Editorial

A New Year in the Gregorian calendar always brings fresh hope for a better year than the last just fading away. And so, the citizens will be looking forward to a happy New Year from tomorrow.

Even the bitterest critic of President Ranil Wickremesinghe will give him his due for stepping into the shoes of a job that everyone else clamours for in ordinary times but shunned in those extraordinary times of 2022. With the support of a new Central Bank Governor, the inevitable recourse to the International Monetary Fund (IMF) and professional help from foreign law and financial firms, the ship of state was steadied in 2023, its sinking completely avoided.

But there’s much to do to bring it back to shore intact for future voyages.

Crippling taxes and steep prices, both in food and essential items like medicines, inflation, and corruption in every possible import by ministers and officials continued unabated in 2023. Even if 2022 showcased the resilience of Sri Lankans to take adversity on the chin, 2023 experienced the genuine difficulties of every household in meeting their monthly bills. If 2022 was about putting a floor to a crashing economy and shortages and endless queues, and 2023 was about setting the structure for stability, 2024 would be about sustaining that stability.

One of the reasons for 2023′s steadiness was that the country was under a debt moratorium. Its mountain of foreign loans hasn’t been paid back. It has to be soon, even with a possible voluntary ‘haircut’ by the creditors. The unfinished agenda of restructuring loans of bilateral government and private creditors remains a ‘work in progress’. The IMF’s bitter pills for economic reform may stabilise the economy, but inevitable tax increases are at a tipping point, with the public particularly displeased with how the tax money is being spent and angry that those who plundered the public purse have gone scot-free. These tax increases also dampen growth and employment creation, dangerously flirting with greater social unrest.

The targeted ‘safety net’ for the poorest of the poor through the Aswesuma programme has already run into logistical problems. It is meant to ease the pain of those in the safety net, yet shrinking incomes and high prices might force the widening of that net, which is the antithesis of an economy recovering. Migration, touted by the Labour Ministry as a success story due to an increase in inward remittance, is creating shortages in the labour pool of skilled and semi-skilled workers.

Much of how 2024 turns out will depend on the fragility of the world at large. An array of global issues will have a direct impact on Sri Lanka. From wars to big power rivalries, to trade and even the seasonal shifts in weather patterns due to Climate Change, they will all have an impact on this country.

Sri Lanka will be navigating a rapidly evolving and unstable international environment at a time when its key national interests and priorities will be dependent on the external world. The lingering implications of the COVID-19 pandemic are raising their ugly heads once again around the world. The ongoing conflict in Ukraine and its impact on the global economy; the trade and financial situation; the humanitarian and security situation unravelling in Gaza; the competition for global leadership between the world’s first and second largest economies, viz., the USA and China; the rapid progress of India and the economies of East Asia; the sabre-rattling in the Indo-Pacific; the reversal of economic integration; and the rise of protectionism are among the cocktail of issues at hand.

The double standards and the West’s loss of credibility over its appalling inaction on the human rights and humanitarian situation in Gaza are telling. They have tacitly backed Israel’s re-enactment of Hitler’s ‘Final Solution’—the total elimination of the Jews, now of the Palestinians. This will only add impetus in the coming year to the new self-awareness of the ‘Global South’ seeking a more equitable global order.

If foreign policy is an extension of domestic priorities, Sri Lanka’s most pressing challenge in 2024 is to leverage its external environment to achieve post-crisis economic stabilisation and recovery objectives. The privatisation exercise and exploring new opportunities, such as in supply chain diversification and market access in new regions while defending existing market strongholds such as the EU and the United States while proactively embracing new markets, and Foreign Direct Investments (FDIs) along with higher-spending tourists, are imperative.

The escalation of tensions between India and China will continue to apply pressure on Sri Lanka’s neutrality. In September next year, the UN Human Rights Council (UNHRC) will take up Sri Lanka’s longstanding challenge in Geneva. That charge is led by the Core Group, which includes the US, the UK, and Canada. It will be prudent for Sri Lanka to win the confidence and credibility of the same Western partners that it succeeded with in the debt restructuring process on the economic front also on the human rights front.

It is true that the entire multilateral edifice is damaged—much like the rubble in Gaza—by the international outrage faced by the same Core Group in light of the unconscionable failure to uphold the very human rights and humanitarian law regimes in the context of Gaza. Still, it would be unrealistic to expect the double standards argument alone to extricate Sri Lanka from its isolation in Geneva.

All of this might, however, be overshadowed by the buzz of 2024 being an election year in Sri Lanka. Coincidentally, it is the same in India, the US, Pakistan, Bangladesh, the UK and several other countries. Local leaders here are already engaged in forming alliances and negotiating for cabinet slots. In this game of political chess, the bishops (or the cardinals), the rooks, and the pawns are all in it. So too was the king, contemplating his next move on the political chess board. His Government is, meanwhile, engaged in a three-dimensional game of chess on the foreign front; bilaterally in its relations with the US, India, China and Japan; multilaterally with the UNHRC, IMF, World Bank, ADB, etc.; and the new dimension of private creditors.

Sri Lankan voters will be trekking to the polling booth in 2024 wearing the straitjacket designed by the IMF, with a head full of election rhetoric, empty promises, castles in the air and dreams of a pot of gold at the end of the rainbow.