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Wednesday December 7th, 2022

Opinion: Failed Government – A Year in Review

ECONOMYNEXT – A year into President Gotabaya Rajapaksa’s presidency, we are in the midst of a raging pandemic, with an ailing economy and mounting debt trap. Our woes are compounded by shrinking foreign reserves, soaring unemployment and increasing poverty.

This is contrary to the picture the current ruling party painted before the election, in which there were promise, positivity and optimism. There were expectations that professionals and technocrats would drive the country forward without political interference. There was hope that stable policies and strong leadership would usher in an enabling environment for businesses.

All these expectations have disappeared into thin air now, with Sri Lanka relying more and more on the military, and drifting towards an authoritarian, surveillance state ruling over a poverty-stricken nation. The crusade against corona has been spearheaded by men in uniform and not qualified doctors, and even the handful of civil officials who were instrumental in handling the first outbreak of the pandemic — Dr Anil Jasinghe and Dr Paba Palihawadana — are not to be seen.

There seems to be no concentrated effort to protect vulnerable groups from the economic fallout of COVID19 and the ongoing lockdowns. Those living in housing schemes in Colombo have been seen flocking to the streets demanding food and money. The newly established ‘Drone Regiment’ of the Army has deployed state-of-the-art surveillance devices to track the movements of curfew offenders. But these new technological capabilities have not been used to track those in need of urgent assistance and provide them with essentials during prolonged lockdowns.

The second outbreak of the pandemic, which source is yet to be established, has spilt out of control. The death toll is on the rise and hundreds of new cases are reported on a daily basis. We do not have adequate facilities to conduct aggressive and comprehensive random testing on civilians and the large majority of new cases are reported within “clusters”. Our health sector is currently grossly ill-equipped to handle a major outbreak of the pandemic and we do not have adequate intensive care facilities to meet mounting challenges. A newspaper report revealed two weeks ago that the Ministry of Health has ordered no new ventilators since March and only 146 ICU beds have been designated for COVID19 patients. This shocking revelation speaks volumes of the inefficiency of the government and its complacent approach towards the global pandemic.

The ill-fate confronting Sri Lanka at the moment is not by accident and was caused by the current government’s flawed approach to the most critical issues the nation is currently facing.

When the government claimed that it brought the first wave of the pandemic under control, Sri Lanka did not have adequate facilities to aggressively test patients. Despite such shortcomings, the government basked in the glow of becoming the “second country after China to defeat COVID 19”. If there hadn’t been a PCR test on the Brandix worker who admitted herself to the Gampaha Hospital, we would still be eating “Kiribath” (Milk Rice) in celebration of the “success” of becoming the second nation to defeat the deadly virus. Such was the government’s ignorant approach to a highly complex public health issue.

The government went into handling the second outbreak of the pandemic with a superiority complex come about from a false euphoria. As in the case of the victory of the war, the primary responsibility of “crushing the pandemic” had been given to the armed forces with medical experts taking a backseat, and the fear generated by the military was maintained to keep people at home. The quarantine process was made seem punitive measure and the cumulative result of this militarised approach to pandemic-control was the stigmatisation of patients, which, in return, made them reluctant to seek medical treatment.

There even lacked a coherent policy on the imposition of “quarantine curfew”. Two weeks ago, the Police Spokesman gave the public 48-hour notice before imposing curfew in the Western Province, prompting a “mass exodus” from the province before the curfew came into effect. It was clear the Police had failed to foresee and mitigate this situation leading to the forced 14-day quarantine of all those who left the province, even at a great personal financial cost. The government has failed miserably to empathise with the woes of daily wage earners and low-income groups who have borne the brunt of prolonged lockdowns and isolation periods.

It was apparent from the early stages of the outbreak in Sri Lanka that the government’s first priority was to consolidate power, not take aggressive action to protect the country from the pandemic. This is a recipe for failure and we are all reaping what the government has sown since the last Parliamentary election. We must remember what we have learned from this; that a government that puts greed for power before a raging pandemic is bound to fail. A government that trusts a family and a coterie of friends over experts and professionals is bound to fail. And a government that hoodwinks the public by manipulating news rather than delivering results is bound to fail. (Colombo, November 16, 2020)

Rasika Jayakody is an active member of the Opposition Samagi Jana Balavegaya Youth Wing. His opinions are his own

Comments (2)

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  1. Peter De Zilwa says:

    If these sentiments have been conveyed to His Excellency the President and copied to the prime minister ,it is now the bounden duty of the Govt to look into the grievances of the people.
    Let’s hope and see what stance will be taken or are we going with the beggin bowl to China again to bail us out of our predicament.

