The United National Party (UNP) yesterday flagged off their Parliamentary Election campaign with little fanfare, and picked an unexpected topic to champion; the economy. It was a surprising choice given that there was little growth post-2015 and much of the reforms that it promised to do remained undone at the end of its administration.
The Government has also made the economy a key pillar in its campaign and this is perhaps why the economy should become a bipartisan topic where both parties should cooperate based on a set of sensible, reform-led policies.
The ‘Yahapalanaya’ Government focused on fiscal consolidation as part of a $ 1.5 billion Extended Fund Facility (EFF) with the International Monetary Fund (IMF). It was the latest in a string of programs that successive Sri Lankan governments have had since Independence, where pledges are given only to be partially implemented or completely broken. At the time the last IMF agreement was entered into in 2016, only one other country (Mongolia) had an arrangement with the IMF in the whole of Asia.
Despite Sri Lanka being part of Asia, which has been part of the fastest growing region in the world for many years, and linked to South Asia that became the fastest growing region, albeit for a short-lived period, it nonetheless continues to face precarious challenges. There was also an IMF program when Prime Minister Mahinda Rajapaksa was President before 2015.
Central Bank Governor Prof. W.D. Lakshman earlier this year went on record at an event hosted by the Ceylon Chamber of Commerce acknowledging the sensitive balance of payments situation faced by the country and conceding that it could well ink another agreement with the IMF provided the terms were favourable.
Since then there have been several reports to indicate that the Government was already in tentative talks to wind up the EFF, which was extended for one year following the constitutional crisis, and enter into a fresh arrangement likely after the Parliamentary Elections and the presentation of a new Budget.
This would actually be sensible. There is nothing wrong in engaging with bilateral and multilateral agencies for the benefit of Sri Lanka, especially given the COVID-19 impact and the country’s serious debt commitments.
However, what is important is staying the course and not having economic agendas turned topsy-turvy with each election cycle or having political parties revamp and present policies they had a whole term to achieve but failed to. This old wine in new bottles policy simply does not meet the aspirations of voters and convinces no one of genuine change.
International rating agencies have warned that Sri Lanka debt to GDP ratio could move past 100% in 2021 and the country desperately needs to create fiscal space, increase trade and promote competitiveness to boost growth and find solutions to its quite serious economic challenges.
Sri Lanka will find ways to pay its debt, as it has always done, but this is not the benchmark anymore. Saddled with a rapidly aging population Sri Lanka needs to find the fiscal space to lift millions of people out of poverty, invest in education and healthcare and ready to take care of an entire generation of elderly people of whom most will be women.
These are weighty tasks that should move beyond partisan politics and petty power games. It would be best for the two main political parties to join together and reach a consensus and support each other in Parliament to achieve economic goals beneficial for Sri Lanka. But this will likely remain a dream.