By the Economist
The Prime Minister's statement on the economy last Thursday was forthright. It was forthright about the state of the economy. It indicated the need for unprecedented drastic actions. It called for bold actions to halt the precipitous and dangerous decline in the economy. The Prime Minister said he was willing to become unpopular for the cause of resuscitating the fallen economy to usher in prosperity for the people. The needed directions in policy were indicated. Yet it lacked any specifics about the government's actions. The specifics he said would be made known by the Finance Minister shortly. Will it be today? He and the Finance Minister have repeated the prognosis many times. The prescriptions were there in the broadest terms, intentions to remedy and preparedness to eschew popularity to remedy the situation was emphasised, though no specific measures, other than the intent to sell government assets to raise money to redeem the debt, were announced.

The most significant point made was that there was a need to take bipartisan decisions on the economy. Mr. Wickremesinghe appeared hopeful of opposition co-operation. We are doubtful.

Therein lies the tragedy of our politics, the bleak prospects for the economy and the poor future for the country. The prognosis was correct. We have heard it repeated so often in the last six months that even the man on the street is familiar about the sad plight of the economy. A negative growth for the first time since independence; the public debt exceeding the country's GDP; the debt servicing costs of Rs.327 billion exceeding the government revenue for this year of Rs. 278 billion; huge losses in public corporations and the inevitability of rising costs of living. Therefore there was no money for much needed expenditures for development. The parlous state of the economy meant the depreciation of the currency and higher burdens on the people through higher prices.

The prescriptions were equally clear in the broadest terms. Reduce expenditure and increase revenue. But how, when and where? The budget deficit will be brought down to 8.5 per cent of GDP from 11.5 per cent of last year. It will be brought down further to 5 per cent in the following year. How? By cutting down expenditure and increasing revenue. Again, how? Privatisation to use proceeds for debt repayment was one means, curtailment of expenditure on Samurdhi was another. Impliedly, these were only possible next year after the passing of certain economic legislation this year. In spite of the Prime Minister's announced willingness to court unpopularity to resolve the economic problem, he wanted bipartisan support.

Therein lies the rub. Therein lies the weak link in decision taking and implementation. This country has very little evidence of such support even for the 20-year war and peace process. The rhetoric of support for a common approach is combines with simultaneity of opposition! It would be particularly difficult for the government to get co-operation of the opposition to cut expenditure and increase taxes. These measures are the bread and butter of the opposition, their strategies to come back to power.

The Prime Minister's proposal to incorporate certain economic and financial parameters into legislation is indeed a pragmatic and much needed course of action in our parliamentary democratic culture. It will remedy a much-needed accountability in economic affairs of parliament to the people. The current trend of each party blaming the other for ruining the economy could be replaced with a more responsible handling of public finances. Governments would have to keep within certain parameters in its expenditures, thereby ensuring less wastage. There could be limits to the accumulation of the public debt. Will most parties support this? Even if they do in parliament, the opposition will surely continue to blame the government and exploit the inevitable hardships on the people. "To hell with the economy, coming back to power is the name of the game!"

Will the government risk going out of office? The government is looking to new ways of enabling proper economic decision making within our parliamentary democracy that has been plagued by political parties "truckling to the multitude" and consequently not taking the correct economic decisions. Will Ranil Wickremesinghe's government change this? If he succeeds, there is a much better chance of achieving the prosperity he has promised.

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