Monday 10th June, 2024

Presidential candidates of the SJB and the JVP-led NPP, Sajith Premadasa and Anura Kumara Dissanayake, respectively, have chosen to sprint even before the commencement of the next presidential race, which is a marathon, wherein one has to pace oneself skilfully to prevent fatigue and maintain momentum. The two sides have been challenging each other to a debate on the economy, giving the impression that the upcoming presidential contest will be a two-horse race, and therefore only the views of Premadasa and Dissanayake on the economy matter. Overconfidence has to be avoided in every contest if defeat is to be averted.

External debt restructuring has not been concluded yet, and therefore it is doubtful whether this is the ideal time for a debate on the economy. However, it is heartening that politicians and the public have at last realised the need to remain focussed on the economy, which must be prioritised over everything else if the country is to come out of the current crisis and attain progress.

It is up to the people to elect as their President the candidate who is capable of handling the economy better than others in the fray. It will be a grave mistake for them to be swayed by other factors such as political allegiances, promises, handouts, caste, ethnicity, religion, and kinship when they vote at future elections.

That they have not exercised their franchise wisely all these years has become evident from the sheer number of elected misfits who are responsible for the current economic crisis. Unless they act responsibly, learning from their past mistakes, the country is bound to be mired deeper in crisis.

There is arguably no need for President Ranil Wickremesinghe, who is the UNP’s presidential candidate, to reveal his economic policies, which he has already unveiled and is in the process of implementing. It is the other candidates, especially Premadasa and Dissanayake, who will have to sell their economic policies to the people. Wickremesinghe’s economic thinking is known to one and all, and only a debate will compel Premadasa and Dissanayake to present views on the economy in an organised manner for the public to decide whether they are fit to wield the executive presidency.

On Thursday (06), Dissanayake, in an interview with the Independent Television Network (ITN), spoke extensively about how he would manage the economy in case of securing the presidency. The ITN programme was to be a debate between him and Premadasa, who skipped it. The SJB’s position is that a debate between the economic councils of the two sides should be held first.

Dissanayake can be considered to have come out with some arguments he was planning to put forth in a debate with Premadasa. It has become clear from his views on the circumstances under which the government had to seek IMF assistance in 2022, and external debt servicing, that he, like other Opposition politicians, subscribes to some misconceptions anent the economic crisis and the recovery process.

He said, in the ITN interview, that the country had been in a position to obtain funds from some friendly nations, especially China, to avert the economic crisis when the government committed it to an IMF bailout programme, and that it has been possible to manage the forex crisis to some extent because of the non-payment of external debts.

Sri Lanka was left with no alternative but to seek IMF assistance albeit belatedly. It was struggling to save its economy from a crash landing in 2022, and its development partners including China insisted that it secure an IMF programme to receive any further funding assistance. Last assistance from China came in August 2021, and that was for importing COVID-19 vaccines and it amounted to about 2 billion RMB, according to information available to us.

India gave only short-term credit until July 2022 to the tune of USD 4 billion maturing within one year. After realising that Sri Lanka would not be able to repay such credit within one year, it stopped funding. The government has had to manage with foreign exchange inflows such as exports remittances and some assistance from the IMF, the World Bank and the ADB since then.

External debt servicing has not been stopped completely. The government has been continuously servicing all multilateral debt service obligations including those to the World Bank, the ADB and the IMF. What one gathers from the reports prepared by the Finance Ministry and the Central Bank on the economic crisis and debt servicing is that Sri Lanka’s forex debt service payments, since the declaration of a soft default in 2022, amount to USD 3.56 billion. The government has paid back the Bangladesh swap and started to repay the one from India and other short-term liabilities.

Besides, it has serviced all rupee debt obligations without any default. It now claims that the servicing of future debt obligations, after restructuring, will not be an issue as the country’s external reserves have already risen to more than 5.5 billion, with the rupee appreciating.

The government deserves the bashing it receives for extreme revenue boosting measures, corruption, waste, attacks on democracy, etc., but the aforesaid vital facts about IMF assistance, debt repayment and forex reserves must not be ignored in any discussion/debate on the economy if the public is to get a clear picture of the economic situation.