16 May, 2022

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Buck Stops With The President

By Ameer Ali

Dr. Ameer Ali

In his address to the nation, President Gotabaya Rajapaksa (GR), was reported to have “disowned responsibility for the current crisis” (FT), although according to another source, he accepted responsibility for “his actions” and was determined to take “tough decisions” (TM). Prime Minister Mahinda Rajapaksa (MR) too claimed no responsibility to the crisis. Whether they accepted responsibility or not, the fact remains that in the all-powerful executive presidency created by the 20th Amendment, which reduced the powers of the parliament and turned it into a “post box”, the ultimate blame should fall on the President. Reasons are too many to enumerate. For example, it was GR who handpicked and appointed a hierarchy of public officials and it was he who gave the final approval to all their decisions and actions. It was GR who virtually commandeered the Central Bank with his chosen governors and members of monetary board, and demanded them to assist in implementing HIS economic policies. It was he who decided on what taxes to be reduced and what imports to be allowed. The ban on imports of palm oil and chemical fertilizer, two crucial inputs was entirely his decision. The so-called home-grown solution by way of providing liquidity with little concern about inflation was also devised to back GR’s alternate way to enjoy “prosperity and splendour”. The list could go on ad infinitum. Shouldn’t the President be made accountable to the chaos these decisions caused?

For almost one year, as the economic and financial crises continued to worsen, and as the regime was desperately searching for short term relief by way of borrowings from and currency swaps with friendly countries, a number of independent economists and members from the opposition were entreating the government to approach IMF without delay and work for an orderly reschedule of the country’s debt. Had that advice been heeded, the cost of rescheduling and the pain of adjustment would have been a lot cheaper and milder respectively. But an obstinate hierarchy of bureaucrats in collusion with an equally mulish President, backed by his Viyathmaga, were convinced that GR’s alternate path would lead to the desired destiny without IMF tutelage. The Central Bank (CB), first under an economist and then under an accountant chose to ignore the alarm bells sounded by the community of international monitors that included the World Bank, IMF and reputed Credit Rating Agencies, and stuck to their home-grown strategy. In fact, the CB chiefs treated those warnings as irresponsible, inconsiderate and even conspiratorial.

Besides, there is also an anti-IMF lobby within Sri Lanka’s political community, which has its own representatives within the ruling coalition. This lobby still refuses to come to terms with the fact that since 1977 the country’s economy had been drawn into the vortex of a highly integrated, globalized and financialized neo-liberal economic order. It is true that this order operates more to the advantage of the rich and powerful than to the poor and weak. But the system has certain institutional arrangements to guide and assist weaker economies that go off the track because of mismanagement and incompetency. The task of those institutions is to make these economies get back on the track, regain their competitive strength and move on. IMF is one such institution. Unfortunately, the anti-IMF lobby views that institution as an icon of Western dominance if not outright imperialism, the lingering vestiges of yesterday’s Cold War. Whether GR fell prey to this anti-IMF ideology or not, his alternate path to development as well as the so-called home-grown solution manufactured with assistance from CB are both in tatters. He has finally realized that there is no alternative but to seek IMF help. But, will that be possible without throwing out the anti-IMF lobby from the coalition, and with a CB Governor who had been adamant that Sri Lanka should not go to IMF? There was a rumour that the chief had been asked to step down, but it was denied later. Even if he were to retain his position would he have the commitment and dedication to see the IMF remedy succeeds? Isn’t there a clash of interests here?

Be that as it may, an orderly rescheduling of debt via IMF is no doubt an absolute necessity to prevent total collapse of the economy. Even the most recent agreement with India for $1 billion injection, the details of which agreement are hidden from the public as usual, must have been contingent upon the fact that Sri Lanka approaches IMF for assistance. That assistance in turn is contingent upon the government’s willingness to undertake implementing IMF recommendations to raise taxes and reduce expenditure, to tighten the monetary policy, to float the rupee, and above all, to clean up corruption and introduce structural reforms to make public corporations profitable. The Sri Lankan Airline and the Petroleum Corporation would come under close scrutiny for reforming. The last two recommendations are the toughest to implement by a regime whose political survival depends on tolerating corruption and writing off losses incurred by parastatals. GR’s resolve to take tough decisions would be tested in this area. In any case, the cost of delayed reparation is going to be painful, but the negotiators should at least be able to work out a safety net to protect the poorer sections of the citizenry who had sacrificed enough during the last two years. They should not be asked to tighten their belt any more.

Ultimately, the long-term solvency of Sri Lanka depends on increasing production and earning surpluses. It is that surplus, which would free the country from all foreign debt. The greatest challenge facing the country now is to produce this surplus. The failure in this regard has a history of more than seven decades. One fundamental reason for this failure was the growth of ethno-nationalism that still bedevils the country. After all, an economy is built basically by and for the people. People are the most valuable asset to any economy. It is their active participation in production, consumption and exchange that make an economy grow. Within Sri Lanka’s neighbourhood, Bangladesh is am shining example to illustrate this point. Bangladesh is a late comer to the economic growth scene. That country did not even exist when Sri Lanka became independent, and when Bangladesh was born in 1971, it was a typical basket case of under-development. Today with 163 million people that nation has become a surplus producer and a lender to Sri Lanka. How did this happen? Its growth secret, according to several economists, lies in optimizing the utilization of its main asset, population.

