Editorial

And yet, with each January comes fresh hopes of a new beginning. 2022 though has arrived with a nation in great anxiety. Whether hope alone is enough to pull it through one of the most difficult periods in contemporary times remains doubtful. It will require prudent leadership and a nation united to prevail.

Three difficulties worry the citizen most, and all three impact on all of them directly or indirectly. There is a global pandemic at war with the human race refusing to be beaten, churning out new variants regularly. It has turned the world as we know it topsy-turvy and in its wake brought several countries, not least Sri Lanka, economically to their knees. On top of it, a nagging debt-ridden Sri Lanka is facing an acute foreign exchange crisis that is throttling the economy. And then, there is a botched ambitious agricultural policy that went horribly wrong despite wiser counsel and triggered inflation, an exceedingly high cost of living and food scarcity that can lead to mass upheaval and political instability.

The country is fast becoming, if not already, a textbook case of a failed state. The Central Bank Governor is nevertheless putting on a brave front and striking an optimistic note in public. His theatrical utterances are not taken as the gospel anymore and the best scenario he can paint is to say the country’s reserves are not below zero. The currency swaps and loans taken in gay abandon to overcome today’s problems are only mortgaging tomorrow’s generations. His self-confidence unfortunately does not percolate to the edgy masses waiting in different queues for their daily essentials.

The Government hierarchy has not taken any action against state corruption in 2021. The Lanka Sathosa scam, the sugar scam, the gas scam all have been swept under the carpet. They have also been convinced there is no need to go for a bailout from a lending agency like the IMF. The President told newspaper editors this week that these agencies will want conditions laid down like privatising loss-making state enterprises that are haemorrhaging the nation’s economy. The IMF is known to demand the removal of subsidies on food items; call for a more realistic foreign exchange rate; trim the fat from a bloated public sector and such matters successive Governments have failed to address. These seem unpalatable even to the present Administration to follow. Still, these are the very conditions this Government is now forced to implement with or without the IMF, and its bailout support.

State lands and properties are on offer by the dozen to foreign investors to shore up depleted reserves; there are no price controls on food imports; and foreign currency is allowed to float like a butterfly at a rate determined by the underground market.  While it has allowed market forces typical of a laissez-faire capitalist economy to determine the course of events, the Labour Minister has begun complaining in public that the Finance Minister has stopped recruitments to the public sector in 2022. It is a case of self-medicating on an IMF prescription without the IMF doctor being officially called in.

Pakistan may be the nearest and best example of a country that shares the same plight as Sri Lanka. It has opted to swallow the bitter IMF pill and go for a USD 6 bn loan programme in return for a series of unpopular austerity measures. Its Government is risking a public backlash in the midst of an existing crisis similar to Sri Lanka — inflation, galloping food prices, devaluation of the Pakistani rupee.

Critics say these austerity measures always disproportionately hurt the poorer segments. Proponents say the long term benefits are worth the short-term sacrifices. This Government seems reluctant to take the risk.

One of the things the IMF is asking Pakistan to do is to make the Central Bank Governor independent of political control. At least on that score, Sri Lanka’s Governor ought to be attracted to the IMF, but he seems assured of being untouchable by the current dispensation.

When the President met the editors this week, he too struck a positive chord. A military man, he spoke of early setbacks during the war against the LTTE, his point being that battles may be lost provided the war is won. He said he had three more years to turn the situation around. Such an approach by a leader is the right one, but not always should the administration of a country be compared to fighting a war.

The British public rejected their wartime leader soon after World War 2 and the Sri Lankan public followed suit in 2015 not long after the euphoria of the war victory over the LTTE had withered away. The public has gone white around the gills with the misery they go through these days. There have been calls for the abolition of the Executive Presidency for years now on the basis that the incumbent tends to get far removed and isolated from the pulse of the people. There have also been calls for him to work with his Cabinet, but given the calibre of ministers the President has to work with, one might empathise with him, and he himself might rue the fact he has such a team of non-performers at his command. On the other hand, given a free hand to pick his own team, like in the USA, the President might rely only on retired Major Generals.

The immediate priority for the President and his Government would be to avoid a catastrophic food crisis and stave of starvation. An accelerated ‘Grow More Food Drive’ is urgently required for which fertiliser is a prerequisite. There seems to be no author for that disastrous fertiliser ban of 2021. Elections have been put off for 2022, so the work ahead is clear. The derailed economy needs to be put back on track, while minding the unseen enemy, the COVID-19 virus, going on to its third year.