By Sunil J. Wimalawansa –
Part 23: Sri Lanka—Changing Pillows to Cure Headaches: Poor Governance—Lack of Policies to Overcome the Crises
In Sri Lanka, as with a few other authoritarian governments, regrettably, the power is used against the people instead of protecting and helping them. Once politicians come to power, they immediately switch their mentality from “begging and bribing” the public for their votes to “taking bribes and suppressing” them (until the next election). Amazing mental transformation, which the constituents cannot understand.
Even though the people and businesses fund the government and pay the salaries and perks of all government servants, politicians and administrators consistently and conveniently ignore this. Instead, the oppressor president downwards, the police, and gramaniladhari—now in Sri Lanka —were involved in arresting youngsters just because they opposed the tyrannical regime. Such is unethical, illegal, and against the internationally agreed norms. This has been reflected in how the international community reacted (i.e., hesitant to assist financially and potential removal of preferential trade status) to the ongoing brutality of the president.
Incompetent governments are hopeless and invariably use violence
The current government(s), including the temporary president (who was an MP), had more than nine months to develop plans, suggestions, and solutions to prevent the current political and financial crises. Yet, took no action due to their incompetence. Politicians and administrators created the political and fiscal crisis through mismanagement, fraudulent transactions, pilfering resources, and loans for themselves rather than the public good and bad governance. These led to all other crises in Sri Lanka, including food and medicine insecurity and gas, petrol, and power shortages.
Unwise printing of money by the irresponsible Central Bank governors (continuing) led to devaluation or SLR, rising inflation and increased cost of living that mostly affected the poor and the middle-class families. The lack of foreign exchange (primarily USD) prevented the government and merchants from paying for importing essential supplies like food, cooking gas and petroleum products. However, who emptied the foreign exchange in the treasury? Moreover, the government defaulted on paying interest loans from foreign agencies and other countries unnecessarily to obtain commissions and pilfere funds by politicians.
Politicians fabricated the financial crisis
The failure to manage the economy by politicians, Central Bank, senior administrators, and govt advisors is shocking. Even today, they have no plans on how to revere the economy’s downward spiral, increase foreign exchange reserves, and pay the interests of unnecessary loans obtained primarily by the Rajapaksa regime for commission and personal gain. It is a perfect storm for a disaster for the country and its people, which politicians do not care about.
They have no new ideas to expedite the recovery from the economic mess, overcome bankruptcy, or kick-start the economy. They seem to think that bickering and waiting might solve the financial crisis—they are badly mistaken. If there were sensible, in 2021, when there was data that the expenses are increasing, when the income for the treasury is going down (the gap between expenses and income nearly doubled), monetisation—printing money alone would not resolve the fiscal deficit. No attempt was made to reduce expenses.
Lack of visions—zero constructive ideas by the administration
The suckers (also called leechers-blood sucking animals) in power over the past five decades did what was mentioned above: systematically divided the nation to make it easier for them to govern, assured stagnant growth and dampened the prosperity, and pushed the country to bankruptcy. If there had been good law and order, many of them would have been in jail: but nothing happened to these crooks.
The accelerated downhill of the economy was due to unwise decisions by the former president: misguided by his advisors, his secretary, ministers, the greedy organic lobby (the gang of four) for personal gain, army leaders, and other administrators. Despite these potential crimes against the country, none of them has been brought to justice.
Despite the above-mentioned, politicians and administrators failed to develop new ideas to increase foreign reserves and strengthen the treasury through increased revenue—to solve the financial crisis. The president, MPs, and the prime minister(s) were too busy creating legislations and underhand deals (especially the last four finance ministers and presidents) to increase their power and open more doors for stealing public resources. Enacting the 20th amendment further strengthened this. Recklessly handling the economy
Since the appointment of President Rajapaksa with misguidance by his secretary, the financial mismanagement escalated. Almost all decisions they made were inappropriate. These include but are not limited to an unnecessarily repeated enforcement of curfew that significantly worsened elderly downward spiralling economy, badly mismanaged COVID-19, and unscrupulously converting COVID into a business for their crony businessman and minsters.
Instead of reducing government expenses immediately, administrations increased their expenses. The war was over 13 years ago, but the successive unwise governments continue to have more than three times the strength (carder) of the military necessary, even today—utter stupidity. Despite the bankruptcy, the administration is not considering a significant military size reduction. It has more than 350,000 military personnel; doing what? As we discussed several months ago in this series of articles, the first step in reducing expenses could be reducing the over-blown number of public servants by half. Even after one year of this misery, they failed to do such —it seems they are brain dead.
Foolishness became apparent in 2020/21: the cabinet was approving the importation of luxury vehicles for MPs, approving billions for non-essential projects, including unnecessary road building contracts given to their cronies. Most recently, the cabinet approved large sums for re-building MPs’ houses and offices (here, these MPs are illegally double-dipping into insurance claims, which is a financial crime) and appointed ministers with criminal records to manage these. This is using the money the government claims they do not have even to import food.
Beginning with erroneous massive tax cuts in later 2019 that significantly reduced the incoming local currency to the treasury, the unwise fertiliser ban hit the final nail in the financial coffin. They waited till the country was bankrupt. Even to date, the administration has taken no constructive steps to overcome the fiscal crisis!
The continuing failure of politicians (MPs) to take the proper steps—politically and economically
To date, politicians have failed to solve the political crises [except reported, apparently taking large bribes to vote for an unelected (and unconstitutional) presidential candidate] and to establish the promised multi-party cabinet. How could the international community engage in financial support when there is no political stability in the country, and the president acts like a dictator with an open-ended emergency declaration?
Most recent Sri Lankan governments are no different from the NATO: No Action Talking Only. Parliamentarians keep them busy with plenty of words, but not with right deeds, finger pointing and shouting for the TV appearances and ratings. Besides ‘praying’ till receiving dollars from heaven, they failed to take a single step to resolve the financial crisis. Is that surprising?
When a country (or a family) is in bankruptcy while looking for options to come out, the first thing that should have been done was to reduce government expenses and increase internal revenues by various means. The government had 12 to 18 months to do this but did nothing—incompetence again. A sensible administration would not have waited for organisations like the IMF to tell them to cut expenses and increase revenue! A high school kid would say that.
Instead, the greedy bunch of politicians did precisely the opposite. They escalated printing money, increased government expenses by importing luxury vehicles, and approved significant additional expenses for unnecessary and non-essential projects. People wonder why they do such blatantly foolish things. Others think some politicians wanted to bring bankruptcy soon for some hidden agenda and accelerate the robbery.