Dr. Jehan Perera critiques the incumbent government’s understated priorities

The past six months have seen living standards of a majority of Sri Lankans fall precipitously. An increase in the price of a loaf of bread to Rs. 300 represents a 500 percent hike on the tag this staple came with six months ago before the economic crisis hit the country. The price of kerosene, which is the poor person’s fuel, has gone up by about 400 percent.

It was a collapse in the living standards of the masses in the time of the Rajapaksa regime that generated much antipathy towards the government. The problem however, is that the government is showing less interest in increasing the production capacity of the national economy and more in giving those who have politically supported this administration an opportunity to benefit from the divestment of state assets.

The government doesn’t appear to be placing priority on mitigating the collapse of people’s savings (nor their standard of living) or even assisting small local producers. This non-consultative approach has been criticised by small businesses et al.

Chairperson of the Sri Lanka United Businesses Alliance (SLUBA) Tania Abeysundara says the decision to place a temporary ban on the import of 300 items was taken without considering the sub-contents listed under the relevant product codes.

She notes that small and medium enterprises (SMEs) make up a large part of Sri Lanka’s economy and account for 80 percent of all businesses. SMEs comprise an essential source of employment opportunities and are estimated to contribute around 35 percent to employment.

“We have come to a situation where we’re unable to continue with our activities. The people who took the decision to ban the importation of 300 consumer items don’t realise the local production of the country. Nearly 4,500 SMEs will be unable to pay the wages of their workers,” Abeysundara laments.

She elaborates: “The government is contemplating printing one trillion rupees to pay the salaries of public sector employees and maintain parliamentarians. But it did not take any measures to protect SMEs, which serve as the backbone of the country.”

The government is proceeding as if economic and political life is normal – and it’s business as usual. It seems as if the protest movement never existed. Former president Gotabaya Rajapaksa’s return to the country is an indication of the government’s belief that the aragalaya has been subdued and quelled.

Sri Lanka’s current political reality is that the anticipated influx of IMF funding has prompted the government to provide massive and unproductive funding for a full complement of 20 ministries with 37 deputy ministers and their entourages, as well as patronage for their private and corporate friends.

There is also continued acquiescence with the long prevailing trend of budgeting for increased military spending. As a result, the country continues to face bankruptcy and kleptocracy along the same old path. This simply means that the government comprises those who seek status and personal gain at the expense of the governed, regardless of International Monetary Fund’s bailouts or the Paris Club’s endorsements.

The Paris Club has declared its satisfaction with the agreement reached between the government and the IMF regarding a US$ 2.9 billion loan to be disbursed over a period of 48 months. The loan will be granted under the IMF’s Extended Fund Facility, which helps countries deal with balance of payments or cash flow problems.

An informal group of rich countries constitute the Paris Club, which provided given loans to less developed countries and seeks to find solutions to the repayment difficulties experienced by those nations. Due to their support, Sri Lanka is likely to escape the tragic fate of prolonged bankruptcy and all its unintended consequences.

The IMF and Paris Club among others will ensure that the government is provided with sound technical advice. If implemented, this will enable it to obtain more loans while increasing its capacity to squeeze the rest of the economy to repay its international debtors.

However, it is important that the government remembers that the protest movement garnered the people’s support due to certain factors and unmet needs, which affected everyone regardless of ethnicity, religion or community.

This is the main issue that the government should be focussing on. The lamentation of the SMEs does not bode well either. The government needs to be more mindful of the needs of the masses rather than those of its members, friends, relatives and party supporters.