State Minister of Finance Shehan Semasinghe said that if some lawmakers think by walking out of the Government they gain popularity, it is a huge mistake made by them. The State Minister in an interview with the Sunday Observer said we do accept the fact that there were mistakes made during the tenure of our Government. As a result both the Government and the country collapsed. So, the best way we can correct it is to take responsibility and restore all the activities which were affected.
He said the stability of the country cannot be disturbed at any cost. The people suffered a lot and they are still suffering. Their main intention is to have a steady economy and our responsibility is to ensure this stability continues. He said: “We expect the 8.5 percent negative growth last year to be reduced to minus three this year and there are steps to be followed. We do understand it is going to be a painful recovery. However, there cannot be a recovery without going through this pain.”
Excerpts of the interview
Q: Is the Sri Lanka Podujana Peramuna (SLPP) ready for the Local Government elections and how confident are you of the alliance with the United National Party (UNP) to gain a substantial victory at the LG polls?
A: It is not only the SLPP, all political parties are interested in the LG elections. I think there is no other option for us. If we have elected a President from the UNP with our support, why should we break apart from it? Obviously, we will join hands and contest whichever way which is beneficial to us. We will contest some Local Government bodies under our symbol and some under a different symbol. Strategically, we will adopt the best available methodology.
Q: The Opposition is alleging the Government is using various tactics to postpone the LG polls citing various excuses. What is your comment on this?
A: Can they cite a single tactic the Government has used to postpone the LG elections. Now it is being challenged in courts as well. So, the decision of the election remains in the hands of the Election Commission. The Government cannot do anything. The Government can facilitate the election but we have also explained the difficulties that the Government is facing right now.
Our main intention is to have a steady economy. Our responsibility is to ensure this stability continues. Actually, this is not the ideal stability that we want. This is only a supply of basic requirements. So, there should be stability and then to look at growth. Nobody should harm the process. If this process is being disturbed, the situation will be much worse. Then we will be in a situation that cannot be reversed and it will be more detrimental than what we had eight months ago.
Q: What is your personal view of holding an election costing nearly Rs. 10 billion when the economy is in serious trouble? Do you think this money could be used beneficially for other things?
A: We have a problem in making the most mandatory and most important payments. However, we are managing with great difficulty with no additional cost taken into the assistance. Our salary bill for the State sector is nearly Rs. one trillion. It requires nearly Rs.10 to 12 billion per month for the welfare of the most vulnerable communities. All these are monthly bills. Then pensioners who should be looked after well by the Government also require about Rs.25 to 26 billion. Those are mandatory payments apart from all the other payments. The payments and expenditure incurred for health is not included in these mandatory payments but we have to prioritise.
Don’t forget we don’t service the bilateral debts and we service the multilateral debt with all we are short of revenue collected by the Treasury. The economy has just shown stability. So, we should not disturb its stability.
At present, inflation has come down to 60 percent from 75 to 100 percent but this is not the ideal inflation that anybody would see. The interest rate is about 30 percent. So, we have taken measures to control the most difficult period we went through but lots of solutions are required.
The Treasury officials are working very hard with the guidance of the President so that this move should not be disturbed. My personal opinion as a citizen and not as a politician, the election is not required at this moment but the people should be given the opportunity to strengthen their democratic rights.
However, at the moment the economy should be the utmost priority and all the other issues can be fixed thereafter.
Q: Most of the Opposition parties except the SJB and JVP formed an alliance under the helicopter symbol given that most of these parties and leaders were earlier aligned with the SLPP. What would be the impact of the helicopter coalition on the SLPP at the LG polls?
A: We have had a split. Actually, this split paved the way for the down fall of the then Government, President and the economy. The economy came into this status is simply because of too many divisions within one Government. All elected members irrespective of whatever the Government they represent should understand that priority should be given to the common goal of the country and not individual goals.
There are various reasons for this economic catastrophe. The global scenario had an impact. Our own home grown solutions didn’t work well and it had an impact. The Covid-19 pandemic also had an impact. There were too many factions within the Government. I don’t know the reason as to why these factions emerged. We should see what happened at the end.
Instability in a Government results in a weak economy. Who is suffering? The people are suffering. So, anybody in the political arena should know you will not get everything the way you want. It doesn’t mean the people should be held to ransom.
Q: Most Opposition parties have also split into different factions. Will this be a helpful factor for the SLPP at the LG polls?
A: I think now people are not interested in political parties or politicians. They are only looking at who could give a practical solution for the problems. This is what they are asking. If you see factions from the Government most of the senior Ministers who were in the Government have not remarked on certain decisions which should have been taken at that time.
The tax cut didn’t work the way we wanted. Who opposed it? Nobody opposed it, including us. If you see the other decisions taken, most of those decisions were taken while these factions were within the Cabinet of Ministers. I think this is an ideal time for us to discipline our fiscal policy, monetary policy and expenditure to match the revenue.
The discipline of the politicians is also vital. We do accept the fact that there were mistakes made during the tenure of our Government. As a result both the Government and the country collapsed. So, the best way we can correct it is to take responsibility and restore all the activities which were affected. That is where the people will understand whether walking out is good or taking responsibility is good. At a time like this the Government or the people who have taken the responsibility will not be the most popular and we do understand that. But somebody has to take these decisions to ensure the country is still alive. So, could we talk politics without a country?
