Forex firefights and political kerfuffles

Fresh ideas – or old, borrowed, hat?

Who does Dr. Harsha de Silva think he is? A sharp-eyed economist with bright ideas no one in their right mind dreams of? Or a socio-political savant of some sort or the other? Or he is a dullard and a humbug, with aspirations no greater than imitating his erstwhile party leader?

Did you hear what he tweeted a few days ago? “I warned @GotabayaR gov for months that #SriLanka forex crisis is real. I suggested the only way out was reprofiling the debt with @IMFNews help. They laughed! Said dollars will flow! Now what?”  

The outburst warrants – and also bears – closer inspection. 

Sri Lanka has some $ 4 billion in hand, including gold reserves. That excludes the 1.5-billion-dollar swap agreement struck with China. Debt due to borrowings in international markets and maturing for repayment just last week amounts to around one billion dollars. And more outstanding debts due to be settled in 2021 tot up to an estimated $ 2.4 billion.

This has stymied Government’s interest in further borrowing while whetting its appetite for currency swaps. There is also the state’s eternal hope of attracting those ever-elusive FDIs. 

The flavour of the times is swap with a cherry on top, though – with plans afoot to secure these to the tune of $ 1.4 b (India); 200 m (Bangladesh); the cherry on top being 800 m courtesy of an SDR released to Sri Lanka as a member state of the IMF. 

So one has to ask: how harder would it be to eat the cake and have it, by opting for a restructuring of debt... right? It’s as inevitable as a Missouri PhD turned ex-state minister saying “I told you so” in another ‘hindsight has 20:20 vision’ tweet. Of course, the minor matter of rationalising one’s fiscal policies in order to secure a 17th bailout from the big boys in the Wild West would be anathema to a paternalistic state majoring in autarky and pseudo-nationalism these days...

While the CBSL expects a further $ 700 million to flow into state coffers via export earnings and remittances from our workers overseas, forex outflows have been plugged by the regulator through a ban on the import of non-essential items. So there is a plan, man! 

With that being said, the Man with a Plan for everything he does (he says) looks increasingly authoritarian, painfully bureaucratic and out of touch with reality with a host of projects that are looking depressingly lacklustre despite their (and his) early promise.

In the forex-spare reality we occupy however, this is pushing state banks to desperate measures. In currency swaps hinted at recently, rumoured rates of -1800 and -2500 bought dollars at over 200 to the rupee today, to sell at 182 and 175 in a year’s time. So histrionics aside, the doc may have a point?

Is it thoughtful strategy or are things getting seriously out of control, as the often hysterical opposition’s tweets rather sombrely suggest this week?

To crown it all, we’ve printed a herculean Rs. 208 billion of late... now who was it who said that printing money doesn’t necessarily cause inflation? Not Harsha for sure. But then again, the ugliest thing that his critics can accuse him of is copying what his erstwhile Party Leader said upon his re-entry into Parliament. And there are those among them who would claim that such fiscal policy mantras and chronic appeals to seek an IMF bailout are all part of the UNP’s DNA – now transmuted into the SJB’s perhaps shallower gene pool.

For while there is no doubt that the former UNP was a wonder to behold in its heyday, the SJB in to which it for the most part has transmogrified is a house divided. In terms of its individual approaches to the country’s pressing problems, if not its ideology as regards the national interest? This is perhaps nowhere more evident in the SJB’s leaders’ praxis in response to the state’s vaccination drive.

On the one hand, SJB MP Eran Wickramaratne said a while ago – in the first wave of the Government’s late-to-get-to-go vaccination drive at the time – that he availed himself of the priority afforded to parliamentarians in the name of science. 

God help us, it was a relief to hear that some policymakers and shapers had hope in something more tangible than unsweetened potions and casting pots full of wishful thinking into the water!

It was a bitter pill though: to know that the state, by virtue of our political culture, had placed the well-being of an elect select coterie of people’s representatives over and above the welfare of the very people they represented.

So on the other, SJB Party and Opposition Leader Sajith Premadasa – who refused the vaccine, and paid a price for it (he and his wife contracted COVID-19) – seems to be closer to the principle of ‘people before their elected representatives’.  Only this week he decried – and not for the first time – the Government’s lack of an inoculation protocol. As well as their perhaps indefensible decision to privilege 225 MPs and an unnumbered gaggle of state apparatchiks ahead of our healthcare front-liners, security forces and essential workers in the trenches of the economy. 

To my mind, the son for a former president botched his copybook a tad by claiming that such selfishness is not the style of a Premadasa. If only he had left it at the level of human nobility, rather than paternity or patronymics! 

Such appeals to political blood – not uncommon across the political divide – are anathema to a nation that is still, on paper at least, a democratic socialist republic. As well as the repository of the world’s arguably most egalitarian religious philosophy in principle! There goes by not a day when some two-bit thinker somewhere doesn’t invoke a political clan or gubernatorial dynasty that will be the salvation of Sri Lanka, somehow. However naive the native wit of the electorate may be in their esteem, it doesn’t pre-empt these somebodies from the apotheosis of first one brother, then another, and now a new contender – although in fact, the troika has been at the helm of our state of affairs since their first day as a junta.

By dint of which they would be held responsible by a more rational polity in more logical times for the results they’ve delivered rather than the manifestos they failed to deliver – and now, more promises of the same ilk.

First, it was the thinking that only Mahinda could make Sri Lanka the miracle, marvel and wonder of Asia. 

Then the salve to paternal politics in the fresh face of battle-hardened Gotabaya, bringing visions of splendour and prosperity – to usher in a brave new age of discipline and virtue. 

And finally, when his predecessors appear to have failed, the Basilisk architect of the party that wrested the nation out of the hand of ingrates and our incompetent former coalition. 

What charisma, what courage, what chutzpah – to claim that a sole person or single vision or solitary effort would be powerfully salvific for a sinking ship of state on fire...

On the contrary, the thinking today is that it’s not so much a case as ‘sir fail’ as that of ‘systems fail’. Be propaganda as it may, the parlous condition of pretty much everything in our country today belies the pernicious thinking that we need one leader with clear farsighted vision and an iron hand in a velvet glove. Gone are the days when even the dumbest creature on the animal farm would accept the conventional wisdom of technocratic committees or stultified oligarchies muttering behind clenched fists, like mice afraid to bell the big cats...

A lot of this from the likes of another PhD – Dr. Harini Amarasuriya, the NPP’s wunderkind; who, unlike many of her parliamentary colleagues, has no political provenance or dynastic DNA but her solid education and practical insights. To wit, that the state is too entrenched in traditional paternalistic policies and has lost touch with the people – to say nothing of lost control of several battles, from the economy to the vaccination programme – while striving to retain a vestige of its power through rhetoric rather than realism.

This, she would suggest (and she’s not alone, and it’s no longer only the political opposition that’s seen the light, but also the regime’s governing partners), is why we’re insisting on a short-sighted diktat to cease and desist from applying chemical fertiliser overnight in the name of a healthy society when in truth it is only a desperate plug to stop the heavy forex flow...

QED, PhDS! What’s up, doc? Well, for starters, the dollar versus the rupee. For another, the balloon: especially as regards the forex hunt. And last but by no means least, the game... if only the likes of “yes, it’s a challenge” Keheliya Rambukwelle could bring themselves to admit it – far from the madding crowd, and the press of Cabinet Spokesmen’s media briefings.

(Journalist | Editor-at-Large of LMD | