Tag: Sri Lanka economic crisis

Mano Ganesan moots Tamil caucus in Sri Lankan Parliament

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In a bid to ensure Sri Lanka’s main political parties do not “take numerical minorities for granted” anymore, Opposition MP Mano Ganesan has recently mooted setting up a “Tamil caucus” in Parliament.

The “caucus”, he said, would allow Tamil legislators to express the “collective desire” of the island’s Tamil speaking peoples. Although Sri Lanka’s Tamils in the north and east, the Malaiyaha Tamils living across Central, Uva, Southern and Western Provinces, and the Tamil-speaking Muslims, may have different aspirations and political aims, their shared desire to live “within an undivided Sri Lanka, sharing wealth and power as combined stake holders of national sovereignty” must be collectively articulated, the leader of the Tamil Progressive Alliance (TPA) said.

“It [the caucus] will help us commence a collective dialogue with all the national political parties, and beyond politicians, reach out to the Sinhala community leaders and organisations; as well as the international community and development partners, and urge them to use their good offices to ensure Sri Lanka stands by its international commitments,” Mr. Ganesan told The Hindu at his Colombo residence. So far, some parties have responded positively, he said.

Also read | Sri Lanka MP Mano Ganesan seeks assistance from T.N. CM for Indian-origin Tamils in Sri Lanka

Currently part of the main Opposition alliance led by Samagi Jana Balawegaya (SJB or United People’s Force), the TPA, representing Malaiyaha Tamils, was among the few political groups to retain all of its six parliamentary seats in the last general election. Mr. Ganesan’s recent outreach comes amid speculation over national elections next year. Sri Lanka’s twice-postponed — owing to “lack of funds” — local government elections may not be held anytime soon, despite Sri Lanka’s Supreme Court restraining authorities from withholding funds, but all signs point to a presidential poll early next year, according to the legislator.

Presidential poll

“I met President Ranil Wickremesinghe one-on-one recently. He told me that he would run [for President],” said Mr. Ganesan, who was a Cabinet minister in the former Sirisena-Wickremesinghe administration.

Six-time Prime Minister Mr. Wickremesinghe was elected President through an urgent parliamentary vote in in July 2022, after Gotabaya Rajapaksa was unceremoniously ousted by a people’s uprising at the height of Sri Lanka’s crisis. The country’s constitution bars a President elected by Parliament when the office falls vacant as it did last year, from calling for early elections. Such a move would require a constitutional amendment, and possibly a referendum.

Mr. Ganesan said his efforts in uniting Mr. Wickremesinghe’s United National Party, diminished to a single parliamentary seat in the last election, and the breakaway SJB proved futile. Predicting a three-cornered contest in the next presidential election, Mr. Ganesan said Leader of Opposition Sajith Premadasa, and the Leader of the leftist Janatha Vimukthi Peramuna (JVP), were the other likely contenders to the country’s top office.

“It appears that Mr. Wickremesinghe hopes to be the common candidate in an entity that brings young members of both, the SLPP [Rajapaksas’ ruling Sri Lanka Podujana Peramuna or People’s Front], and the SJB, along with the minority parties together,” the MP said, adding that the TPA would engage with all parties and decide closer to the elections. “We will fit in with any government,” he said, if it is receptive to the Malaiyaha Tamils’ demands.

In Mr. Ganesan’s view, it is “too early” to comment on the President’s efforts towards economic recovery, but the increase in tourist arrivals and worker remittances are “positive” signs, although much remains to be done. “The Sri Lankan economy crashed due to three main reasons — corruption, mismanagement & wastage. I have not seen any serious efforts from the government other than the notice of the anti-corruption bill. Pity, President Wickremesinghe is living with the wolves.”

Making a case for closer trade ties with Sri Lanka’s international partners, the TPA Leader said greater access to the Indian market, with preferential trade terms, will help small and medium enterprises in Sri Lanka. “India is booming as the world’s 5th largest economy. Look at booming Tamil Nadu, the closest Indian state [to us]…We must grab this opportunity and grow with India.”

