Accountability and development

For a small country, Sri Lanka’s focus on politics at times borders on the obsessive. So deep does the adherence to politics run, it can be argued that politics has taken precedence over the economy at policymaking level since Independence. Politicians, particularly when elections are nearby, tend to lean towards populist measures at the cost of fiscal consolidation, which has led to Sri Lanka living beyond its means for decades. 

Since the Constitutional deadlock was resolved and a Government backed by Parliament restored, the biggest concern is keeping the focus on economic matters, especially reforms. Understandably, reforms on land, State Owned Enterprises (SOEs), subsidies, and public service among many others are unpopular and therefore tend to be put on the backburner when an election is around the corner. Since Sri Lanka is heading towards not one but three elections, the pressure to simply make people happy is overwhelming. But given the growth challenges that Sri Lanka is facing, allowing fiscal slippage could result in dangerous consequences. 

Despite the normalising political situation, Sri Lanka’s economy continues to be challenging, with the latest growth numbers showing the country’s economic growth in the third quarter had slumped to a historic low of 2.9% in comparison to 3.2%. The 3Q growth was lower in comparison to 3.7% achieved in the 2Q. These numbers are nothing new but they confirm a tale that has been told and repeated many times by the private sector, economists and other stakeholders. The Government must continue reforms, even with elections, or face stronger challenges that would be harder to deal with further down the road.

Perhaps with this in mind, the Ceylon Chamber of Commerce (CCC) released a rather tough statement on Thursday hailing the appointment of a new Cabinet but also indicating that political issues taking precedence over economic imperatives needs to end. Calling for a focus on development, the chamber also said it would hold the President and Prime Minister responsible for Cabinet appointments and insisted it wants to see “meaningful implementation” of the development agenda. 

The Chamber also emphasised the need for policymakers, particularly key Cabinet ministers, to take action to achieve results. “We expect the political leadership to respect the need for integrity in all of their actions.” Since 2015 the Government presided over by President Sirisena and Prime Minister Wickremesinghe has received regular criticism for failing to implement policies consistently and quickly. It has also been slammed for introducing policies without adequate consultation, ignoring accountability and failing to clearly communicate policies. 

With an estimated $12 billion in debt repayments from 2019-2022, the Government cannot afford to let its spending get out of hand, especially since the political turmoil over the past few weeks has already resulted in a sovereign rating downgrade. In this environment, key policymakers openly advocating for tax concessions without considering the aftermath is worrying. Even though the Government appears to be on an election footing, it cannot ignore economic challenges and runs the danger of moving away from the fiscal consolidation process. 

As the Chamber has pointed out, political survival cannot continue to dominate discourse and direct policies. The Government cannot be directed by the whims of party politics. A government should rise above and fulfil its responsibility to serve the people.