Q: The President has described 2023 as a year of economic recovery. How hopeful are you of seeing some sort of economic recovery during the year or is it 2024, 2025 before we see any progress?
A: Actually, 2025 will be the year of growth. But don’t you feel some recovery is taking place. There is recovery taking place. You should never forget the history as well. If you go back to eight or ten months, what were we facing? There was no basic supply of essential needs, food items, fuel, gas and 12 hours of electricity blackouts. In addition, there was no fertiliser. We could see the suffocation the people had. Is it the same situation now? It doesn’t mean it is being restored fully and I agree to that. However, there is visible and tangible stabilisation taking place. The people would think it is stabilised now but it is not stabilised to the best extent. It has been stabilised to the basic level. So, we have to get it going first.
Q: Most Opposition parties are calling for a General Election as a solution to the economic crisis. Will such an approach work?
A: Whether it works or not would be a secondary thing. All the policy decisions taken by the Government are being criticised by the Opposition. Has anybody been able to come out with an alternative solution? If you take the JVP, SJB or ‘helicopter’ alliance, you can see ample amount of criticism coming from them. It is always easy to go to history and point fingers at somebody and say he or that particular party did it. Those are good things to hear. Are we going to live in history forever? What is the way forward? It is today and the future for the Government. That only depends on how strongly the country will calm down.
Q: Critics have also blamed the Government for allocating a huge sum of money for the Independence Day celebrations. But the President has described it as an investment and stepping stone to becoming a developed country by the 100 anniversary of Independence in 2048. Can you explain this further?
A: The President made a statement in Parliament as well as in the Government Group meeting on laws, regulations and legislation to be enacted this year when we celebrate the 75th anniversary of the Independence. On the preparation for the Independence Day celebrations, if there are areas that could be curtailed, it will be curtailed.
Secondly, whatever the expenditure incurred on the Independence Day celebrations will have money circulation among the service providers as well. It doesn’t mean that we can lavishly spend at a time like this. The Government will be cautious. At the same time, the pride of the country will be taken forward and a lot of investments for the future will be made. Actually, politicians keep on criticising this. If we don’t have a celebration, what will happen? If we don’t celebrate Independence Day, do you think there will be no critics? I think we should not be too bothered by these critics. If you are clear in your vision and targets, you should work towards it despite whoever criticises it.
Q: Many industries are still reeling from the pandemic and economic crisis. What are the Government’s plans to revive those sectors such as tourism despite the economic constraints faced by the country?
A: It is not only the pandemic per say, there are various other global factors which impact industries. The tourism industry is showing signs of growth from the moment it was announced as one of the best 24 countries to travel in 2023. We saw lots of protests coming up suddenly. So, you need a peaceful environment for the tourists to come and visit the country. If you see other industries are heavily impacted with high interest rates. This is something which the Government is cautious of and wants to provide a solution. I think the IMF program will be approved and the level of confidence being built up globally will have a positive impact on the interest rates.
The country’s reputation will change overnight once the IMF approval is given. The level of confidence of the investors will increase. The rating agencies will look at us positively. Then the interest rates will have a positive impact. It will also have an impact on lowering the inflation rate. Apart from that one of the biggest problems we have is the currency depreciation. Once the inflow comes in there will be stabilisation of the currency.
Likewise apart from the monetary value, there is a large impact to the positive note of the economy. This is not something the people talk of. Then the other biggest problem we have is our credit lines. The banks are restricted with credit lines. So, they will have access to the capital market.
The country will have access to the market and credit lines. It is a massive positive impact that the internal economy will have.
Q: President Ranil Wickremesinghe told Parliament that debt restructuring talks with India and China were successful as the country is trying to get an International Monetary Fund bailout. Would you like to comment?
A: Basically, we are at the final stages of receiving funds. So, we don’t want anybody to disturb that because assurances are required apart from the reforms that we have done.
We are getting positive signals from our friendly nations and creditors. I think we would be able to announce a very positive note within the quarter. However, getting assurances doesn’t mean that the process is over. Once we get the assurances, it will take a number of weeks for IMF mandatory requirements for the board approval.
Getting financial assurances means basically we are being supported by all our creditors. We are thankful for that. Especially, the Paris Club Secretariat carried out the coordination job along with its members such as Japan, India and China. So, we will receive good news and once it is there, the President will announce the entire process.
Q: You told the Parliament there is significant progress in the country’s financial status due to the reforms made to improve the financial situation. Your views?
A: Actually, firm results will come starting from March because of all the amendments and reforms we have done. The adjustments that we made from the Interim Budget have brought positive results. However, it doesn’t mean we are stabilised and out of the problem. We have managed it to a limited extent. There are lots of things to be done. One is to stabilise the economy.
That is why I say that any political party or a leader who is criticising the Government could provide us with an alternative system or a methodology, we will be happy to adopt it.
It is just mere criticism. This is not the wish of the people. Most of the parties which criticise the Government are going against the wishes of the people. The people’s wish is to have a peaceful life with less or no trouble. That is what we are trying to do.
If this is disturbed that will be against the wishes of the people. We have to understand all these painful decisions were taken by taking people’s issues into consideration. In the short term it will be painful but we will recover on the long run.