Sri Lanka's Economy

No sir, no sir, but give us three bags full
What Sri Lanka needs is a Sarath Fonseka for the country’s economy

By Romesh AbeywickremaThe Subday Leader LK October 11 2009
Yes sir, yes sir, three bags full. Well, that’s how it is supposed to be. Just ask the 17 UNP pole-vaulters, or the 10 from the NFF for that matter.
Of late, however, there is something odd going on in this island of ours. ‘We don’t want it, but we want it.’ ‘We don’t need your preaching, but give us the moolah,’ we have been telling the West. Ditto with
the IMF: ‘No conditions please; we are Sri Lanka, so just dole out the 2.5 billion.’ To the US: ‘Put your house in order before lecturing us.’ And then we go and ask these very people for favours. How
intelligent is that?
Just a couple of weeks ago we had a chorus led by the likes of Central Bank Governor Nivard Cabraal stating to anyone willing to lend an ear that Sri Lanka can do jolly well without the EU’s GSP+
concession, “which in any event was to be a temporary measure, granted following the 2004 tsunami. We can do without it.”
However, this stance was reversed the very next week when another batch from our world record cabinet of ministers started crying that without GSP+ poor Sri Lanka will be kaput.
The President weighs in
Intriguingly enough, the high and mighty in government have kept their distance from this slandering cum pleading match, preferring to play goody goody as and when the requirement arose. However, that
ended on the last campaign date in the south when the Chief Executive himself went on record to say that the cost/benefit of GSP+ was the equivalent of the Hambantota Port, so if the country can build the
port it can also build alternatives to GSP+.
Last week, the main alliance partner of the government, the JHU, began a signature campaign against the US. One wonders how many of the signatories realise the fact that over one-third of our apparel
exports are shipped to that very country. The loss of that market share apparently does not figure in the political equation. What benefit does this stance bring to the country? If the US wanted financial aid from
Sri Lanka, then the strategy would be spot on.
It is time the ‘give it if you want, be damned if you don’t’ strategy is seriously evaluated by the warriors in government purely on its financial merits. The strategy is fine if the audience is the Southern Province of
Sri Lanka. Unfortunately, it isn’t so. The average man from the EU or US doesn’t differentiate between the information intended for Hambantota, in the deep south of Sri Lanka, and Washington D.C. in the
US. Everything that happens in the world is reported in real time. The world is wired, and what you want to know is right there waiting to be read on some electronic device. If what you want to know is
whether criteria has been fulfilled for GSP +… well, go on and click. Which is what the West is busy doing.
Though the strategy of staggered provincial polls has produced the desired results for the government, the years-long campaign has been nothing short of a nightmare on the public relations front. Details of
campaign-talk are being reported and accessed from all over the world. It seems our politicians are yet to come to terms with the wired world they live in, even though the most hi-tech communication devices
are an essential part of their get-up.
Although targeted to the local audience, the government’s West-bashing has effectively antagonized the West unlike ever before, without the government even realising it. Politicians in Sri Lanka seem to think
that the whole world operates on their terms. It is not so. For the rest of the world, a friend is a friend and a foe is a foe. The foe by day/friend by night policy of our politicians is not the way of the world.
Military wars, economic wars
When the war was won, many took it for granted that the economic war would be a cakewalk – foreign funds would flow like a tsunami, the people were told. Nothing of the sort happened. Even the IMF stretched the government’s endurance to its limits before the first tranche of the promised US $2.1 billion was doled out.
Then the unthinkable happened last week. The Central Bank of Sri Lanka issued an official statement on Thursday stating that “the key targets and structural benchmarks as agreed with the IMF at the end of September 2009 were comfortably achieved by Sri Lanka.” It goes on to reassure the public that “This follows the successful achievement of the targets set for July 2009 as well.” Targets as agreed with the IMF?
Weren’t we Sri Lankans told ad nauseam that there were no conditions (read: targets) with the IMF? What exactly are these ‘targets’ and ‘structural adjustments’ as ‘agreed to with the IMF’ that have been fulfilled? What, then, has not been fulfilled? (The answer to that obviously has to come from the IMF.)
Is the cat out of the bag? Cat or no cat, it seems the famous ‘plug’ is back in place, securely as ever, with the Central Bank itself assuring us it is so!
The different messages emanating from different quarters in the government point to one thing – no one seems to know whether they are coming or going. Either way, the guiding principle is to do whatever that pleases the political masters.
OECD classification
That the economic war is far from being won was apparent by a classification issued by the Organisation for Economic Cooperation and Development (OECD) just last month, which largely went unreported.
Under the heading “Sustainable credit and export credits,” this influential organisation lists “Low income countries subject to IMF/World Bank concessionality requirements,” and Sri Lanka is listed as a country “subject to the Non-Concessional Borrowing Policy of the IMF.”
Those who are approached for credit don’t just lend over the counter. They seek the resources of such organisations as OECD, whose job is to provide that service. The mandarins running our economy just don’t seem to see the big picture, namely, the high-cost funding that Sri Lanka has relied on for some time.
What is missed sorely in the economic front is the equivalent of a Sarath Fonseka spearheading the economic machinery of government. With the administration settling on the controversial duo of P.B. Jayasundera and Nivard Cabraal to deliver the goods, the status quo is likely to continue.
Meanwhile, the chorus will go on: ‘No sir, no sir, but give us three bags full.’