Is a national consensus to resolve the economic crisis possible? | Print edition

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Consensus on economic policies to resolve the country’s severe economic crisis is not possible due to the country’s political culture and political environment.

Every political party exploits the economic crisis to gain political advantage. National interest is pure rhetoric.

National effort

The severity of the current financial and economic crisis requires a national effort based on economic consensus to resolve it. This is not possible due to the political context of the country.

mature democracy

The economic crisis has reached such serious proportions that a mature democracy would have responded with a united response from all parties. In Sri Lanka, the political parties see the crisis as an opportunity to discredit the government and strengthen their base of support, each with the hope of gaining power.

APC

Therefore, the call for an all-party conference (APC) to resolve the crisis was doomed. Major opposition parties did not participate in the APC because they said it would be useless. They turned out to be correct. However, such an attitude is not in the national interest.

Opening speech

The ‘keynote speaker’ had no idea what the All Party Conference (APC) was aiming for and started off on a false note only to be shot down by former Prime Minister Ranil Wickremesinghe. He reminded conference participants of the purpose and objectives of the conference. He said blaming each other for the current economic crisis was pointless. An embarrassed president apologized for the governor’s inappropriate address.

Conference failed

The President’s All Party Conference (APC) not only failed to bring all parties together in the conference, but was derailed by irrelevant and partisan opening remarks that derailed the conference’s goals. He did not address the economic issues he was supposed to discuss.

Minor gain

Although the APC did not achieve the intended goal of developing a national consensus to resolve the economic crisis. He had some minor gains. Finance Minister Basil Rajapaksa, who had not been to parliament for about three months, was there to answer a vital question. Where is the IMF report on the recent Article 4 consultation? Finance Minister Basil Rajapaksa admitted that the IMF had submitted a draft report and comments on it had been sent. Soon after, the 42-page IMF report was released.

No national unity

Unfortunately, the country’s political culture is incapable of providing a national and united response to the fundamental problems. Each political party exploits the situation to gain political ground rather than to solve the country’s problems.

Scarcity

The serious problems of unavailability and scarcity of basic necessities and the daily rise in prices are excellent arguments for the opposition to gain popularity and power in the next elections. Therefore, the national interest is subordinated to their political interests.

No pragmatic solution

Another feature of current politics is that several opposition parties have no solutions to the economic crisis. They are opposed to any foreign aid the country was receiving to solve shortages due to shortages of foreign currency.

Opposition

This political culture of opposition to all politics and the absence of pragmatic solutions is a serious flaw in the country’s political culture. Our political culture is ideological rather than pragmatic and practical. Therefore, regime changes invariably lead to policy changes which have been a significant reason for delaying the progress of the country.

Economic consensus

Recent political developments indicate no progress in forming an economic consensus or any cooperation across the political spectrum to come together to resolve the crisis. In fact, the APC’s recent effort to find a consensus that ended in irrelevant debate is illustrative of our political behavior.

Only a debate

We have only witnessed a debate on the economic crisis without any solution being proposed to solve it. Much of the controversy is about blaming others for the crisis rather than offering a solution or coming together to iron out one.

Anti IMF

Unfortunately, bashing the IMF and opposing foreign aid from whatever side we receive it is gaining popularity. There is no viable alternative policy framework on how opposition parties would resolve the crisis. Their plea is that if given power, they will develop the economy by increasing production. How? ‘Or’ What?

No pragmatism

Party politics and economics lack pragmatism. This contrasts with former communist countries such as Vietnam, which adopted pro-market policies, secured international aid and foreign investment, and adopted trade policies to propel their economies to high growth rates.

Not COVID

Another feature of our politics is the regular refrain that the fate of the country is due to COVID-19. No one denies that the country’s balance of payments has suffered a setback due to additional spending on COVID-19 prevention and lower tourism receipts. On the other hand, merchandise exports have recovered and import prices have fallen to the benefit of the country’s trade balance.

Other countries

Other countries that also faced COVID-19 have recovered. Sri Lanka is the country with the lowest economic growth, highest inflation and severe shortages of basic necessities in South Asia. It is the continuation of bad policies, bad administration and corruption that have created this crisis.

national unity

Faced with the serious economic and financial crisis where national unity and an economic consensus are necessary to avoid bankruptcy and replenish foreign exchange reserves, there is no indication that the parties will come together and find a solution. All we hear is opposition to the country going to the International Monetary Fund (IMF) to restructure debt repayment and get balance of payments support. There is no hint of any other alternative economic strategy.

The loudest

Interestingly, the strongest critics of accepting an IMF program are those with few or no elected members of parliament. Their political stance is indicative of their outdated and impractical economic policies.

National effort

What is needed is a genuine national effort to avert national economic catastrophe. A national government made up of parliamentarians from any party that understands the seriousness of the problem and has a pragmatic economic approach must form a government under an acceptable leader. A multi-party cabinet of up to 25 members should be formed to lead the stimulus package.

IMF

The Sri Lankan economy is in such dire straits that foreign aid is imperative to resolve the crisis and lay the foundations for economic stability and growth. The country has no choice but to seek IMF assistance to restructure our debt obligations and liberalize trade and capital account to ensure a better balance of payments.

Those opposed to seeking IMF assistance cite the onerous conditions that would be imposed. These include fiscal consolidation by increasing government revenue and decreasing government expenditure by reducing wasteful spending such as for a large number of ministers and reducing losses of public enterprises.

Don’t those who oppose IMF aid want these reforms? What are their alternative economic policies to resolve the crisis?

Last word

Now that the government has more or less decided to seek IMF assistance and undertake its reforms, it is vital that there is effective implementation of the reform program to stabilize the economy and initiate economic recovery. .