By Hema Senanayake –
Now, the forecasted GDP growth is less than 4% which is well below the expectation. The country is in a severe debt crisis which led to an unstable domestic currency, the rupee. What was required was to correct the matrix of macroeconomic fundamentals which would have justified the roll-over of foreign loans to get over with the imminent crisis. It’s true Ranil Wickremesinghe did not do it but careful intervention might have made him to work towards that goal because he was the Prime Minister who legitimately commands the confidence of the majority in the parliament. But president sacked him and put the smooth functioning of the government into chaos.
President knows well that Mahinda does not command the confidence of the majority of legislators legitimately. Perhaps the president or Mahinda at one point might have thought that Mahinda can get the support of the majority of legislators not legitimately but by making a bunch of crooks to switch party loyalty. What moral uprightness exists in this kind of thinking by a Head of State and the Government? Due to this very fact, even if Mahinda did swear-in as the Prime Minister, before the eyes of the public he has no legitimacy to hold the high office of Prime Minister. Truth has more power and the general public sense it than politicians think. Accordingly, the country will be ungovernable under Mahinda’s premiership.
Now assume, upon the convention of the Parliament that Ranil Wickremesinghe would have proved that he would still command the majority of parliamentarians and win back the premiership again, still he will find it difficult to form a new cabinet and to keep a good working relationship with President Sirisena.
Practically, at the end. President Sirisena made the country ungovernable either with Mahinda, or Ranil or any other UNP leader as the Prime Minister. This status quo will sure to continue until the next election. We, the people will have to pay a lot of economic cost in near future. Our debt burden, domestic and foreign, might go up significantly. Rupee will destabilize further. Investors will reluctant to invest. Tourism industry will be badly hit.
Like Ranil, Mahinda is not good at handling the economy. The country needs unusual and unprecedented economic reforms including the acquisition of new tools for monetary and fiscal policy management.
Instead, Mahinda, as far as I know believe in microeconomic maneuvers (business level decisions) when comes to economic governance. As I understand, one entrepreneur has promised him to bring in about 70 million dollars in each month so that he might think that will ease the depreciative pressure on the rupee. Any inward transfer of USD is good. But the economy is a bigger system. That is why I insist that matrix of macroeconomic fundamentals be put right so that rest of the things would be just details.
Ranil also did the same thing. One stock broker who is an operative in a few international financial markets, told Ranil that he would list and trade Sri Lanka’s sovereign (rupee) bonds in international financial markets. The effect of it would be the purchase of rupee bonds in dollars or euro by foreign investors, so that inflow of foreign currencies might increase. So, Ranil appointed that man namely, Arjuna Mahendran as the Governor of the Central Bank without thinking or not knowing that Sri Lanka cannot do it while having a depreciating currency resulted from increasing current account deficit. I guess, Ranil never asked him what he would do differently to put the macroeconomic fundamentals right. The result was that he messed up the very fundamentals which he himself must have taken care of.
Sri Lanka is a very unfortunate country. Party loyalty and power-hungry politicians has been ruining this country. However, citizenship involves certain duties to one’s own country. At this moment I feel it is the duty to defeat the effort of the bunch of crooked politicians and their masters. First and foremost, the country needs a discipline including the President.