Recalling Prime Minister Narendra Modi’s first meeting with the TPA delegation in Colombo years ago, Mr. Ganesan said: “He [Mr. Modi] told us ‘Tamils should be united’, but immediately qualified his statement saying that ‘Tamil unity should strengthen Sri Lankan Unity’. Whether it is the BJP or the Congress, Indian national policy is unity in diversity. They preach to us what they practice at home,” he said, adding that India was Sri Lanka’s “greatest security shield” against any internal or external challenges. “Sri Lanka should understand this basis and come over semi-hostile phobia.”

Meanwhile, Sri Lanka must stop playing India and China against each other, he contended. “Mainstream Sinhalese politicians thought they were being clever in using India-China rivalries. But this foolishness has brought this country to this level,” he said, adding: “India is our greatest security shield against any internal or external challenges. Sri Lanka should understand this.”

200th year

Sri Lanka is marking the 200th year since the British brought down indentured labourers from south India to work in the island’s plantations. The British government has a “moral responsibility” towards the community who developed the profitable tea export industry, the island’s motor and railroad network, and the Colombo port in then Ceylon, he stressed. “I have started a dialogue with the British establishment on this recently.”

The responsibility of Indian state “is equal or even more”. “Our people were subjected to arbitrary and involuntary repatriation to India, notably by the Sirimavo-Shastri pact (1964)…We were not consulted, but treated like cattle,” he said. “Indians thought keeping Colombo happy served its national interests. This greatly diminished the political status and socio-economic wellbeing of our community. If not for this repatriation pact, the current strength of our MPs in Parliament of Sri Lanka, which is nine today, would have reached not less than 25.”

The Indian government and policy makers have been briefed “many times,” Mr. Ganesan said, expressing disappointment over the execution on ongoing projects. “India is helping build [14,000] houses for the families living in the plantations, but it is going on at a frighteningly sluggish pace. At this rate, it may take another 50 years to complete the project. Generous socio-cultural- economic development projects of India in Sri Lanka seldom reach our community,” he said. “Even in Tamil Nadu, most think that Sri Lanka’s Tamils live just in the north and east. Their awareness of the plight of Malaiyaha Tamils is very low,” he said.

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The aftermath of Sri Lanka’s economic crash

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For nearly a year now, many in Sri Lanka have been fervently chanting three letters — IMF (International Monetary Fund).

As the country’s familiar balance of payments problem escalated last year, citizens experienced crippling shortages and painfully long power cuts. They took to the streets in a staggering mass protest and ousted the Rajapaksas, who they held responsible for their suffering. The chant, seeking IMF support, persisted through these dramatic developments.

In July 2022, former Prime Minister Ranil Wickremesinghe was elected President, through an urgent parliamentary vote. One of the first tasks he set for himself was to negotiate an IMF deal to resurrect the country’s battered economy. Sri Lanka entered a staff level agreement with the Fund on September 1, 2022.

Looking for a bail-out

Mr. Wickremesinghe recently announced that his government had completed 15 tasks prescribed by the IMF, in preparation for its assistance. The IMF’s provisional $2.9 billion package will come through by end of this month, he said.

In fact, Sri Lanka had hoped to tap it by the end of last year, or at least in January this year, but the process had dragged on. One of the main reasons for the delay had to do with written financing assurances from China, Japan, and India, Sri Lanka’s top three bilateral creditors. The IMF had made its programme contingent on their cooperation. India took the lead and sent its assurances to the Fund this January, with the Paris Club group of creditors, which includes Japan, following suit. China’s written financing assurances alone are pending.

Should the IMF package kick in later this month, either with China coming on board, or with other official lenders expressing confidence for the Fund to go ahead and clear it, Sri Lanka will see it as a critical milestone in its economic recovery. Evidently, a $2.9 billion-Extended Fund Facility, over a period of four years, is not big money for Sri Lanka. Even after streamlining imports to save dollars, the island nation spends well over a billion dollars every month on essential imports alone. Exports totalled $978 million in January, pointing to an enduring trade deficit.

