No end to hooks at the pump
Saturday 19th February, 2022
The government is planning to jack up fuel prices, again, claiming that the Ceylon Petroleum Corporation (CPC) is incurring huge losses. An attempt is apparently being made in some quarters to scapegoat Energy Minister Udaya Gammanpila for the fuel price increases in the pipeline. When oil prices were increased on a previous occasion, some SLPP MPs loyal to Basil Rajapaksa flayed Gammanpila for aggravating the woes of the public; they insisted that if Basil had been in the country, he would have prevented a fuel price hike. Today, Basil is the Finance Minister, but fuel prices are increased!
Gammanpila has sought to deflect public criticism; he has written to the Finance Ministry requesting that taxes on fuel be slashed to prevent a fuel price hike. It is a clever political move, which may help disappoint the SLPP’s Basil faction, which is trying to pin the blame for fuel price hikes on Gammanpila; the ball is now in Basil’s court.
What one gathers from some facts and figures Minister Gammanpila happened to reveal at his media briefing yesterday is that the real cause of the CPC’s losses is the domestic taxes and not the increases in the world market oil prices as such.
Minister Gammanpila told the media yesterday that the CPC’s daily losses amounted to Rs. 551 million. The CPC, according to him, loses Rs. 19 from a litre of 92 Octane petrol, Rs. 17 from a litre of 95 Octane petrol, Rs. 52 from a litre of regular diesel, Rs. 35 from a litre of super diesel and Rs. 63 from a litre of kerosene. In the same breath, Gammanpila said the government taxes amounted to Rs. 42 on a litre of 92 Octane petrol, Rs. 64 on a litre of 95 Octane petrol, Rs. 17 on a litre of regular diesel and Rs. 39 on a litre of super diesel. This may explain why decreases in the world market prices are not reflected at the pump, here.
The CPC’s revenue ends up in the Treasury, and therefore, in the final analysis, it is only from the sale of regular diesel that the state coffers, which rake in unconscionably high fuel taxes, suffer losses. Where other types of fuel are concerned, the Treasury is not incurring losses; only its profits have decreased to some extent. However, Minister Gammanpila has said the government taxes on fuel amount to Rs. 367 million a day. Thus, it may be seen that the actual loss that the CPC causes to the state coffers is only Rs. 184 million a day. Minister Gammanpila should have explained what actually caused this loss; is it due to the fact that the volume of regular diesel (which causes an actual loss of Rs. 35 per litre) sold daily is much higher than those of super diesel, petrol and kerosene, and/or other factors such as overdue payments. An explanation is called for.
If fuel prices are jacked up again, inflation will increase further, worsening the ordinary people’s lot. The prevailing pandemic and the resultant economic downturn have reduced many people to penury, and they must not be burdened with any more price hikes. One may ask whether Minister Gammanpila’s request to the Finance Ministry for slashing taxes on fuel is pragmatic in that no government can do without taxes on petroleum products, but the fact remains that the incumbent administration has given huge tax cuts to its cronies at the expense of the public, and relief could be given to the public if it acts rationally without adopting ad hoc relief measures for political reasons.
The government has, in its wisdom, allocated as much as Rs. 229 billion for the provision of relief mostly to the state sector workers. Even the teachers who won a massive pay hike recently are given Rs. 5,000 each as a special monthly allowance! If at least a part of this huge relief package had been utilised to cushion the CPC’s losses which are mainly due to the sale of diesel, the lifeblood of public transport, everyone would have benefited immensely, and a further increase in inflation could have been obviated.
Is Sri Lanka ready?
Thursday 23rd March, 2023
The IMF is ready to help Sri Lanka tackle its economic crisis, President Ranil Wickremesinghe has told Parliament. This is good news. But is Sri Lanka ready to help others help it? Its bilateral creditors are united in trying to assist it in restructuring its staggering debt, and rebuilding its economy, we are told but, sadly, the domestic stakeholders, especially politicians, are at daggers drawn, and their clashes will only erode the confidence of prospective investors, and put paid to efforts being made to revive the economy.
President Wickremesinghe, making a special statement in Parliament, yesterday, did not forget to pat himself on the back for having come forward to bring order out of chaos while the country was teetering on the verge of anarchy, last year. He deserves praise for that. But for his decisive action, violent hordes would have marched on Parliament and set the place on fire. He ordered the military to stop them, and Parliament, nay the country was saved. (If he had acted similarly in the early noughties, when a UNP-led government was in power, and ordered the military to take on the LTTE with might and main, he would have been elected President in 2004!)
