Change the policies; not only the man

Dr. P.B. Jayasundera, Secretary to the President, recently tendered his resignation and it has been verbally accepted. The senior official was coming under heavy fire from within the Government for the handling of the country’s economy. The fact that the Secretary to the President was in fact driving economic policy, is an aberration and a sign of the dysfunctionality of the current administration. 

It is neither the expectation of that office nor the responsibility. A vast majority of members of the current Government are now expecting things to change after the resignation of Dr. PBJ. However, if there are no drastic course corrections and policy changes, this is simply wishful thinking. Changing any number of individuals without changing the disastrous policies that have brought Sri Lanka to the brink of ruin is simply unrealistic.

Dr. PBJ is better known as the secretary to the treasury from 2005 to 2015 during the presidency of Mahinda Rajapaksa. He is credited with managing the economy during what was a boom time, after the end of the ethnic conflict. International lenders were willing to bet on Sri Lanka as a potential high growth economy and as a result there was enough money to be borrowed in the international markets. These debts, accumulated through the years and added on by successive administrations, have now become untenable. 

To the credit of Dr. PBJ, some of this debt was used wisely to build infrastructure which has no doubt contributed to the national economy. The talent many attribute to Dr. PBJ is to cater to both the whims and fancies of his political masters while also creating some economic growth opportunities. The investments made in the highways and the energy sectors are most definitely commendable. The Southern Expressway for example has generated enormous economic activity and contributed to the growth. So has the construction of the Norochcholai Coal Power Plant which has significantly reduced the dependency on hydroelectricity and until recently ensured continuous energy supply to the national grid. 

However, it was under the economic guidance of Dr. PBJ that colossal wastes such as the Mattala Airport, dubbed the most deserted international airport, the $ 100 million Lotus Tower, which is only good for occasional lights shows and many other such white elephants were also built. 

During the previous Rajapaksa administration, the government sector expanded exponentially, from around 800,000 persons to nearly 1.4 million. Inability of Dr. PBJ to advise his political masters on the dangers of such increasing expenditure should not be underestimated. Even during his recent tenure as secretary to the president the government went ahead with granting over 75,000 state sector jobs to unemployed graduates, an inexcusable burden on the public coffers during a financial crisis. 

Dr. PBJ was called an economic hitman by some in his own camp not because he was curtailing spending but they were perturbed by his favouritism in spending for certain ministries with political patronage while curtailing spending on others. In fact, if Dr. PBJ had been an effective economic hitman in the context he is being accused and curtailed government spending he would have served the economy far better.

Dr. PBJ’s affinity towards the socialist economic school has also not served the country at a time when there is a requirement for a private sector led growth. There should have been no doubt that the policies tested and failed by Dr. N.M. Perera in the 1970s would fail even more spectacularly when the economy is far more open and dependent on international supply chains should have been a given. Yet it seems that this is exactly what Dr. PBJ tried to do during these last two years. Import restrictions and substitutions, including on fertiliser and pesticides which has now created food shortage and a crisis in the whole agriculture sector, attempts to artificially control the exchange rate and unsustainable public sector spending have all contributed to the current calamity.

While the resignation of Dr. PBJ doesn’t give a particular reason for joy or sorrow, it is imperative to note that unless there are serious course corrections and changes in policy such resignations would hardly have any effect to address the current economic calamity.