Enforcing laws on economic targets
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Can economic targets be mandated by law? While there may be provision to do this, it is morally and ethically wrong to do so since voters change governments entrusting new regimes with a fresh start and a re-look at the economy.This was also the dilemma facing my friend Pedris Appo – short for Appuhamy – a retired agriculture expert who does farming, when we chatted during a Thursday morning call.
“How can they bring laws to enforce economic targets? That is so unfair when new regimes would want to implement their own targets,” said a concerned Appo.
“This is the problem of seeking a handout from the IMF. We have to follow their rules and targets and, as the current administrators proclaim, must be followed by any new regime,” I said.
“So to make sure that these policies are diligently followed by the next set of rulers, such targets that stretch beyond the tenure of the present government are mandated by law,” he said.
“The same applies to all kinds of changes, in particular the sale of state assets, and whether incoming administrations, if the current rulers get voted out of office, should proceed with such decisions,” I said.
In fact, in a recent statement former President Mahinda Rajapaksa, leader of the Sri Lanka Podujana Peramuna (SLPP) which has the parliamentary majority on which President Ranil Wickremesinghe heavily relies on to stay in office, urged the President not to proceed with the sale of state assets. He said that since elections are to be held, such decisions should be left to the new rulers in case the present lot is not re-elected.
It would also be interesting to see whether the SLPP will support the Economic Transformation Bill, against which several petitions have been filed in the Supreme Court, when it is eventually debated in Parliament. Opponents of the government won a crucial battle when the Supreme Court, hearing several petitions against the Sri Lanka Electricity Bill said its provisions contravene the Constitution.
The problem with the Economic Transformation Bill is that by setting economic targets in law, it is following a failed precedent in the past where similar targets were set but not followed by other incoming administrations.
The bill plans to reduce the country’s debt burden from 128 per cent of the Gross Domestic Product in 2022 to 95 per cent by 2032 and reduce the gross money supply to 13 per cent by 2032 from 34.6 per cent in 2022. It aims to achieve economic growth exceeding 5 per cent after 2027 and unemployment to below 5 per cent by 2025. These are future years when the current administration may not be governing, so how could you force by law or decree, policies by a regime that might be voted out of office?
This question is even more pertinent since the Elections Commission is preparing to announce in the coming weeks, the date of the next Presidential Election. It must be held between September 17 and October 16, this year.
Respected economist and former Central Bank Deputy Governor W.A. Wijewardene, alludes to this same issue in his weekly newspaper column. This is what he said: “This is a bill forcefully thrown through the throats of people. The way that the Economic Transformation Bill has been formulated lacks adherence to democratic policy governance. Though continuous public engagement was promised, there is no evidence that the public has been consulted when the bill was drafted. Without such engagement and consensus building, there is no guarantee that future Governments will choose to bind themselves to the quantitative goals included in the bill. It, therefore, seems that the present transformation bill is inadequate for Sri Lanka to attain its long-term growth goals.”
The new bill includes provisions for the establishment of key entities such as the Sri Lanka Economic Commission, Investment Infrastructure Corporation, International Trade Institute, National Productivity Commission and Sri Lanka Economic and Trade Institute. The institutions to be replaced include the Board of Investment (BOI) whose unions are protesting against the move.
The SLPP’s argument seems valid: You should not change things when we are heading for an election. The dismantling of the BOI needs further scrutiny, for such a move would be the second time this institution is subject to change after the BOI replaced the original Greater Colombo Economic Commission. Instead of amending the BOI Act to suit current needs, why reinvent the wheel?
As I returned from the kitchen with a mug of tea, like a breath of fresh air, I could hear a familiar song on Kussi Amma Sera’s phone while the trio was in conversation under the margosa tree. The song titled ‘Chande denna epa hora thakkadiyanta (literally meaning don’t vote for the rogues)’ lambasts politicians in true Gypsies-style. The band is ably led by Piyal Perera, brother of the late legend Sunil Perera, and continues the tradition of critical social commentaries through song.
“Apahu deshapalana kattiya chanda dayakayanwa merri go rouwmey geni yanna lasthi wenawa (Once again the politicians will take the voters on a merry-go-round),” said Kussi Amma Sera.
“Monawa karannada. Api chandey danna oney nae (“What to do? We have to vote noh),” said Serapina.
“Prashney thiyenney ugath panthiye godak kattiya deshapalanaya karanney nethi eka (The problem is that not many of the educated class are getting into politics),” noted Mabel Rasthiyadu.
With election fever increasing, the question on everyone’s lips is also whether the Government will go ahead with its privatisation moves, particularly since its main partner, the SLPP, is opposed to it. President Wickremesinghe’s team, however, is determined to proceed with these reforms with loss-making state-owned enterprises which are soaking up valuable financial resources of the Government. Also-up-for-sale SriLankan Airlines this week, according to some reports, has reported an operating profit of Rs. 1.124 billion for the nine months ending December 31, 2023. The airline, however, carries a huge debt owed to the Government, the reason it’s looking for a new investor.
Rather than engaging in setting economic targets by law, the rulers should – with the support of all political parties – come together and prepare national policies on education, health and social welfare. This is something that should have been done a long time ago instead of new Governments meddling with old policies, particularly in education and health, during a regime change.
As I neared the end of this week’s column piece, my mind was on the petitions against the Economic Transformation Bill before the Supreme Court and what kind of verdict awaits its drafters.
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