GR had been ignorant of this fact. Over the last two years since he became president, he and his regime had been practically ruling for the benefit of only two-third of the population and deliberately ignored the interest of the rest. His assumption was that when prosperity and splendour return, the other one-third would automatically be attracted into his Valhalla. On that assumption, the founding father of Singapore, Lee Kwan Yew, could have easily ignored the Indians and Malays in that country and built Singapore entirely with the support of the Chinese and in their interest. But he had the foresight to realize the danger inherent in that strategy and kept Chinese ethno-nationalism at bay. How he had succeeded and turned Singapore from a Third World country into a First World country is another illustration of optimum utilization of population. Will the President, having been instrumental in producing the prevailing calamity, at least now discard his Sinhala-Buddhist chauvinism and take the whole country under his fold and start rebuilding the economy and polity? It is a tough ask, but he promised to take hard decisions. Would this be one of them? Needless to remind again that the buck stops with the President.

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

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Latest comments

  • 6
    0

    The Rajapakses may not accept responsibility for the current crisis but even the most ‘patriotic’ Sinhala Buddhist, ever grateful for the Rajapakses for saving SL from terrorism, in all honesty, has to accept that if not for vanity projects in the past funded by commercial loans, we would not be in this situation. We all know the corruption, & maybe, thankful that the commissions were 20% & not 50% as Putin had demanded but massive corruption, abuse of power, cronyism, repeated blunders can all be described in one word, MISMANAGEMENT of public funds. Therefore, the buck stops with the all powerful President but if he is to share the blame, then those who were directly responsible, from Ministers to public officials, should be held accountable. Incompetence cannot be tolerated &, particularly, Cabral, with a track record of blunders, should not be in a key position.

    We boasted how well the pandemic was contained & laughed at other countries but most countries are now back to normal while SL is not. Bangladesh also suffered from the pandemic, yet, has overcome the problem & is in a better state of economy, even helping bankrupt SL financially. Is the average SL so dumb to believe Rajapakse rhetoric?

    • 3
      1

      “GR had been ignorant of this fact. Over the last two years since he became president, he and his regime had been practically ruling for the benefit of only two-third of the population and deliberately ignored the reast On that assumption, the founding father of Singapore, Lee Kwan Yew, could have easily ignored the Indians and Malays in that country and built Singapore entirely with the support of the Chinese and in their interest.”
      One wouldn’t expect a jumped-up drill sergeant to understand these intricacies in the same way as a Cambridge graduate like LKY.
      More to the point, in this country, economic output by the minorities is way out of proportion to their numbers, The majority prefers cushy pensionable jobs and/or fancy uniforms. In Singapore, the Chinese majority are, if anything, more industrious than the minorities. So LKY could easily have ignored the rest, but he didn’t.

    • 2
      0

      Raj Uk, Agree with you wholeheartedly. Sack Cabra immediately and then look around for replacement without corruption. Those who handle money must be above board.

  • 10
    0

    Ameer, these Rajapaksha jokers not taking responsibility for the current mess is super obnoxious given the fact that they were the gang in power for 13 years out of the the last 17 years, which is 76% of the whole time. These Madamulana cavemen don’t have an iota of knowledge even to run a ‘appa kade’ let alone a country with 22m people, other than shamelessly robbing the coffers and then unloading lies after lies!!

    • 1
      0

      Dear Dr Ali,

      See, how mlechcha MR is about. His hoodwinking would not seem to be ceased. MR knows it well, that majority of this nation are filled with PUNNAKKU drinkers.
      .
      https://www.youtube.com/watch?v=MFTeEBZp6vE
      .
      Father goes to celebrate ” koth palandaweema – buddhist rituals in north province” while his own sun is on holidays and excercising ” water sports”: Have these men had ever be able to afford such luxury life styles, prior to 2005.
      :
      All these

      • 0
        0

        All these were very clear, also prior to NOV 2019, because entire world incl. ones with some sanity were clear – that things would not be better even if whole lot gawky ones dreamt of the other way around….. granny repeated, the dog s tail would not be straigtened even if it would have been put in a bamboo sheath.
        .
        https://www.youtube.com/watch?v=y1LGIedWIR4

    • 3
      0

      …cavemen don’t have an iota of knowledge even to run a ‘appa kade’ let alone a country with 22m people…
      Yes during their tenure, they borrowed left and right and used it for white elephants not bringing revenue even after 8 years. It was easy money and fooled people saying it is “development” but it was their development only. If I have summa money or anyone with no brains, can spend it but it is unwise and that is how R’ got credit saying they developed the country.

