For a happy New Year

Thursday, 12 April 2018 00:00 - - {{hitsCtrl.values.hits}}

The Sinhala and Tamil New Year dawns amidst greater political upheaval than has been witnessed in Sri Lanka for quite some time. The political uncertainty that erupted from the Local Government election results culminated in the No-Confidence Motion earlier this month, and its tremors are still being felt in the third Cabinet reshuffle in less than a year. As the country heads into a New Year, it is hoped that these uncertainties will fade post-April and give the country a chance to focus on development and economic issues.

According to the latest news emerging from the Government, the plan is to remove six Cabinet ministers of the Sri Lanka Freedom Party (SLFP) who voted for the No-Confidence Motion, and replace them with other SLFP members. Irrespective of this change, the United National Party (UNP) will continue to hold key portfolios crucial to the economy and good governance. Too many months of this year have been whittled away in political controversy.

The result of the Local Government elections gave fresh energy to the Joint Opposition, backed by former President Mahinda Rajapaksa to pull the limelight in his direction. As the No-Confidence Motion vote proved the entire effort was aimed at drawing more attention to the Joint Opposition and the Rajapaksas, as a simple calculation would have showed that Prime Minister Ranil Wickremesinghe had the required number of votes to carry the day.

However, the upshot of the No-Confidence Motion was to split the SLFP faction of President Sirisena and create a precarious situation within the party, where the Joint Opposition could feel that they had gained more authority. Unfortunately, reducing SLFP representation in the Cabinet is a double-edged sword for the UNP. On the one hand, they can focus more on objectives which are important to the UNP, and take undivided credit for them at the next round of elections. On the other hand, however, key policies, which may require a two-thirds majority in Parliament, may prove to be more challenging to enact without the help of the Sirisena-faction of the SLFP.

These could include major legislation, such as establishing an international financial centre at Port City, which may require an Amendment to the Constitution. Previous reports have indicated that establishing a different legal system for the functions of the international financial centre, as has been done for Dubai, could mean Parliament would have to pass a 20th Amendment. The legislation, which was initially expected to be tabled in Parliament in April, is likely to be delayed given the latest political situation.

The Port City legislation is just one of many new projects and reforms that need to be urgently rolled out by the Government. Few pundits would deny that the low 3.1% growth in 2017 is indicative that delays in crucial structural measures are beginning to have an impact on economic expansion. This, together with external challenges such as rising oil prices and rising protectionism, is contracting Sri Lanka’s window to further stabilise its macro-economy ahead of large foreign debt repayments of about $3.5 billion per annum from 2019 onwards.

Politics has always taken precedence over economic policy in Sri Lanka. In the New Year, this trend must be changed for Sri Lanka to have a chance at achieving its aspirations.