenders, fuel tenders and the losses incurred by the national airline only infuriating the people further as sordid details of inefficiency and corruption surfaced. The 22nd Amendment to the Constitution is a sham and a new Constitution hatched in secrecy and incubated in darkness is now with the Government. So too a ‘One Country; One Law’ report.

With all these floating around, no one is sure what is what. The future of the current Parliament is also in animated suspension. It is confusion worse confounded.

However, yesterday’s mass agitation does not portend well for political stability in a country already wrecked by economic instability. The patience of the public is wearing thinner by the day, and night their threshold to endure pain diminishing and the economy grinding to a halt. It is only the ingrained resilience of the otherwise exploited masses that is holding the country together.

Has the ‘unceasing waves’ call for the ouster mainly of the President and the Government thrown the country from the frying pan into the fire? Will the exit of the President douse those fires with the people expecting any change from the present dispensation to be the panacea for the current ills? The acrimony between the ruled and the rulers continues, as do the acute shortages of essential items. The world too is watching as there is the whiff of anarchy in the air.

The need for a stable Govt.

With the likely exit of the Government by next week, who will take the mantle of negotiating with the IMF?

Sri Lanka has to repay more than $4 billion per year for the next four years. Similar disquieting figures were revealed by the Central Bank in the past as well. These gross debt figures mask a truer picture since there are inflows as well as outflows on debt. It’s the net position on Government loans that is critical on external debt.

In 2020, inflows to Government coffers mostly on projects was $1.9 billion and it repaid $1.7 billion and similarly, net positive inflows of $0.7 billion were recorded in 2021. However, the Government had to repay $3.1 billion on Foreign Commercial Loans (FCL) in 2020, and 2021. These large repayments together with interest expense totalling $1.7 billion on FCL over the last two years led to the drastic fall in foreign reserves. Consequently, we are facing today’s humongous dollar crisis.

Those who were at the Presidential Secretariat and the Central Bank till recently raised FCL during 2007-2014 with the IMF’s tacit support. FCLs were mainly International Sovereign Bonds (ISBs) and volatile inflows of foreign money to the domestic debt market. From 2015, the Yahapalana Government facing a looming rollover crisis i.e., refinancing of past loans, continued the borrowing spree with new commercial loans, spreading their repayments till 2030. Then from late 2019 under this Government, came the suicidal “home grown” remedies lacking a coherent plan to tackle the rollover crisis which led to default this year.

Although all past Governments claimed that FCL would boost growth, the money was largely frittered away on Government consumption unlike the use of project funds which for the most part realised benefits over the longer term. Hence, payback time has come, with troublesome negotiations with the IMF on restructuring of Government debt especially of FCL.

The IMF staff team that was in Sri Lanka recently went back without an agreement. Did they sniff continuing political instability in the horizon? As far as they are concerned will there be a stable Government to implement an IMF programme. The long and arduous road to economic recovery has only just begun, and further political instability is not going to help the cause.