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President Ranil Wickremesinghe must ensure law and order, political stability, reduce economic hardships and revive the economy. These are monumental challenges.

Can President Wickremesinghe’s government usher in a period of law and order and political stability, reduce the severe hardships of the people and revive the economy?

Expectation

The new President, Prime Minister and the Cabinet will hopefully usher in a period of political calm that would enable the government to reduce the economic difficulties and hardships of the people and set in motion a process of economic recovery. These are however huge challenges for a government that does not enjoy much popularity and an economy which is in a deep multidimensional crisis.

Stability

A universally accepted fact is that political stability is a pre-condition for economic stability and development. This is more so in the context of the recent people’s struggle, the resignation of Prime Minister Mahinda Rajapaksa and the fleeing of President Gotabaya Rajapaksa from the country.

The people’s struggle or aragalaya also demanded that Ranil Wickremesinghe quit politics. Will this movement now accept his election as President constitutionally by a large majority in parliament? Will the protestors at least not organise protests and strikes that cripple the economy and the life and work of the people? No.

The Galle Face aragalaya is demanding that Ranil too “Go home.” The consequences of these for law and order and political stability are unpredictable.

Hampering economy

Protests, strikes and violence would hamper the functioning of the economy and obtaining of foreign assistance essential to resolve the country’s economic hardships.

Choice of parliament

The election of President Wickremesinghe was not a choice of the people. It was the choice of a majority of the 225 members of Parliament. Nevertheless, it was a democratic and constitutional appointment: A clear and convincing victory obtaining 134 votes to a mere 82.Yet, it was not the people’s choice.

National interest

At this time of an unprecedented severe economic crisis, it is in the national interest to cooperate and assist the government, rather than oppose and hamper its measures for economic revival. Impeding policies that resolve the economic problems facing the country would worsen the crisis and threaten livelihoods of people.

Consensus

Although there is a broad consensus that the national need is an all-party interim government to implement an agreed economic programme, there is no prospect of implementing such a programme.

Cabinet

The Cabinet must at least be based on merit and capability, not friendships, loyalties and personal allegiance. Those found to be corrupt should not be given portfolios. Will we have such a Cabinet?

Political stability

The recent political turmoil must subside to enable the government to steer the sinking ship to safer waters.  This too is unlikely. The aragalaya has recommenced its protests. Its peaceful actions are likely to lead to violence sooner or later. The consequent political unrest would deter foreign assistance.

Economic recovery

The process of economic recovery would have three stages. First, the country has to be retrieved of its current scarcities and difficulties as early as possible. There is no prospect of resolving these scarcities by our own capacities. Immediate foreign assistance is needed to meet our essential import requirements and get the economy functioning.

Foreign assistance

Assistance from friendly countries like India, China, Japan, the US, and European countries, as well as assistance from international organisations is vital. We have obtained a certain measure of such assistance, especially from India, that has prevented a horrendous situation in the country. We need further assistance to enable the country to survive and the economy to function. Whether adequate amounts of such financial aid would be forthcoming is uncertain yet.

Good news

The Indian foreign minister has said India will continue to help. Furthermore,on Wednesday, the International Monetary Fund (IMF) Managing Director KristalinaGeorgieva told Nikkei Asia in Tokyo, that the IMF hopes to complete rescue talks with Sri Lanka “as quickly as possible.” She said the fund was “very deeply concerned about the well-being of the people in Sri Lanka,” which has been gripped by severe shortages of fuel, food and other essentials after its foreign reserves dried up. She added that the IMF will assist Sri Lanka with emergency aid quickly. This is indeed good news.

International response

There is also an international alert that countries, international organisations and international financial institutions should not confine themselves to humanitarian aid for Sri Lanka and that they should extend financial assistance to rescue the country’s economy.Hopefully, such aid that is immediately needed to overcome the severe shortage of essentials will arrive speedily.

Second Stage

The second stage is one where the President expects the formation of an aid consortium of friendly countries. Such an aid consortium assisted the country during the 1977 regime. If this is realised, it could enhance the country’s economic growth. However, unlike in 1977, current global economic conditions are not favourable.

Third stage

The third stage is to obtain an Extended Fund Facility (EFF) from the IMF to stabilise and develop the economy. The long term viability of the Sri Lankan economy and its growth is dependent on a wide range of economic reforms that would enable the economy to operate more efficiently. This is very much dependent on the country’s entering into an EFF programme with the IMF that would stabilise the country’s fiscal and monetary situation and enable the economy to revive.It is expected that the IMF programme will be in place in three to four months and the country would take the first steps towards economic stabilisation and growth.

Unpopular

The adoption of the reforms required by the IMF will not be popular or politically palatable. Nevertheless, those reforms are the ones that will enable the country to get on its feet by increased production and exports and an improvement in the balance of payments.

Conclusion

The severe economic conditions in the country require a united and concerted national effort. Although there is a broad consensus that an all-party interim government should be formed to implement an agreed economic programme, implementing such a proposal is politically unlikely.

This inability will weaken international confidence in the country and deter international financial assistance so crucial for the country’s survival. Law and order too are vital for economic revival.

In as much as the country’s political situation and behavior are stumbling blocks for economic revival, the worsening of the economic conditions could lead to political chaos.