President Wickremesinghe spelt out how the government intended to resolve the economic crisis, and his speech was devoid of rhetoric, theatrics and animosity. He sounded conciliatory and serious about enlisting everyone’s help to revive the economy. He invited the Opposition to work with the government to enable the country to resolve the economic crisis. This, we believe, is the way forward, but the government should not hold out an olive branch with one hand to the Opposition and deliver killer hooks with the other. There are some contentious issues that have stood in the way of a rapprochement between the government and its political rivals, and they should be sorted out.
President Wickremesinghe yesterday promised action to eliminate corruption, which is bound to impede the country’s economic recovery. He will have his work cut out, for he is dependent on a bunch of corrupt politicians for parliamentary support, and it is only natural that he is seen to be defending them and serving their interests. Perhaps, the Opposition can lessen his dependence on the corrupt by offering support for his programmes that are beneficial to the public.
Trade unions are on the warpath. Most of their grievances are legitimate, and they deserve a patient hearing and reassurance from the government. They must not be driven to take industrial action, which adversely impacts the ailing economy and political stability. They are resentful that the government politicians are living the high life at their expense while they are paying high taxes. Pakistan Prime Minister Shehbaz Sharif has announced that his ministers and their special advisers will forgo their salaries and perks in view of their country’s economic situation. If the members of the SLPP-UNP administration emulate their Pakistani counterparts, perhaps the protesting workers will simmer down. These politicians and their kith and kin have amassed colossal amounts of ill-gotten wealth and bankrupted the country, and there is no reason why they cannot make some sacrifices. The government can increase the state tax revenue without increasing the PAYE tax exponentially, some Opposition economists have argued, and their views should be taken on board.
The government must stop suppressing the people’s rights and freedoms if public resentment is to subside. Elections are the lifeblood of democracy, and must not be put off for political reasons. There is a public outcry over the postponement of the local government polls. This is not an issue the government can wish away or tackle by resorting to strong-arm tactics. It has to talk to the Opposition and other stakeholders, and explain its position instead of riding roughshod over its political opponents, the judiciary and the Election Commission. The SLPP-UNP combine has made a huge blunder by summoning some Supreme Court judges before a parliamentary committee over an interim order they have issued. The judiciary is the linchpin of democracy, and must not be trifled with in this manner.
Only a course correction will enable the government to secure the much-needed support of other stakeholders for its efforts to sort out the economy with IMF assistance.
Celebration of debt
Wednesday 22nd March, 2023
The SLPP-UNP administration is cock-a-hoop at the unlocking of an IMF bailout package. What is the world coming to when a government which has bankrupted a country, defaulted on debt and visited untold miseries on more than 22 million people, paints the town red after obtaining another loan on constricting conditions?
At the height of Eelam War IV, Lakshman Kiriella, who was a UNP MP at the time, audaciously claimed that onema goenkuta yuddha karanna puluwan (‘any fool can fight a war’). Similarly, one may say ‘onema goenkuta loan ganna puluwan (’any fool can obtain loans’. The government has been able to secure the IMF bailout package because it readily agreed to all loan conditions, some of which have not been made public yet, according to the Opposition. No less a person than ex-Chief Economist and Senior Vice President of the World Bank, and Nobel Prize winner, Joseph Stiglitz, has inveighed against the IMF for causing riots in the countries that have had to follow its programmes. In Sri Lanka, too, a perfect storm is brewing on the horizon with workers taking to the streets in large numbers. However, it is our failed, corrupt leaders who should be blamed for our predicament.
Ironically, the IMF happened to announce its decision to release Sri Lanka’s credit facility, on the eve of the World Puppetry Day! The grandees of the Rajapaksa-Wickremesinghe regime claim to be managing the economy themselves but they are only a set of puppets controlled by the IMF. They have to do as the IMF says, and it does not require much grey matter to do so. But care will have to be taken to ensure that they will not help themselves to the dollars to flow in. It behoves the IMF, and the nations that have been considerate enough to part with substantial amounts of their citizens’ money to help ameliorate the suffering of Sri Lankans to ensure that the government of Sri Lanka handles financial aid in a transparent manner.
It’s one thing to obtain an extended credit facility, but it’s quite another to put an ailing economy back on an even keel, and repay loans that have been defaulted on. That the IMF has agreed to provide assistance is no guarantee that Sri Lanka will achieve economic recovery. There are countries that have failed to straighten up their economies fast despite IMF help, Greece being a case in point.
Greece is vastly different from Sri Lanka in that its bailouts came from a powerful troika—the European Commission, the European Central Bank and the IMF. Still, it has been struggling to achieve realistic primary surpluses and return to investment grade. Needless to say, Sri Lanka’s task will be even more difficult, given the fact that a failed, corrupt government continues to be in power.
