The IMF in February and the CDH in March issued two sets of recommendations to enable Sri Lanka to emerge from its economic and sociopolitical illness. The two sets are interdependent. The underlying themes of both, one primarily economic and the other also non-economic, are not new and indeed a number of local economists, intellectuals and leaders of civil society groups had reminded and warned the Rajapaksa regime of its misplaced priorities, its misuse of economic resources and its erroneous precepts of governance.
But, to remind Lord Acton, power corrupts and absolute power corrupts absolutely. Populism and arrogance combined, and in the name of an “alternative way” to achieve “prosperity and splendor”, the economic locomotive has derailed, shaking the local production base as well as its associated consumption. Without facing the reality of the situation and unwilling to retreat from the dreamed path, the regime continued to make ad hoc adjustments while scapegoating the pandemic.
But no scapegoat could hide the fact that it is the sheer mismanagement of the economy by a regime committed to an ideology of Sinhalese Buddhist ultra-nationalism that has created the current dystopia. As a result, while the vast majority endure economic and financial hardship and deprivation, ethnic minorities have additionally been left out of mainstream development due to discriminatory government policies rooted in ethno-nationalism. Therefore, without reshaping the economy and reconnecting the disconnected, reviving growth and prosperity will be difficult.
On the economic level, no other choice but to go to the IMF. Delay is extremely costly. If the leaders had gone much earlier without selling false promises and false hopes, the cost of repairs would have been much less and smooth. The main culprit of this fraud was the Central Bank (CB). Professor Lakshman who resigned in disgust and his successor Cabraal, an accountant-turned-politician, were handpicked along with other members of the monetary council specifically to help translate GR’s alternative path into action. CB lost its independence and began to pander to GR’s wishes. Money printing accelerated, real inflation was camouflaged, the exchange rate was controlled, and debt repayment and servicing was managed by resorting to more borrowing from friendly countries.
With the subjugation of the supreme economic institution, GR’s grandiloquent “views of prosperity and splendor” provided the necessary cover to propose unaffordable and unrealistic projects in government budgets. For example, the government of Rajapaksa had gone crazy about building highways and highways with borrowed funds, and assuming that such investments alone would promote economic growth and bring prosperity.
In fact, it should be the reverse. It is the robustness of a growing economy that creates bottlenecks in infrastructure, which requires investments to remove those bottlenecks. Today, with no money to import fuel, the highways are virtually empty of traffic. Would the government at least allow pedestrians, cyclists and carters to use these roads? What an unbalanced development strategy!
Seeking a local solution, Cabraal presented a six-month roadmap in October 2021 calling it “dynamic” and promised that currency flows would exceed $10 billion by March 2022. Instead of that, the country’s foreign exchange reserves had fallen below one billion. He is still the first opponent to ask for help from the IMF. Whether the reason for his persistent opposition is personal, professional, or in the national interest, only time will tell. (Don’t forget he was the architect of the Greek bond bet that cost the country $200m during his previous tenure at the CB). Meanwhile, the economy is inexorably collapsing. The rupiah’s delayed free float sent prices skyrocketing. Famine is knocking on the doors of millions of homes.
Even if the regime finally decides to go to the IMF, one wonders if it would be able to clean up corruption and undertake structural reforms. Because such measures would break the political foundations of the regime. Furthermore, economic recovery and a return to a new normal would be impossible as long as the country remains divided with nearly 30% of the population kept out of government care. Recall that GR declared on several occasions that he was elected by the Buddhists and that he would protect Buddhism and govern according to its virtues. The fact that he is president of all the communities in one way or another escaped him.
However, with “armed Buddhism” and khaki and saffron troops marching in the lead, the Buddhist governance of the GR disrupts the ethnic balance in the north and east of the country where Tamils and Muslims are concentrated. His Archaeological Task Force appointed to excavate and safeguard lost Buddhist ruins has proven to be a smokescreen for land grabbing in Tamil districts for state-aided Sinhalese Buddhist encroachment.
Prime Minister MR has also said a few times that no district or province in the country should belong to any particular community, without extending this argument to the whole country. Didn’t BBS secretary Gnanasara Thera claim that this country belongs only to the Sinhalese? Moreover, the saffron army’s conversion of Hindu temples into Buddhist viharas, the sneaky erection of Buddha statues as happened recently at Mullimalai in Addalaichenai, a Muslim enclave in the Eastern Province, and the gradual disappearance of Tamil script from public notice boards are attempts to change the ethnic character of this region.
Finally, the One Country One Law task force led by an ex-prisoner Bhikkhu is nothing but an attempt to homogenize the cultural heterogeneity of the nation. These measures have widened the gap between the majority and the minorities and add to the stock of injustices and human rights violations – the main concern of the HRC. These issues must be addressed and power must be shared with minorities if economic recovery and peace are to return. IMF reforms are only half of the necessary remedies and the other half should come from meeting the demands of the HRC.
With no idea how to tackle the chaos in power, GR’s moves to convene (a) an all-party conference, (b) appoint an 11-member committee with 10 ministers plus the head of the CB, and (c) meeting TNA are public relations exercises to fool people and maybe please India. The regime has failed and failed miserably, and there is no reason for it to continue. Regime change is therefore imperative to recharge the economy, reconnect the people and reinvigorate the struggle, at least to reduce the pain and suffering of the masses.
(The author is a professor at the School of Business and Governance, Murdoch University, Western Australia.)