  2. Rohan says:

    Lol yahapalane is better in shortwords ya.

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Comments (2)

Cancel reply

Your email address will not be published. Required fields are marked *

  1. Peter De Zilwa says:

    If these sentiments have been conveyed to His Excellency the President and copied to the prime minister ,it is now the bounden duty of the Govt to look into the grievances of the people.
    Let’s hope and see what stance will be taken or are we going with the beggin bowl to China again to bail us out of our predicament.

  2. Rohan says:

    Lol yahapalane is better in shortwords ya.

Crisis-hit Sri Lanka sees recovery in cruise ship tourism from zero

ECONOMYNEXT – Seventeen cruise ships are scheduled to arrive in Sri Lanka next year with
Queen Mary 2, one of the largest and popular ships, Colombo’s harbor master said, as the island nation is looking for alternative avenues to boost its faltered tourism sector.

The rise is expected to bring thousands of high end tourists with higher spending capacity after two years. The island nation saw a record high 54 ships in 2019, rising from the previous year’s 42, Nimal Silva, Colombo Port Harbor Master said.

“The 2019 was one of the best years and in 2020 there were more than 60 scheduled vessels to
call but with COVID pandemic all hell broke loose,” Silva told EconomyNext.

Fourteen cruise ships are scheduled to call from January-May next year and another three are scheduled to arrive in Colombo in November, when the peak tourism season begins.

Cruise tourism cycle begins in Sri Lanka from October to May with a dip during the monsoon

Sri Lanka welcomed two cruise ships in November after almost two years.

Three ships are scheduled to arrive in December and Azamara Quest, carrying at least 722 tourists, arrived in Colombo on December 3 and is now heading to Hambantota.

On December 18, Le Champion carrying 264 will arrive in Colombo and depart to Mumbai and the third vessel, Silver Spirit will arrive in Colombo on December 23 carrying up to 648 passengers.

There are two scheduled in January, one in February, and four in March next year, according to the harbormaster.

“Next year more ships could schedule, so far these are the confirmed ones now,” he said.

This also generates income for the port and the prices are charged according to the size of the

Silva said the first medium sized-cruise vessel, 229 meters long, generated about 14,000 dollars
for docking in the port for a day.

He said Queen Mary 2, a 325 meter long ship and one of the largest cruise ships in the world, is also
scheduled to call at Colombo in February. It can carry up to 3200 passengers.

Silva said almost all the ships that were scheduled have arrived on the island and therefore, he is
confident all the ships including Queen Mary 2 will arrive in Sri Lanka.

“Only one ship has been canceled thus far. There are no last minute cancellations if there were some they would have informed us by now,” Silva said. (Colombo/Dec07/2022)

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Sri Lanka President says 2015-2019 policy struggle was ‘warfare’

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe said his attempts to reverse the inward-looking protectionist policies and fix state finances during his last term as Prime Minister was opposed both by politicians and business interests.

“In the 4.5 years as prime minister it was an effort to take this economy out in a different direction,” President Wickremesinghe told an economic forum organized by Sri Lanka’s Ceylon Chamber of Commerce.

“We were able to get a surplus in the primary budget. But it was warfare.

“Politicians wanted to protect their power, businessmen wanted to protect their profits and many others wanted to see what the country would provide them free of charge.”

Wickremesinghe was unable to bring private investment to the port under apparent internal political opposition. Relations with President Maithripala Sirisena also soured and he appointed his own economic advisors.

Meanwhile Wickremesinghe’s free trade agenda was hit by monetary instability as the central bank printed money under flexible inflation targeting and triggered forex shortages which were followed by trade controls.


Sri Lanka controls imports in ‘Nixon-shock’ move to protect soft-pegged rupee

Sri Lanka President calls to expand Nixon shock as rupee falls

Wickremesinghe’s ‘Yahapalana’ administration also went on a spending spree called ‘100-day program’ in 2015 triggering a currency crisis in 2015/2016 as the central bank printed money to suppress rates.

