Concomitant political, economic, and social instability is harmful | Sunday Observer

Concomitant political, economic, and social instability is harmful

8 May, 2022

The country is in its deepest economic crisis in known contemporary history. Yet, politicians from all sides seemingly either ignore the severity of the crisis or are simply not aware of the depth of the gravity of the situation. Even the general public appeared to be unaware of the true danger.

Most of them are busy with protest campaigns and demand the resignation of the President, Prime Minister, the Cabinet, and all 225 Parliamentarians. However, the pertinent question is whether the moves suggested by anti-Government campaigners are pragmatic or realistic within a democratic framework of governance.

Public animosity towards the Government is not unjustifiable. They are carrying the brunt of the burden in the form of shortages of LP gas, fuel, medicine, and some other essential daily needs. Adding salt to the wound, the enduring power cuts not only hamper day-to-day life but also threaten their livelihood with job losses as some of the small businesses are on the verge of closure due to these issues. Therefore, giving a strong message to the Government is reasonable from every angle.

The strong opinion of economic analysts and experts, both local and foreign, is that an immediate short-term solution is a dire and desperate need to slow down the ongoing slide towards total collapse. According to them, if the decline is not controlled immediately, the country will not have time for a long-term solution.

Emergency basis

According to almost all analysts, only three parties can help Sri Lanka at this point on an emergency basis. Firstly, the International Monetary Fund (IMF) can provide a substantial amount of funds, and secondly, the foreign lenders can restructure the debts. Thirdly, the expatriate community can be of enormous assistance. The current export earnings are also at a creditable level, yet not adequate to make a considerable impact on the current emergency as the country needs extremely urgent foreign exchange inflows.

Even with tough conditions, the IMF will not release loans without a concrete commitment to repayment of the loans they provide. Furthermore, they will not provide assistance to a politically unstable country. Political stability and social stability will be two preconditions of IMF assistance. They will most likely recommend tight monetary policy to control escalating inflation, flexible exchange rates to counter rupee depreciation, and increased taxes to improve state revenue.

Hence, the opinion of economists is that Sri Lanka must come up with a tangible macroeconomic plan acceptable to the world with short and long-term solutions and provide it to the IMF and other friendly countries. At this point, IMF direct monetary assistance and debt restructuring are the two most important short-term measures for the country.

The irony in Sri Lanka is that even the economists express contradictory views. It is evident that some of the opinions are based on personal political bias rather than actual analysis. Therefore, even though differences of opinions must prevail, a common ground has to be found among the economists on the economic issues without further confusing and dividing the general public.

A large portion of the current foreign exchange crisis has been exacerbated by the loss of tourism income and decreased remittances from the expatriate community. The loss of income from tourism is understandable, the decline in ex-pat remittances was due to the mismanagement of foreign currency policies by the Central Bank.

Experts say that the decision to hold the US dollar in a fixed-rate regime went on for far too long. They are also of the view that the sudden switch to the floating exchange rate has resulted in the uncontrollable devaluation of the rupee.

Apparel industry

The country’s high performing export sector is also likely to face challenges in the next few months if a viable solution is not found immediately. Exporters, particularly those in the apparel industry, say that they are in need of an urgent supply of raw materials to continue. Due to the shortage of foreign exchange, they are unable to continue production.

However, they hail the decision of the Central Bank to exempt the apparel trade from restrictions imposed on payments on imports. The CBSL has earlier announced that all payments on imports must be compulsorily done only through the authorised banking system. The Government, incumbent or interim, must make sure that export industries are protected at all costs because a disruption will not only affect all-important foreign earnings but also possible job losses numbering in the hundreds of thousands.

The citizenry is inundated with burning issues. Nevertheless, no international lending institution or country will offer help until political stability is established.

Unfortunately, none of the political parties seems to understand the serious repercussions the entire country will face. Very clearly, all of them, both the Government and the Opposition, are at each other’s throats grabbing power, completely disregarding the graveness.

The Government is stubbornly trying to hold onto power as they have been given a mandate by the people until the next election. On the other hand, the Opposition factions try every trick in the book, sometimes over and above the book, to oust the Government and come into power.

Independent thinkers

The interim Government was initially proposed by a group of forty Parliamentary Members belonging to eleven political parties. This was hailed by most independent thinkers and the majority of society, including activists and clergy, as the best pragmatic solution. Even the President, in principle, accepted and agreed to the proposal. Regrettably, the main Opposition, Samagi Jana Balavegaya, and the JVP led Jathika Jana Balavegaya, are opposing the proposal.

Hence, the establishment and the actual functioning of the interim Government are still in doubt. The opposing factions cite various reasons for their disapproval of an interim Government. The SJB leader is stating that the reason for disagreement is that they are not willing to form an interim Government with the incumbent President. The Jathika Jana Balavegya (JJB) leader is demanding a snap election, which is obviously unaffordable at this point.

The SJB does not seem to be interested in forming a new Government at this point because they understand that it is political suicide. One of the seniors was abundantly clear on this point and recently publicly stated that the public has voted them to be in the Opposition and they are not interested in taking over the Government. This clearly indicates that they are focusing on the next election rather than solving the current public issues.

On the contrary, the Jathika Jana Balavegya demands the dissolution of the Parliament and a general election must follow. Any sane person realises that the country’s situation is not prudent for a general election. Also, their demand for the resignation of the President is also unrealistic because, according to the country’s Constitution, he can be ousted only through an impeachment, which is an extremely time-consuming and complex process.

Even if the President resigns voluntarily, his successor will be chosen from among the sitting Parliamentarians. It is doubtful that such a move is acceptable to the country in general.

Alternative solutions

Even the protesters throughout the country neither have a clue about what will happen if the Government suddenly steps down or if the President vacates his office, nor do they possess any alternative solutions to such an event. They simply demand the resignation of the President and the Parliamentarians, hoping someone will step in from somewhere and provide solutions to the country’s burning issues.

Many of the protesters this writer spoke to have no clear idea of their immediate future plans, yet they say the President must resign immediately regardless of possible dire consequences. None of them had any idea about the repercussions if the state machinery failed to function. Most of them are not fully aware that the country needs a functioning Government and a Head of State to function. The participants who know the Constitutional requirements and legality of the Constitution ignore them for political gains.

All political parties must individually and collectively decide whether they will allow the protests to continue and the strikes to repeat. Both these actions can further harm the already volatile situation in the country.

There are many examples that can be cited in the recent past where countries fell to the bottom of the pit due to concurrent political, economic and social unrest. Neither the majority of protesters nor the general public are aware of the gravity of the dire consequences. Therefore, it is high time that the clergy, intellectuals, and respectful citizens come forward and explain the current situation and force the political parties to fall in line for the sake of the country.