16 May, 2022

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An Agonizing Impasse

By Ameer Ali

Dr. Ameer Ali

The Debacle

When the country’s economy contracted in 2020 amidst mounting debt, falling foreign reserves, creeping inflation and rising cost of living, and when life turned miserable to millions of Sri Lankans, the government blamed the pandemic, and Covid-19 was made the scapegoat. With Gotabaya Rajapaksa’s alternate path to develop the economy and homegrown solutions, establishment economists, Viyathmaga experts and the Central Bank were predicting a U-turn or V-turn in 2021 or 2022. All their predictions ended in no turn and the decline gained momentum. Yet, scapegoating Covid-19 continues as CB Governor Nivard Cabraal sang the same tune in a video conference held two days ago to seek foreign portfolio and investments from UK. This is in spite of facts and figures produced by economists and analysts showing only Sri Lanka in the Asian region experienced an economic and financial debacle of such devastating magnitude, while others, which were also visited by the pandemic, registered an upward trend. Still, no one in the ruling circle dared to point finger at the man on top whose whimsical policy diktats and authoritarianism recked the heart of the economy.

Photo from Ishara Kodikara’s Facebook

Restarting with IMF

Having misled the country for two years and having disregarded advice from independent economists and experienced central bankers to change the track, a regime in utter desperation seems to have finally relented and called in the IMF for assistance. Cabraal, the man who went overboard in assuring imminent success for GR’s alternate path and homegrown solutions, while warning of the dangers in seeking IMF assistance, is now talking of resetting the economy and moving ahead with new impetus. Does this mean that the government is ready to implement all of IMF’s recommendations contained in its report, or pick and choose only those that would not jeopardize the political support base of the regime? For instance, how far would the regime go in eradicating corruption and what steps would it take to restructure its loss-making enterprises to make them earn enough at least to cover their expenses? These are two areas in which IMF would expect progress if the economy were to be reset and revived. Debt restructuring and macroeconomic stability alone would not be enough to reverse the trend. In the meantime, GR has appointed a National Economic Council with 16 members in it of whom the majority are business magnates with only two economists. Cleaning corruption and undertaking structural reforms are fundamental to any revival but they would certainly disturb the cozy relations between private business interests and political establishment.

Scapegoat No. 2

There are also voices of criticism and complaint emanating from certain quarters of Sangha, targeting the finance minister for his leaning on IMF, India and the West. In fact, Basil Rajapaksa’s contact with IMF officials in Washington might have started even before he became Finance Minister and when he went to the US in mid-2021, apparently for medical consultation. On his return he was elevated to become the Minister of Finance. After submitting his maiden budget in November, he immediately flew to New Delhi to work out a financial deal with the Indian Government. That billion-dollar deal was made contingent upon Sri Lanka approaching IMF for help. Apart from that, India has its own strategic interest in the island. Altruism is never the sole reason for economic assistance in international relations. And, what was promised by the minister in return for that deal is not known, except for a statement from him quoted in the media that there were no strings attached. Sangha, which historically carries negative views on Indo-Lanka relations, suspects the minister. This may be the reason why certain prelates are scapegoating him for the current troubles. At least one Head monk had urged the Prime Minister to shift Basil from the finance portfolio and place him elsewhere in the cabinet, as if that would solve the crisis. With all due respect to that monk, one should remind the prelates that economics and finance is not their forte to make recommendations to governments. Apart from encouraging a reshuffle the Sangha is not prepared to withdraw its support to the regime.

Agonizing Impasse  

On top of all this are the regular scenes of public protest and anger against the regime. Chronic shortages of consumer essentials, skyrocketing prices and crashing real income, had brought the multitude to streets demanding the regime to quit. People have decided that it is time for Rajapaksas to quit. But they do not know how to make that happen. There are three more years before a General Election. In spite of all the rallies organized by NPP/JVP and SJB, which were mostly in metropolitan areas, there is an absence of a united opposition stitched together by an alternative and workable economic agenda to attract the discontented masses. The opposition seems to be waiting for the government to collapse spontaneously, because of internal bickering and divisions within the coalition. This is highly unlikely because none of the constituent parties in the coalition is prepared to walk away for fear of legal action being pursued against their leaders. For example, the PCoI report is hanging like Damocles sword over the head of Maithripala Sirisena, the President of SLFP for his inaction to prevent the Easter massacre. In contrast, with support from the khaki and saffron armies the government is well aware of the fact that a united opposition would never eventuate.

With this agonizing impasse, international powers which have a stake in the country also do not want Sri Lanka descending into anarchy with street marches and unruly protests. This may be the reason why India is said to be considering another billion-dollar credit line and urging the government to open dialogue with TNA. At the same time, the government is also said to be reworking the previously rejected MCC agreement with the US. Unless the masses take upon themselves to topple the regime the situation would continue for the next three years with a new normalcy. Unfortunately, in spite of IMF assisted resetting and impetus bandied about by the CB chief, and with yet more tied financial assistance from India, China and possibly the West, sustainable economic revival is years away for poor Sri Lanka.