However, an ongoing IMF programme helps Sri Lanka become more credit worthy in the eye of global lenders, be it multilateral agencies like the World Bank or the Asian Development Bank, bilateral partners, or private creditors. The bankrupt nation that defaulted on its $51-billion external debt last year hopes that with an IMF programme, it can borrow again. After falling into a cycle of indiscriminate borrowing, especially in the last 15 years, Sri Lanka finds itself in a position where its problem, and its solution, look eerily similar at this point.

Tackling corruption

What could potentially make a difference this time is the IMF’s emphasis on fixing Sri Lanka’s corruption vulnerabilities, which has been a rallying point for many Sri Lankan economists and policy analysts. It is corruption that led Sri Lanka to this precipice in the first place, they argue. Corruption, coupled with the state’s tendency to implement “populist” welfare programmes that are “unsustainable”, made the country’s economy fragile over time, in their view. So much so that 16 of the past IMF agreements could not turn the tables for Sri Lanka.

Critics of the IMF, a very small minority in Sri Lanka, see an IMF package as part of the problem, not the solution. They worry that the austerity measures that come attached with it will be a deadly blow to the people, especially the country’s working class that is worst affected in this crisis. Apart from that, there is no raging public debate on, or popular resistance to, the IMF within Sri Lanka unlike in say, Argentina in recent times. On the IMF package, the average Sri Lankan is preoccupied more with when it might come through, rather than whether the country really needs it.

Even worker unions, currently protesting against the sharp increase in taxes and utility bills — introduced by the government in anticipation of the IMF programme — are resisting only the specific policy measures that are hurting them. Otherwise, they appear reconciled to yet another IMF-led reform agenda, an “inevitable, bitter pill”, as it is often projected.

Food insecurity

Over the last year, poor families have been forced to reduce their food intake drastically. Soaring prices have kept eggs, fish, and meat out of reach for many, raising concern among medical practitioners over nutrition levels in the community. With inflation persisting over 50%, half of the families in Sri Lanka are forced to reduce the amount they feed their children, humanitarian organisation Save the Children found in a recent survey. Additionally, they warned of a “full-blown hunger crisis”. The World Food Programme, in its January update, estimated that 33% of Sri Lankan households are food insecure.

Irrespective of when the IMF programme kicks in, and how much more money Sri Lanka can borrow after that, it will be a rather rocky road before possible recovery.

Members of Sri Lankan opposition party National People’s Power carry an injured Buddhist monk during a clash with the police in Colombo on February 26.
| Photo Credit:
AP

The country is currently witnessing a new wave of protests, mainly by workers and professionals, as people’s economic hardships increase. The government also faces criticism for the recent postponement of local body elections, even as multiple surveys point to a significant rise in support for opposition parties. But for those looking for policy coherence, such as the business community, the Wickremesinghe administration symbolises a version of stability. Democracy can wait, they contend, since economic recovery is urgent. For many others, Mr. Wickremesinghe, who lost his mandate in the last general election and rose to power with the support of the widely despised Rajapaksas’ party, represents continuity of a political order they fought to change. They see election as a vital barometer that will reflect this sentiment.

Meanwhile, how Sri Lanka charts its path of economic recovery will be evident in the coming months. Nearly half a century after liberalising its economy — Sri Lanka was the first in the region to do so — the country has confronted some fundamental questions, about how much it produces, how much it still imports, and how little its export basket has diversified in all these years.

These are questions that go beyond the problem of corruption. These are also questions that have a bearing on the country’s overall progress, which can’t be measured without factoring in the extent of inequality.

The latest Household Income and Expenditure Survey of 2019, conducted before the pandemic and Sri Lanka’s crisis, showed an increase in the Gini coefficient, a measure of income distribution, to 0.46, reflecting widening inequality. The IMF has said that a key element of its programme would be to mitigate the impact of the crisis on the poor by raising social spending and improve the coverage and targeting of a social safety net.

As the government goes ahead with its austerity measures, it remains to be seen if it can support its most vulnerable citizens.

This is the first part of a series of articles looking at Sri Lanka’s economic recovery and political course

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