The failed politicians who bankrupted the economy by mismanaging it, indulging in waste and corruption and stealing public funds, are still at the levers of power. They must be salivating at the prospect of being able to line their pockets again when forex begins to flow in. Doomed will be the economy if it continues to be in the clutches of these failed, corrupt elements who have not mended their ways and are all out to gratify their insatiable appetite for power and public funds.
Now that the IMF bailout has become a reality, the people must be given an opportunity to exercise their franchise and indicate whether they have faith in the current regime, which has inflicted so much suffering on them and ruined the economy. Hence the need for the local government polls to be held without further delay. There is a massive build-up of public anger in the polity and it has to be defused if the country is to be prevented from being plunged into chaos again. Expenditure on an election is a worthwhile investment in that it helps make the irate public simmer down and bring about political stability, which is a prerequisite for economic recovery.
Tuesday 21st March, 2023
Sri Lanka finds itself in a distressingly unprecedented and unenviable situation. All three tiers of government—Parliament, the Provincial Councils and the local government institutions—are now under the Executive President indefinitely thanks to the postponement of the Provincial Council and local government elections. President Ranil Wickremesinghe is the head of government and therefore has Parliament under his direct control. The Provincial Governors appointed by the President exercise control over the Provincial Councils as well as the public officials under whom the local government (LG) institutions are to be placed.
The separation of powers has become a thing of the past to all intents and purposes. Although his party, the UNP, has only one parliamentary seat, President Wickremesinghe has the legislature under his thumb because he is now constitutionally empowered to dissolve Parliament at a time of his choosing. He can leverage this power, if he so desires, to enhance his bargaining power vis-à-vis the SLPP, upon which he is dependent for legislative support. He spends more time in Parliament than all his predecessors did while holding the presidency, and even tells the Opposition MPs to shut up and sit down when they express dissenting views! Thus, he imposes his will on the legislature!
The Rajapaksa-Wickremesinghe government, which bankrupted the economy, has turned the country’s economic woes to its advantage; it is all out to avoid a crushing electoral setback by refusing funds for the LG polls. President Wickremesinghe has rendered the Election Commission toothless by blocking funds for elections. His action has caused a severe erosion of public faith in the electoral process.
Worse, the government is now in overdrive to tame the judiciary! Some MPs are reportedly planning to question judges!
Having taken exception to a recent Supreme Court interim order that public officials refrain from blocking the release of budgetary allocations for the EC, the government claims that the judiciary has caused a breach of parliamentary privileges! There is no reason for the ruling party grandees to see red; the SC has only asked the Secretary to the Finance Ministry and others to carry out what the government has undertaken to do in Budget 2023, in respect of the EC. Having made an issue out of a non-issue, the government has decided to have it probed by a parliamentary committee. Will anyone in authority care to reveal the educational qualifications of the MPs who are to be tasked with questioning the judges and, more importantly, whether there are court cases against any of those worthies? Judges must not be insulted in this manner!
In 2017, the UNP put off the PC polls by amending the PC Elections Act in the most despicable manner with the help of the SLFP, the JVP, the SLMC and the TNA; it stuffed the amendment bill with a slew of sections sans judicial sanction at the committee stage, and secured its passage amidst protests from the then ‘Joint Opposition’ bigwigs, who have now thrown in their lot with President Wickremesinghe and are endorsing all his actions, including his refusal to make funds available for elections on some flimsy pretext.
What is unfolding on the political front reminds us of an Aesopian fable. A camel happens to move its bowels while walking along a babbling brook downstream, and sees its dung racing past it; puzzled, it wonders how on earth what should be behind it is going ahead of it. The learned judges facing the prospect of having to suffer indignities at the hands of a bunch of political dregs must be in a similar dilemma. But they can rest assured that all right-thinking people are on their side. One can only hope that the people’s struggle to exercise their franchise and knock the lowest of the low in politics off their perches will receive a judicial boost.
The police and the military are busy doing full-time political work. Senior police officers seeking promotions and political generals receiving gallantry medals in peacetime are hell-bent on cracking down on pro-democracy protests to humour the powers that be. Unidentified persons in military uniform, armed with assault rifles and iron rods, operate alongside the army and the police to crush anti-government protests. Both the army and the police have categorically said these characters are not their personnel? If so, who are they? Are they mercenaries? It is a non-bailable criminal offence for anyone to carry firearms without permission from the defence authorities. Why haven’t the police arrested those armed men? The Opposition must flog this issue aggressively in Parliament and elsewhere. But it is all at sea and too impotent to take on the government the way it should to safeguard the interests of the public. It floats like a bee and stings like a butterfly, so to speak! The country certainly can do without such a feckless Opposition, which however is an invaluable asset to any dictatorial regime.
How could it be denied that we are witnessing the rise of the Sri Lankan version of the Third Reich?
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