The central bank however had already started injecting liquidity and losing reserves (by terminating term repo deals) from the fourth quarter of 2014 as domestic credit recovered from a 2012 currency crisis before his administration came to power.

The rupee fell from 131 to 152 and stabilization policies led to an output shock. The International Monetary Fund then taught the agency which had already depreciated the currency from 4.70 to 152 to the dollars seeking bailouts 16 times, how to calculate an output target.

Under Finance Minister Mangala Samaraweera taxes were raised and budget were fixed in 2018 to bring deficits back to pre-2015 levels, though state spending went up from 17 to around 20 percent of GDP under the spendthrift ‘revenue based fiscal consolidation’ where cost cutting was dropped.

The central bank then printed money by purchasing bonds from banks to target the yield curve, jettisoning a bills only policy established by ex-Central Bank Governor A S Jayewardena, through term reverse repo and overnight injections taking the rupee from 151 to 162 to the US dollar.

The central bank also created money by entering into a swap with the Treasury in 2018, a type of strategy used by speculators to bring down East Asian pegs putting, further pressure on the currency from around July 2018 onwards.


What went wrong; Sri Lanka’s illiberal economics and unsound money : Bellwether

Stabilization policies then led to another output shock. As forex shortages came Sri Lanka resorted to heavy external borrowing as it was unable to settle maturing loans with domestic borrowings.

After two currency crises and output shocks, macro-economists of the new administration cut taxes saying there was a ‘persistent output gap’ and printed even more money for stimulus (close the output gap). (Colombo/Dec07/2022)

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China calls for joint effort to ease Sri Lanka’s debt burden, no mention of restructure

ECONOMYNEXT — A top Chinese official has expressed hope that countries and multilaterals like the International Monetary Fund (IMF) work with Beijing to play a constructive role in easing Sri Lanka’s debt burden, stopping short of an assurance on debt restructuring.

Chinese Foreign Ministry spokesperson Mao Ning was quoted by international media as saying on Monday December 05 that China attaches high importance to Sri Lanka’s difficulties and challenges.

She was responding to a question on media reports that an IMF team will be in China this week to discuss faster progress on debt restructuring for countries including Sri Lanka, which is negotiating for an IMF bailout.

“On Sri Lanka’s debt issue, I’d like to stress that we support the financial institutions in working out ways with Sri Lanka to properly solve the issue,” said Ning.

“We also hope relevant countries and international financial institutions will work with China and continue to play a constructive role in helping Sri Lanka overcome the current difficulties, ease its debt burden and realise sustainable development,” she added.

She said China has long-standing sound cooperation with the IMF and other international economic and financial institutions.

The spokesperson avoided any mention of debt restructuring, a prerequisite for the IMF extended fund facility (EFF).

Nearly a fifth of Sri Lanka’s public external debt is held by China, according to one calculation. The emerging superpower has been generous in Sri Lanka’s time of need, extending much needed assistance in the form of rice, medicine and other commodities.

The latest arrival in the Colombo port from China was 2 billion Sri Lankan rupees worth of essential medicines and medical supplies, delivered on Tuesday.

However, critics say China is doing everything but what Sri Lanka really needs: agreeing to restructure its outstanding debt.

At least one Sri Lankan opposition MP has demanded that China agree to a restructure.


Sri Lanka debt restructuring: opposition MP warns of “China go home” protests

Tamil National Alliance (TNA) legislator Shanakiyan Rasamanickam, who had been on the warpath with Beijing over an apparent lethargy in helping the crisis-hit island nation restructure its debt, recently warned of a “China, go home” protest campaign similar to the “Gota, go home” protests that unseated the country’s powerful former president in July.

The MP told parliament last Friday December 02 that Sri Lanka owes 7.4 billion dollars to China, a nearly 20-trillion dollar economy, and if the latter was was a true friend, it would agree to either write off this debt or at least help restructure it.

Colombo has been vague at best on the status of ongoing restructure talks with Sri Lanka’s creditors, and opposition lawmakers and others have expressed concern over what seems to be a worrying delay. Rasamanickam and others have claimed that China, Sri Lanka’s largest bilateral creditor, is the reason for the apparent standstill. (Colombo/Dec06/2022)

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