Sri Lanka is wallowing in the luxury of positive sentiment. Time and time again the public sentiment is one of great expectations. Many in the country expressed their near-feel-good factor. Many vehemently believed that with the election of Gotabya Rajapaksa to the Presidency, they did not need to be mindful of the vigilance that has been in place since black easter 2019. It may not be the reality – for there remains much to be done and undone – but it is always mind over matter. If you do not mind it will not matter.
Certainly the new President has got off to a great start. He has resorted to simplicity. Like the ban on buying new vehicles for government officials including for ministries. There are reportedly thousands of vehicles lying around in car pounds all over the place. Then there was the now famous exit as an ordinary passenger on his way to India shocking almost everyone at the Colombo international airport at Katunayake. The size of his entourage put to shame several instances of largesse on this very matter in the past. There was the order to reduce immediately the presidential motorcade of nearly 15 vehicles – and he apparently has asked his now-shortened motorcade to obey the traffic Act.
On the economic front a series of tax concessions marked again by simplicity has caught the public imagination – even if the Inland Revenue stated that the benefits would take two to three months to filter through.
The senior adviser at the Finance Ministry the former Governor of the Central Bank Ajith Nivaard Cabraal has dismissed the claim that the Rs 700 Billion expected deficit as a result of the realigning of taxes is bound to be catastrophic. Cabraal instead points to a need to jump start the economy which has never recovered after the last government brought various projects to a halt whilst they carried out so-called investigations into perceived corruption. Ironically neither was much evidence found but the economy took a huge hit. The artificial rise in interest rates during the bond scam caused reverberations across the economy and the rupee value of public debt rose strongly – coupled with a cripplingly high exchange rate that saw the dollar go from Rs 131 to Rs 181 in four and one half years.
The government has recently announced bans on the importation of some spices where the locally grown variety enjoys a superior status in the international market place. The Tea industry has not been left alone – there too concessions have been given to owners of tea factories and the glyphosate issue is a non-issue now.
However good these short-termist measures are the government will be acutely aware that intense and decisive decisions will need to be taken to spur real growth of the economy. The Plantations Minister will find that he has very little leverage when asking Regional Plantation Companies to intensify almost non-existent measures to plant new bushes and bring Sri Lanka estates to the international standard of having around 5,000 bushes per acre of tea rather than SRi Lanka’s dismal standard of only half of that per acre. More trees means more plucking means more work meaning that productivity is up and the cost of production plummets down towards levels in competing markets like in India and Africa for instance.
The government will probably be readying themselves to go for international bonds to gather much needed short-term dollars. The long term answer is to spur the non-brainers like the tourism industry which has the rooms, the facilities and the weather to attract dollar-carrying tourists to Sri Lanka. Tourists who love to explore the island of their own free will.
President Gotabya Rajapaksa will need to identify massive wastage and corruption using a fine tooth comb. Some of the scams take advantage of the complex nature like for instance within the Power and Energy sector. Here, World Bank data reveals that Sri Lanka has an aggregated distribution loss of 11% of the energy it produces at great cost.
Taking the 11% as a gospel due to the source it emanates from, in financial terms what it means is that Sri Lanka is losing at least Rs 35,000,000,000 or USD 197 million each and every year. The reason: an utter lack of commitment on the part of so-called engineering professionals to get to grips with the problem and take available action. In technical terms what this means is that in dollar terms, the country could save enough money to purchase new power plants of 150 MW each every year for at least ten years.
The current problems the country faces have very little to do with national security as a specialist in the field is now the President and he has put in place the necessary apparatus to ensure the safety of all in this land. The major problem is for the nation to get out of the USD 4,000 per capita trap and move into the next phase.
This will need the coordinated efforts of everyone. A commitment on the part of the people to respect the rule of law, public servants to ensure that they will not be willing and capable partners with dealmakers and businessmen intent on foxing the system coupled with the entire clergy to keep the people on an even keel by preaching unity understanding and real patriotism which is different from a lop sided nationalism.
