Collective Opposition statement on economic crisis welcomed

Several key Opposition parties issued a joint statement last week highlighting the immediate action that is required to address the dire economic crisis facing the country. This is a most welcomed development, especially at a time when the Government is attempting to implement a strategy of placing its head in the stand and carrying on as if everything is fine in paradise.

The statement was endorsed by several lawmakers representing the main Opposition Samagi Jana Balawegaya, the Tamil National Alliance, Sri Lanka Muslim Congress, and former Speaker Karu Jayasuriya’s National Movement for a Just Society, among others. 

The statement called for “urgent, constructive, and sustainable solutions” to the pressing situation. Conspicuous in their absence was the Janatha Vimukthi Peramuna which did not endorse the joint appeal. Despite this, it is timely that at least the main Opposition parties seem to be addressing the crisis at hand with the maturity and seriousness that is required.

Sri Lanka is facing its worst economic crisis in living memory. While there is no doubt that the global pandemic has exacerbated the situation, with falling revenue from tourism and some exports, the situation is primarily a crisis of incompetence. For example, the $ 1.6 billion shortfall in remittances that was recorded in 2021 compared to the previous year was a direct result of the misguided and politically motivated policies of holding the exchange rate of the rupee at an unrealistic rate. In the meantime, Government debt has risen sharply, and the country’s ratings have fallen to the level of being blacklisted in international credit markets. 

Since April 2020, Sri Lanka has been locked out of borrowing using International Sovereign Bonds (ISBs) in the international market. As the Opposition parties point out, repaying US dollar debt in this context means that the usable foreign reserves are down to below one month of imports – the lowest on record since independence. The ratio of interest on debt to Government revenue increased to 70% in 2020, a historical high making it amongst the highest in the world. The ratio of public debt compared to the value of Sri Lanka’s domestic production (GDP) is also the highest on record, at 120%, as highlighted in the joint statement.

The Opposition parties’ recognition that Parliament has full control of public finance, and that each Member of Parliament has a fiduciary responsibility to ensure the proper management of public finances in Sri Lanka should be seen as an opportunity by the Government to engage all concerned in addressing this crisis. Such commitments of support from Opposition parties have been rare in the past, even when addressing national crises. The signatories to the statement have called for a negotiated debt restructuring and called on the Government to “correct its policies towards a path of sustainable economic growth and debt management, while also ensuring access to essential needs and goods for the Sri Lankan economy and Its people.”

Whether the Government agrees with these proposals or not, it is indeed a positive development that these Opposition lawmakers and their parties are willing to demonstrate maturity and statesmanship during this time of crisis. It should also be a wake-up call for the Government which has mostly adopted a policy of denial and distraction during this time. In addition, the Opposition parties have also demonstrated that there are alternatives in leadership to the current predicament. It is hoped that the JVP also will present its clear policies towards addressing the economic situation, even if it has opted out of the collective call by the Opposition parties.

No number of rallies, propaganda or wishful thinking is going to get Sri Lanka or its Government out of this mess of its own creation. It is time for the Government and its leaders to engage with other political parties and formulate a collective response to this once in a generation national crisis.