What’s missing from the Prime Minister’s Economic Statement

“We know that these changes will not be easy, nor will they be popular with everyone. There are some that have a stake in the current approach. But the stakes for Sri Lanka are too high not to take these necessary steps and to do so quickly. This new system can be in place before the end of this year and then it will be implementation, implementation, implementation” - speech by then Prime Minister Ranil Wickremesinghe at the Tokyo Donor Conference in June 2003.

I was hoping to see language similar to the quotation above in the Prime Minister’s Second Economic Statement to Parliament.  

But sadly, the 2016 statement falls short on ‘bankable language’ that would enable decision-making by investors, local and foreign, and others whose actions are needed to realise the stated grand objectives.  Most importantly, the speech failed to recognise the critical problem afflicting economic policy in this Government: implementation.  

The problem can be illustrated using two examples from the Prime Minister’s 27 October Economic Statement.

Hambantota

This was new and tangible. Many newspapers led with this story. As did the Government’s opponents.  The former President has already started complaining loudly against the announced policy on Hambantota. Here is what the Prime Minister said on what would be done with the megaprojects in Hambantota: 

Most of us thought that our next generations would have to pay the debts incurred for the Hambantota Port and Mattala Airport. Now, we have entered into a debt to equity swap. Chinese investors have made significant commitments to invest equity in the debt-strapped Hambantota Port and the Mattala Airport as PPP ventures.  

The Government plans to receive sufficient funds to offset these debts. You can now be assured that your children will not have to pay these debts but can reap the benefits of a dynamic, international air-sea hub.

Here the language is not in the future tense: “We have entered into a debt to equity swap”; “Chinese investors have made commitments.”  

Even better would have been specifics on the public-private partnerships (PPPs). Are terminals or parts of the port being converted into PPPs or is it the whole port plus land for an industrial zone? What are the terms and when will the deal be inked? Will this be an extension of the landlord port model that is emerging in Colombo? What will be the role of the Sri Lanka Port Authority? Will there be a regulator?  

Or at least clarity on implementation.  An international air-sea hub requires coordination. The airport comes under one Minister, the port under another and the industrial zone under someone else.  How will these be coordinated? Does this not seem like an assignment for a project minister?  

Agriculture and fisheries

Here is what the Prime Minister’s economic statement says on the subject of agriculture and fisheries:

Modernizing agriculture and fisheries

It takes over a decade to modernise the sectors of agriculture and fisheries. We plan to establish a Rural Modernization Board, which will include all stakeholders. Fisheries and Poultry will be the first categories to be promoted for exports.

The difficulties faced in the tea and rubber industry will be reviewed. The Government will restructure the plantations sector to invite new capital and eliminate inefficiency.

National agricultural marketing authority

Marketing of agricultural products is the most important link between the producer and consumers. We will establish a fully empowered National Agricultural Marketing Authority to coordinate the marketing of agricultural products, and develop existing markets, transport and storage facilities. In addition, new infrastructure facilities such as cool storage will be added at a divisional and regional level, for preservation of food before or after purchase. Providing large storage facilities for purchasing and storage during the harvesting season is an essential prerequisite for implementing a guaranteed purchase price. It is planned to create 250 ‘polas’, farmer markets islandwide for farmers to bring their produce to local markets.

It’s bad enough to start with a sentence which says that the job cannot be done. Here is a Government without a majority, dependent on managing the relationship with a President whose priority appears to be rebuilding his party and needing the votes of the faction of the SLFP loyal to the President. The UNP must deliver results in agriculture if it is to remedy its chronic inability to win enough rural votes.  The relevant timeframe is between now and 2020.  To achieve results within this timeframe, policy statements must be couched in concrete terms. Almost two years after the main election was won, it’s odd to see the continued use of future-tense-laden language more appropriate for an election manifesto. What is truly sad is that the raw material is available. In June 2016, the Government signed a massive $ 125 million ‘Agricultural Sector Modernization Project’ that will run from this year to 2021. The funds and the responsibilities are divided between the Ministry of Agriculture, headed by a loyalist of the President, and the Ministry of Primary Industries, which has industrialist Daya Gamage at the helm.

The Agricultural Modernization Project fits well with the Prime Minister’s big thoughts. The project seeks to provide capital to smallholders and SMEs through matching funds and bank guarantees so that they can more effectively participate in export value chains. There is explicit mention of support for investments in cold chains (cool storage), a topic mentioned in the statement as well as the manifesto.   

Simply talking about the elements of this well conceptualised project with some timeframes would have given those in the agriculture space hope that the Prime Minister and his team had made the transition from thinking big thoughts and were on the ground actually implementing policy. The absence of easily accessible and highly relevant information from an operational project led by a party stalwart raises doubts about the quality of internal coordination within the UNP.

Hidden away toward the end of the statement is mention of a booklet containing the details which will be published soon. Is this enough of an escape clause?

Implementation (and communication)

Implementation and communication are missing from the statement and the actual practice of the Government. The talk in Tokyo explicitly recognised the importance of the former. “Implementation, implementation, implementation” was what the Prime Minister then said. The importance of communication is implicitly recognised in the opening line of the Tokyo quotation: “We know that these changes will not be easy, nor will they be popular with everyone.”  How does one overcome resistance other than through an effective communication strategy? 

Getting close to the midpoint of this Government’s term, one wishes the Prime Minister would put into practice what he talked about in Tokyo 13 years ago. As he said, the stakes were high then. That holds true even today.