  • 5
    0

    Some countries maintained self-sufficient we have seen online, countries such as Bangladesh and Nepal that their dollar reserves are rising. Besides the covid epidemic. Some countries were aiming long-term benefits for people even before the covid.They have corrected the past mistakes by accepted responsibility

    • 1
      0

      RBH59,
      Morning.
      “Some countries maintained self-sufficient we have seen online, countries such as Bangladesh and Nepal that their dollar reserves are rising.”
      Very valid point and well said.
      Specifically, Bangladesh (BD) and less extent, to my knowledge Nepal, were the beneficiaries of the GSP plus allocations taken off from SL in the period ending December 2014, due to the sad and depraved decision by then SL government of not addressing the UNHRC and EU requests to alleviate the concerns of human rights violations.
      At that time, our well educated and knowledgeable GLP (Chairman – SLPP), MR (PM) condemned EU as playing ‘politics’ favour Diaspora and a VIP, was audacious, state that, “we don’t need GSP and EU ‘Largesse’, find alternate markets.
      Many Garment Industry owners went away countries and majority to BD, with key SL Staff!!
      We lost the industry, skilled staff in garment manufacture.
      Anyone taking responsibility for this malaise.
      Sri Lankas’ loss is BD’s Gain.
      So a country which gained independence 25 years after SL gives us loans of US$ 500 million!!!
      Last I heard, not repaid and extended.
      When we have such credulous leaders and “Know All’s”, why do you need IDIOTS to ruin SL??!!

      • 0
        1

        Mahila
        Good Morning

        Sri lanka thought taking GSP is a beggary stand and was proud for not taking it,and going behind every one.

        Other countries took this opportunity and used it and became self-sufficient and penetrate to foreign company contributes and gain technology, international expansion with local partner contributes , knowledge market and access to it.

  • 0
    0

    The Rajapakses may not accept responsibility for the current crisis but even the most ‘patriotic’ Sinhala Buddhist, ever grateful for the Rajapakses for saving SL from terrorism, in all honesty, has to accept that if not for vanity projects in the past funded by commercial loans, we would not be in this situation. We all know the corruption, & maybe, thankful that the commissions were 20% & not 50% as Putin had demanded from his oligarchs but massive corruption, abuse of power, cronyism, repeated blunders can all be described in one word, MISMANAGEMENT of public funds. Therefore, the buck stops with the all powerful President but if he is to share the blame, then those who were directly responsible, from Ministers to public officials, should be held accountable. Incompetence cannot be tolerated &, particularly, Cabral, with a track record of blunders, should not be in a key decision making position.

    We boasted how well the pandemic was contained & laughed at other countries but most countries are now back to normal while SL is not. Bangladesh also suffered from the pandemic, yet, has overcome the problem & is in a better state of economy, even helping bankrupt SL financially. Is the average SL so dumb to believe the Rajapakse rhetoric?

  • 4
    0

    All those Anti IMF, Anti Capitalist, pseudo communist, pseudo socialist
    of Silly Lanka just made poor much poorer and middle class hit the poverty index..But they all made sure they got filthy rich. It’s all a drama just like most of our politicians including Rajapaksas calling themselves Patriots. Bottom line people have to be retards if not racists to believe such lies for decades.

    • 3
      0

      In Lanka neither politicians nor the people who elect take responsibility. How do we expect change. Rajapaksas are like Trump they claim credit for others success like war victory but when it comes to their own stupidity they try finding scapegoats.( Udaya, Nimal)

  • 1
    3

    “Needless to remind again that the buck stops with the President. “
    The bug, germs & pests germinate from Langkang presidents, the Peruchali Rats, and their nepotism, robbery, hording, wasting & destroying people’s toils.

    “After all, an economy is built basically by and for the people. People are the most valuable asset to any economy. It is their active participation in production, consumption and exchange that make an economy grow. “ Well…. what a beautiful economic theory! But do want to put these in work? Do one think that the The Pruchali President can do this? No! So send the Ayatollahs to Bohambara, there they can feel the Nirvana, instead in that old, stolen Hindu building. And UNP_SLFP Escobars to Siberia. Their they will earn, eat and die, instead of skinning the poor for their unlimited greed & lavishness in Langkang. Urgent need is a French Revolution to cleans the country. That is the only internal mechanism guaranteed can work for Lnagkang. JVP has been calling for failed October Revolution. I think they much educate the people about French revolution, which germinated the ideas of Freedom, Fraternity, Liberty, Republic…..

    • 0
      0

      Stopping bold

  • 2
    0

    A real leader will take responsibility for the state of the country. It was HIS policies, HIS administration, HIS decisions, and HIS family and cronies that rule the land.
    Blaming others is weakness and dishonesty. Nandasena has failed this country and the people.

    Now Gota Antoinette says “let them eat Kavum”.

  • 3
    0

    Ameer Ali, Buck Stops With The President?

    Yes indeed, all the stolen ‘bucks’ stopped suddenly and fell into the Rajapaksa bank accounts. Don’t know how that happened. Maybe the smartest guy on CT Eagle ‘Dumbass’ Eye can share his wisdom and explain.

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