A reset is plausible – BY RAJPAL ABEYNAYAKE

Source : sundayobserver.lk

This country is in debt to the tune of some US$ 52 billion and no doubt it has been highlighted in this column and by many other writers in the recent past, debt has been the major problem that has caused the economic meltdown.

While this is correct and there has been serious mismanagement, under certain circumstances, Sri Lanka’s situation would not have been considered serious at all in a different context.

52 billion in debt is a lot, and it is clear we cannot afford the debt, especially when revenue dries up in bad circumstances such as the Covid-induced world economic slump.

But it’s is not as if the 52 billion would have had to be serviced in its entirety — at least that would have definitely not been the case until we defaulted. The debt servicing for the 52 billion would have been, say in a conservative estimate, 15 percent of that 52 billion?

If we were able to go to the IMF on time this quantum of debt could have been paid off, and we could have hammered out something of a debt-restructuring plan and done it without so much as a hiccup.

EXPENDITURE

Even today, the 52 billion in debt — profligate as it is seen to be — need not mean that we self-flagellate and say that we as a country have been guilty of over indulgence

Our people do not have proper public transport. Of course there is free health care and free education, but as far as the first of those is concerned, the free health care on offer is sometimes quite scary because the hospital facilities are abysmal, and most people do not even want to sight our national hospitals.

There is no luxury that our people are used to. They travel in buses that are overloaded, and take tuk-tuks as a form of alternate transport whenever they feel they need a ‘luxury’ ride. In other words, there is no pampering that Sri Lankan people have been subject to, and to even suggest that is ridiculous.

Of course the pampering has been in the area of expecting the State to provide everything. The State is providing jobs for graduates, and these State service personnel do relatively little and get salaries for services they do not often render.

All this top-heavy State sector expenditure and of course in recent times the obscene defence spending has been the bane on the expenditures side, and should have been rationalised long ago.

But it’s the dollars that we are lacking, and the dollar-debt we have accumulated is obscene no doubt. A good deal of it should be written off hopefully if the country is to have a chance.

But bad as all this is, the country could have managed to service some fifteen percent or so of 52 billion as annual servicing with interest payments factored in, even under the most trying circumstances.

It should not have been a calamity. It became a calamity because we did not go to the IMF on time and because we did not heed the calls to do the most obvious things such as to unfreeze the rupee against the dollar on time.

The argument here is that fundamentally this crisis is man-made and it is not something that we should have had to go through. Also, on the flip side it is not a crisis that’s so difficult to come out of, as it is made out to be.

It all depends of course now on the bailout and how we manage that. But there is also something strange about the fact that no country was willing to help us out, except of course India.

That is — it’s a safe guess — because there were problems with the administration in charge. Now all that has changed at least to a certain degree, after the exit of President Gotabaya Rajapaksa.

Hopefully, things should improve from here on, of course provided that some other correct decisions are made as well with regard to the presidency and so on. By the time this article appears in print, these decisions would have been made.

The point is that the Sri Lankan people cannot be blamed for individual profligacy, as some pundits are doing these days. Yes, the Government service, the over dependency on the welfare State, all these can be cited as over indulgences.

But they are specific excesses and as individuals Sri Lankans have not been leading profligate lives or lives they cannot afford. Far from it. They have suffered in public transport, and have been for the most part leading economically mediocre lives that have not been in any way particularly fancy or smacking of being overtly indulgent.

To blame them for the current economic crisis is certainly not correct and to blame their lifestyles, as some eccentric commentators have tried do, is insane.

The current crisis is to a great extent an aberration of sorts. This is not to say that the system in Sri Lanka has been good. But it has been a relatively decent country with the people enjoying relatively good lifestyles, with also relatively good physical quality of life indicators that the people could collectively boast of.

The current crisis is proximately due to one person and that is Gotabaya Rajapaksa. That does not mean that there aren’t any other authors of the debt-problem and so on, in recent administrations.

But it was Gotabaya Rajapaksa who made a manageable debt situation into an unmanageable crisis, and for that an entire country and an entire people ought not to be blamed and maligned.

Now that he is out of power, there needs to be a reset. However, politics as usual is far too dangerous now.

The people — due to the economic meltdown — are at the end of their tether. Just because things can perhaps be reset and life can go on in a few months, life should not go on in the earlier way by which corruption, nepotism and political favoritism was tolerated.

TRACED

Therefore, those who are seen to have enabled Gotabaya Rajapaksa should not have a place under the sun. But apart from that, it is important to recognise that the country’s problems could have been avoided had Gotabaya Rajapaksa handled things differently as president. That realisation would eventually, fundamentally change the way we look at the current situation.

It’s not Armageddon by a long shot. It’s a rectifiable issue. Our debt habits certainly should change and we should never, ever, run up such obscene debt in the future. But having said that, we could have serviced or alternately restructured that debt before a meltdown, but that didn’t happen under the Gotabaya administration.

It could happen now, and we could reset, and not suffer for the next five years as some falsely predict.

All we need is to come out of this crisis and to put things in perspective, servicing or restricting US$52 million should not be such a major ask for a country such as Sri Lanka which is not totally bereft of revenue streams.

But we need the bailout fast, the fuel fast, so that the economy would be up and running again and the people who run the engines of the economy — the private sector — are able to get us back on track.

The remittances too and other earnings would start flowing in good time. It’s not a blight that we are condemned to forever, but rather a situation that can, to stress things, be in the main traced back to one leader — Gotabaya Rajapaksa.

But there are several others who contributed to the situation both before and during the meltdown. They are culpable too. But culpability is another matter and resetting the economy is entirely something else. We have an abundance of talent through which we can handle that brief properly. It’s only hoped that Gotabaya-type politicians will not get in the way.