2022: A new hope

Even in the most desperate of times, there is always hope for a better day. As 2022 dawns, it is no secret that Sri Lanka is facing an unprecedented economic crisis. However, there is still hope for recovery, and avoiding a catastrophic economic meltdown if the correct decisions are taken, even at this late hour, and there is monumental course correction. The need of the moment is leadership, and through that leadership a concerted and unified effort by all the peoples of Sri Lanka who wish to find a way out of this abyss.

There is plenty of blame to go around regarding the current state of affairs. But this is not the time for blame games. Whatever the effects of the global pandemic, the current crisis in Sri Lanka is purely self-inflicted. While introspection, retrospection and accountability are important, the task at hand is to face the imminent crisis that is unfolding. 

In very simple terms, Sri Lanka has been living beyond its means. For decades, administration after administration has expanded the State sector for political gain, popularity and personal imperatives. State sector spending which should ideally be limited to the needs of civil administration, essential services and the social safety nets such as education and healthcare have by now penetrated every aspect of life and economic sectors. The situation is so dire that even an accurate count of the exact number of State sector enterprises and institutions in the country is unavailable. By conservative counts, there are at least 400 such State-owned enterprises and State-dependent institutions. A majority of these are making colossal losses. Adding further to the economic crisis they are stifling private sector initiatives and opportunities for job creation.

Now that Sri Lanka is at the cusp of a monumental economic collapse, there is a moment of hope that these unsustainable expenses to maintain the State and its numerous institutions need urgent reform. It is the moment that leaders can finally use to convince the general public of the necessity of immediate action, which may have otherwise been politically unfavourable. It should dawn on all that the answer to the current problems is to curtail expenditure and to do so rapidly. The ratio of public servants to the workforce in Sri Lanka remains one of the highest in Asia. It is imperative that this be reversed. Not only should there be an immediate freeze in hiring, unless into essential services, but the Government should also take explicit policy decisions that would encourage private-sector job creation.

There is no better time to address State sector reform. Failing giants such as the Ceylon Electricity Board, Ceylon Petroleum Corporation, SriLankan Airlines, etc. need to be restructured with immediate effect. The countless number of State-run corporations, boards and authorities dabbling in numerous businesses that could very well be handled by the private sector should be privatised. These have for too long stifled private entrepreneurship, innovation, competition and caused a drain on public finances, while providing sub-par service to the public. 

The Government can lead by example as Sri Lanka goes into austerity. The ridiculously high number of ministries can be reduced, the number of ministers and their staff curtailed and costs of maintaining this bloated bureaucracy brought down. Government leaders should set an example by putting their house in order and cutting costs. Trips abroad in private planes, escapades to watch motor raising and the apparent inability for ministers to travel on economy class will only create a backlash when the general public are called on to make sacrifices in the new year. 

The current Government has an unprecedented two-thirds majority in parliament, the President has centralised executive power granted through the 20th amendment and there is no significant national level election for at least three more years. This Government therefore has all the time and space necessary to make the hard decisions that are crucial for saving the Sri Lankan economy. Whatever political costs there may be in the short term, these prudent actions will be justified in the medium to long term through positive results. It only takes courage and foresight to make these decisions. Here’s to hoping that the leaders of Sri Lanka will have them both in the new year.