Finally, it is worth reminding at this time of travail and tribulation that it had taken more than a decade to realize the enormity of the pyrrhic victory in 2009. As Ilankovadikal, an ancient Tamil poet, penned in his epic Cilappathikaram, “araciyal pizhaiththorku aram koottakum” (dharma will be the angel of death to those who err in governance).

*Dr. Ameer Ali, School of Business & Governance, Murdoch University, Western Australia

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Latest comments

  • 40
    1

    “Finally, it is worth reminding at this time of travail and tribulation that it had taken more than a decade to realize the enormity of the pyrrhic victory in 2009.”
    I don’t think those who lit firecrackers and distributed kiribath then only to stand in kerosene queues today are smart enough to make that connection. All the fake patriots and stupid monks who demanded war and accused Ranil of selling out are ultimately responsible for a war fought on unsustainable loans. For a few years, flashy credit-fuelled projects hid the reality, that we are the poorest in South Asia.
    How many lives would we have saved if there was no war? Would we be saddled with 300000 pensionable military ? Would there have been a revengeful Tamil diaspora?
    Covid was only a catalyst.

    • 9
      23

      Ameer, The economic pain is set to continue in until Sri lanka de-dollarizes and dumps the US petrodollar and buys oil, gas and jet fuel from Russia at discount rates, OR Basil Rajapassa, Washington’s IMF Economic Hit man, also for the MCC project, delivers Lanka into the arms of the IMF and CIA US Deepstate..
      Since the CIA owned and Saudi funded ISIS claimed Easter attacks against tourism and Chinese investment (like Shangri La hotel where the leader Zaharan died) Sri Lanka has been subject to Hybrid Cyber, Maritime Trade War with the dollar weaponized- Essentially and Economic War. This was followed with Moderna pateneed Covid 19 bio warfare LOCK DOWNS and expensive Pfizer injections to DESTROY the Economy with the US citizens Rajapakse brothers and the Minister for Economic Disaster US citizen and Economic Hit man running the Show.
      Time for them to be impeached and their assets in LA seized!

      • 3
        10

        The Americans have taken over Sri Lanka’s Yugadhanavi power plant and are destroying the country’s Energy sector and security with the Corrupt and criminal US citizens Basil and Goat.

        Sri lanka needs another coal power plant in Hambantota or Sampur and NOT American LNG ! The island’s contribution to Carbon is minute and the it should not be asked to bare cost of America’s and EU’s and China’s oil and gas guzzling..
        While people are in petrol queues and distracted with power cuts the Corrupt and criminal Rajapakse brothers have handed over three wind farm projects to India!- the De-carbonization agenda of the UN and a fake environmental disaster narrative has been used to destroy Sri Lanka’s energy security

        • 7
          2

          Dinuk,
          “The Americans have taken over Sri Lanka’s Yugadhanavi power plant”
          Don’t you think, if that was true, Yugadhanavi would be running and we wouldn’t be sweating in the dark?
          There are comments, there are rants, and then there are stupid rants.

    • 41
      2

      Dear OC
      You have stated the truth as clear as can be.
      How we as a majority acted be in the final phases and in the aftermath of the war was nauseating, inhuman and cruel.
      I arrived in Sri Lanka on the 18th of May, the day the war ended, and what I saw, I didn’t appreciate at all as a Sinhala Buddhist person.
      I told my wife that the attitude of the people will catch up with us one day.
      We are celebrating a tragic devastation to a set of our own countrymen and women like there is no tomorrow. That was not the end.
      They went ahead and denied the massacre of 50,000 to 60,000 innocent civilians who were taken as human shields as if they never existed.
      Politicians, Buddhist priests and even JVP vehemently denied the truth. We went ahead to glorify a megalomaniacal bunch of thieving savages not considering the pain our compatriots were suffering.
      Rajapaksas pillaged what was left of the Tamil peoples Gold, stole their land and went ahead to molest the Muslims.
      They bombed the churches. Assumed a family rule. Now karma has not only caught up with them, the entire population is on it’s knees.
      There will soon be anarchy. I was hoping it will not come to that, but now it looks inevitable.
      Only the truth can set us free.

    • 3
      0

      This comment was removed by a moderator because it didn’t abide by our Comment policy.

      For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

    • 0
      0

      Blame it on covid India china west US whole world, except self destruction of Sinhalese themselves after independence. In 2014, I made comment under one of the stupid Sinhalese sach may be new avatar here as eagle that this is what will happen in 5 years. Instead internally self strengthening by reaching out to all people and work in ethnic harmony, the war victory bravado and agonizing one section what else will lead to ? Hope there is a change in mindset after this crisis,.else days are not far away that srilanka will be part of India.

