21st January 2001

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Economic mess? turn the searchlight inwards

By Victor Ivan

The government is attempting to put the economy on the right track by taking extreme measures that have shot up prices and heaped an unbearable burden on the poor people.

These hostile measures have severely hit not only those who draw low incomes but also those who belong to the high income bracket.

Anticipating protests over its harsh measures, the government was apparently also prepared with counter-measures. The police action at a JVP demonstration against the rising cost of living was a warning to the public that there was little room for protest by political parties. We must also mention here that the fisher folk from Negombo to Kalpitiya came in their thousands to protest against the rising fuel prices and successfully staged a march, forcing the authorities to initiate a dialogue with them.

But what was significant in the JVP protest rally was trade union activists joining hands with them. It is generally known that the JVP strength in the trade union movement was not so visible or strong. Yet the participation of a large number of workers in the rally shows the extent of the growing discontent among the urban working class.

The UNP has also begun to smell the discontent in the air. It has been compelled to give up its mediocre protest or virtual inaction and launch a vigorous campaign.

Thus on the one hand we see a government determined to crush any protest staged by political opponents and on the other we see the opposition's resolve to go ahead with protests. In other words the atmosphere is heating up for a possible confrontation.

The government is trying to show that the liquidity crisis was caused by external factors which it cannot control. But it is not willing to admit that certain internal factors have also contributed to the crisis. The main internal factor is the mismanagement. Even donor countries voiced concern over it at the recent Development Forum meeting in Paris.

In view of a pledge it made at the elections in 1994, the government artificially brought down the price of bread ignoring its adverse impact on the paddy cultivation. An additional expense of Rs. 12,500 million for two years had to be incurred as a result of this move. According to the observations of the World Bank, as much as 44 per cent of Samurdhi relief goes not to the poorest who deserve it but to party people who are in higher income bracket. While the expenditure on Samurdhi from 1995 to 1999 had been Rs. 38,358 million, as much as Rs. 16,876 million has been spent on maintaining the party people, at village level, it is alleged.

It is also reported that state institutions, especially ministries, have not settled their electricity bills to the tune of Rs. 6,000 million. To cover the losses caused largely by these dues, the Ceylon Electricity Board has decided to increase the rates.

Isn't it a case of people being asked to pay for the sins of the government?

To beef up the depleting foreign reserves, the government is said to have resorted to foreign borrowings at high interest rates. But surprisingly, it shows little interest in pressurising the Emirates Airlines, which manages the national carrier, to collect US $ 25 million as part of the sales deal.

To allow Prime Minister Ratnasiri Wicremanayake to occupy Temple Trees, the President shifted to the Janadhipathi Mandiraya in Fort, creating not only a heap of security concerns but also economic problems. Ships outside the Colombo harbour have reportedly been asked to berth at seas near Panadura. It is said that as a result the income of the Colombo harbour had dropped by 30 per cent or by Rs. 450 million.

It is also alleged that the loss incurred by the country due to the French locomotive transaction is colossal. Besides allegations that a VVIP influenced the tender board decision to buy the locomotives from the French firm inspite of advise from the then Treasury Secretary B.C. Perera and Transport Secretary Sisil Kumarasinghe, the deal went ahead and as a result an additional Rs. 500 million was incurred on one unit.

The PA came to office in- 1994 on the pledge that the executive presidency created by J.R. Jayewardene would be abolished. Not only did he introduce a new system that robbed parliament of its supremacy but also built a luxurious parliamentary complex at a cost of Rs. 900 million. But what it is doing today is perpetuating the system as evident in its effort to build a new Presidential complex in Madiwela, Kotte. Perhaps because the president is superior to the parliament, the expenditure to be incurred on this superior complex is going to be around Rs. 2500 million, it is alleged. Does not all this mean that the existing problems cannot be solved through a change of government alone? What is needed is transparency in governance.

The writer is the Editor of Ravaya.

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