A new year with old challenges

Even though 2018 dawned with a holiday the next 12 months are likely to be anything but relaxed. The year opens with political parties readying for elections and the political fallout from people’s expectations as well as the continuing challenges presented by a sluggish economy will be sorely trying for Sri Lanka.

The economy and politics are two sides of the same coin. President Maithripala has put corruption right at the centre of the polls campaign once again as the three-year-old Government has struggled to push forward painful economic reforms crucial to growth. This is a risky move as the promises made during the 2015 presidential election, with a few exceptions, are yet to meaningfully materialise and the anti-corruption drive remains fragmented and disorganised.

Key efforts such as passing the Audit Bill remain undone, courts are overburdened with cases, and corruption-fighting agencies have limited coordination with each other. The Presidential Commission report on the alleged bond scam was handed over to President Sirisena on Sunday but it is unclear what future course will be taken regarding it. The Government promise to take action against corrupt members of the former administration as well as seek repatriation of wealth illegally taken out of the country is still gridlocked and people who genuinely supported the good governance campaign are disappointed.

Local Government elections will test whether the public is still behind the cause of good governance. Several rounds of tax increases and bad weather have raised the cost of living for the masses. In such instances the temptation is to think about one’s wallet rather than ideals. Unfortunately what voters must understand is that Sri Lanka’s economy cannot be fixed by artificial stimulus from politicians and in fact any effort to do so will actually make the present situation worse.

Politicians keen to win elections promise jobs, higher salaries and cheaper prices for essential goods. This they usually achieve by creating higher budget deficits, giving selected tax holidays and interfering with market functions. None of these tools are sustainable and after a brief period of relief the people are once again faced with the same problem, only this time they have become even more acute.

The only way forward is for exports and investment to be improved but this is a difficult and time-consuming effort, partly because it ties in with anti-corruption measures and reform of State-Owned Enterprises that are politically hard to accomplish. Sri Lanka is coming to liberalisation late and with restrictions such as a rapidly-aging population. With its window for development growing ever smaller with each passing year, the Government is forced to consider radical change, which obviously comes with even stronger risks. In such a background selecting core issues for elections becomes a knotty problem.

Local Government elections, which are usually an effort to elect village level representatives, have been transformed into a popularity contest for the Government. This is in effect misleading because national politicians are simply trying to drum up publicity for themselves and remain relevant in the political sphere even though they will for all practical purposes do nothing at the village administration level.

Come what may, the elections will be done by mid-February. Hopefully at least after that tackling climate change, economic reform, fiscal consolidation, debt repayment and lifting growth will take centre stage because with high debt repayment looming in 2019 the one thing Sri Lanka cannot afford to be in 2018 is complacent.