  • 9
    24

    Ali,
    While it is ‘nice’ of you to admit that the economic problems for the common man in SL got really bad from 2020 onwards, you are still beating around the bush.
    The pandemic was a total hoax, created by freemasons for various sinister reasons.
    One of those reasons was to push real humanity (non-freemasons) into total destitution.
    What the economists (who are mostly freemasons) say cannot be trusted. It is too easy to make up numbers and draw some graphs.
    As the saying goes ‘there are lies, damn lies and then statistics’
    The reality is that countless millions of lives have been ruined world wide in many nations, due to the lockdowns and the kill jabs.
    Trying to put a spin on the problems in SL, and claim it is ‘all due to Rajapaksa incompetence’ is just more deception and play acting, to keep fooling the masses with manufactured distractions.
    But the real awakening cannot be stopped regardless.
    A growing number of people are realising that the real problem this world faces is freemasons and tares.
    Mark Alan King and his gematria website is uncovering all kinds of important truths.

  • 20
    0

    On many occasions, in this Forum, I have said that I know no Economics. Should that stop me from commenting on an article, purely economics. I don’t think so.
    .
    Here is what Ameer Ali says:
    Only Sri Lanka, in the Asian region, experienced an economic and financial debacle of such devastating magnitude, while others, which were also visited by the pandemic, registered an upward trend.
    .
    It doesn’t have to be Ameer Ali to say that. Our own Government is said that when it went begging to Bangladesh. Our own Government is saying that when it goes to IMF for assistance.

  • 3
    16

    They are intent on force-working the Cryptocurrency deal. Hence the 13-hour power cuts each day.

    Rajapaksa’s big plan for the Motherland : Indian-Lankan Oligarchs of the alternate Russian-Chinese monetary-network to overturn the established Western global monetary system.

    US and West have got the wind of things, and are trying to prize out the Crypto for their advantage.

    Moral: Each shameless foot gets burned when placed in 2 camps.

    • 1
      0

      I mean, they are furiously working on the Krypto whilst all the while, trillions of US$$$ are being lost on it. yanavā, yanavā namut kavadāvat ivara vennē næhæ

  • 4
    10

    Dear Dr Ameer Ali,
    .
    Thanks for yet another good article. I’ve read it through, but no time to say more. I spent a lot of time on this:
    .
    https://www.colombotelegraph.com/index.php/tna-habitually-bums-sinhala-chauvinists/
    .
    We had no power from 2.20 pm until about midnight. I then found that a street light was shining through a window, and inspected the Trip Switch. It was down. There was a brief, very heavy shower about 4.00 pm and Zeus was hurling his thunderbolts.
    .
    So the rains are coming, and also the Bak Maha Akuna.
    .
    Panini Edirisinhe in Bandarawela

  • 1
    0

    If you had followed Lord bhuddhas teachings all this would not have happened.No point in having Lord Bhuddha statues in every nook and cranny and bo tree if you do not believe in his teachings or you think it is too hard to follow his teachings.When true bhudhist out number the ‘bhuddhists’ then only all problems will cease like in bhutan,a happy country though less wealthy than us.

  • 2
    0

    This comment was removed by a moderator because it didn’t abide by our Comment policy.

    For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

  • 4
    0

    Whatever reasons the country is in deep trouble and there is no easy way to come out from this. We should realise that Politicians and Religious leadership mislead the people and people danced to their fake lies over lies. People also should take responsibility because they also supported these lie with full knowledge. We can blame pandemic, external factors, natural hazzards but the real cause is racism, fundamentalism and violence.Still We have the same old politicians and same old racist lies and dramas and if the people fall again once more that is the end of the country.Look for truth and only for truth.

  • 4
    0

    Sri Lanka is about to enter a period of anarchy. The Saffron robed are not united and certainly not supportive of this government. Even though the family has managed to keep the opposition divided the powder keg of public anger is about to blow. When it does hell will not have more fury than the angry public. Things are about to overtake the stupid AKDs and Premadasas who think they are too smart by a half. They are about get their rear ends handed back to them. Who knows it is possible Sirinoris will be the new CB governor while the old one is dragged down the streets. The blue jet is fueled and ready waiting at Ratmalana while a chartered jet is fueled and ready at Katunayake to wisk the family out of Sri Lanka. Their henchmen will bear the brunt of the punishement overdue to them. They all wait watching nervously as the water levels in the Victoria and Kothmale reservoirs drop slowly toward zero power generation. Even at this eleventh hour the family is busy trying to make a commission out of government tenders. The robbing will never cease until they are driven out.

  • 0
    0

    “As Ilankovadikal, an ancient Tamil poet, penned in his epic Cilappathikaram, “araciyal pizhaiththorku aram koottakum” (dharma will be the angel of death to those who err in governance).”
    *
    Have not many survived the fury of ‘அறம்’ before to go on to destroy many more, and be protected even when they fail– like Marcos, Reza Pahlavi…

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