Sri Lanka is one of Asia’s oldest democracies. Despite undergoing a near three-decade conflict, lacklustre growth and challenges in governance, Sri Lanka has always had peaceful transitions of power. The will of the people was respected, perhaps not always, but when it counted. Ironically, Sri Lanka’s Constitution and key institutions that survived war have had a harder time during peace with repeated assaults on their independence.
A week ago, Sri Lankans were caught by surprise when President Maithripala Sirisena removed Prime Minister Ranil Wickremesinghe and swore in former President Mahinda Rajapaksa. Matters were made worse by the President’s decision to prorogue Parliament till 16 November. The resulting standoff between the two main political parties has hit headlines around the world and focused negative attention on Sri Lanka. Travel advisories have been issued just as Sri Lanka was heading into its peak season, and there are now concerns that GSP+ trade concessions given by the European Union will be rescinded once again.
Perhaps most worryingly, the Finance Ministry, which is now under Rajapaksa, on Thursday released a slew of tax concessions, clearly intended to please the public and distract from the constitutional crisis the country is engulfed in. Loyalists of Sirisena and Rajapaksa have assured that Provincial Council elections will be called soon with a Parliament poll likely to follow. Returning to populist policies to muster votes is a typical ploy of Rajapaksa’s, but it comes at a time when Sri Lanka has to stick to fiscal consolidation and promote strong macroeconomic fundamentals to ready for large debt repayments that begin from 2019.
Sri Lanka will have to resort to a wide range of refinancing options, the most vital being international capital markets, with interest rates being decided by the level of fiscal and monetary policy management. The more fiscal slippage endorsed by the Finance Ministry the higher these interest rate premiums will become. That situation will not be helped by larger debts of Ceylon Petroleum Corporation (CPC) incurred by arbitrary price decreases at a time when international prices are climbing. The Government will have to borrow more to finance these excesses and that is pushing Sri Lanka into more debt in the long-term.
Spurred by the change of Prime Minister and the proroguing of Parliament, several countries, including Sri Lanka’s main trade partners, have called on the President to convene Parliament. Several protests in Colombo have also called for the same step. This is an appeal to restore democracy and respect the Constitution, to ensure that no one, including the President, is above the law. It is an effort to ensure that future mandates are not stolen without the approval of the people.
President Sirisena in 2015 was viewed as a unifying figure. He was given a mandate to unify a country, not just ethnically divided, but also politically partisan. He was given a position of massive power and privilege so that he could use his powers for the benefit of the country, not just petty political ends. Therefore, as the constitutional crisis drags on and Sri Lanka’s image begins to darken on the international stage, it is time for President Maithripala Sirisena to act as a Statesman and restore democracy to Sri Lanka by convening Parliament.