As the President and the Prime Minister dilly-dallied over appointing a new Cabinet of Ministers, it does not mean that the country was exactly waiting with bated breath for the outcome. It only means that there is a serious power struggle within the Government of 2015, and with two more years to go, the country [...]


Populist measures or economic stability


As the President and the Prime Minister dilly-dallied over appointing a new Cabinet of Ministers, it does not mean that the country was exactly waiting with bated breath for the outcome. It only means that there is a serious power struggle within the Government of 2015, and with two more years to go, the country is not going to see much good come out of the political chicanery at the highest levels.

While the hard bargaining was going on all of the past fortnight in the immediate aftermath of the February 10 local council election results that floored the two leaders, the Rupee has taken a slide. Not that it needs political instability to grease its downward trend, but those dealers in the money market confirmed that the on-going political uncertainty triggered jitters among investors, including foreigners owning bonds and shares in the Stock Exchange, and exporters and importers who play around with their sales and purchases.

The Central Bank is averse to intervening in such matters and the Governor can only make an appeal to the warring political factions to bring about some stability asap. With the Rupee’s slide, the Government will end up paying more for its imports, especially fuel, and then how much longer can it keep prices at present levels is the question. As it bites the citizen, the citizen can only bite back by rejecting the Government at the next election that comes around.
As our Economic Analyst said in his column last week with reference to the ongoing uncertainty at the helm of affairs; “These would deter investment, weaken the capacity of the Government to take bold and essential decisions needed for economic stability and growth. The Opposition’s obstructionist activities may escalate and cripple the economy. The emerging political developments will have far reaching economic consequences”.

The local government elections seem to have completely derailed the Government, sending it into a spin. Not that the Government was on the fast-track anyway. It was like a train with the two engine drivers arguing with each other as they were proceeding and then a sudden earthslip caused the train to jump track and come to a halt – on the edge of a precipice. And the senior driver is blaming his second in command and wants him sacked.

In reality, both engine drivers are to blame jointly and severally. As we said last week in this space, the President, upon his election in January 2015 quickly forgot that he sat on the executive throne by virtue of being a ‘common candidate’ of the Opposition and then tried to wrest control of the Sri Lanka Freedom Party (SLFP) whose loyal faithful felt he had betrayed the party for his personal aggrandizement. The Prime Minister forgot there was an Executive President and ran the Government as if such an office did not exist.

As the years rolled on, people; bureaucrats, political appointees, even ministers started playing one (President) against the other (PM) building up mutual mistrust and resentment between the two. Messages were sent from the Presidential Secretariat to Temple Trees not to be unmindful as to who the numero uno was, and to treat him with due courtesy. Whether these early messages were in fact communicated is not known, but if they were, they seem to have been dismissed somewhat contemptuously. Meanwhile, the ministerial cabal around the President kept harping on a break with the PM”s party. Policy-wise, too the two parties remained like chalk and cheese.

The question now is whether this week’s announcement that the National Government still exists is a mere façade for self-preservation. The President, having tried – and tried, to sack his Prime Minister has resigned himself to his fate best described in a pithy double-meaning local idiom; “banda bere gahanna wei”, or he who ties the drum round his waist will have to play it himself.

The two main parties in the National Government stuck firmly to their confirmed economic policies. The President is still in the mode of the Socialist-style centralised economy where the commanding heights, as they say, are in the hands of the state. On the other hand, the PM’s lot want to dismantle the public sector apparatus, which, not entirely wrongly, they feel is too obese and are for a liberalised slim-fit private sector driven economy. The PPP (Public-Private Partnership) initiative, if it was meant to be that common ground between the two ruling parties in what earlier was referred to as a mixed-economy, is still not to be seen.

The February 10 local election results have caused a rupture that was waiting to happen within the National Government at the Centre even though the eventual winners from that poll are still to be named in the bigger councils, 14 days after. It has, no doubt, been a wake-up call for both parties in the coalition. The backbenchers are the most vociferous. They say they left economic policy to those in the corridors of power in Colombo, a small group and now face the consequences.

It was said somewhat sarcastically, that the cabal that ran the economic policies of the previous Administration knew nothing of economic management. The cabal that runs the economic policies of this Administration knew everything. Whether it is mega projects and negotiations on FTAs, or how to control the price of a ‘buth packet’ (rice pack), they know it all.

The backbencher MPs now want a voice in directing the economic policies of the nation. They want a course correction by the Government. Their priorities are not the hitherto policies of stabilizing the external debt, largely though not entirely, created by the previous Administration, nor chasing Foreign Direct Investments (FDIs), but the that the focus must shift to the economic necessities of the common man and woman. Essentially, this means more handouts. Who picks the tab is anyone’s guess.

This approach will therefore, be looking at the future of the country through an electoral prism and for short-term benefits. The aim, objective and target will be winning the 2020 elections and thus pushing further back, good economic order. Populist sentiment will prevail over sound economics. Indebtedness will be of academic interest as practicality for a win-at-any-cost in 2020 will be on the political agenda.

A remark by the President this week quoted by our Political Editor today says it all. At the high-level meeting of the NEC (National Economic Council) which he presides over, he said he was not worried about international finance – only about the buth packet.

The President has also asked ‘his’ ministers, meaning the SLFP ministers to bear with him for just another month in the National Government. What does he mean by this? We know he is still trying to reach out to his breakaway faction which did him in, after he did them in. ‘My enemy’s enemy is my friend’, seems to be his approach. So, does the political uncertainty continue for another month? Presumably, the political leaders get their kicks from keeping the nation guessing, whatever the cost may be.

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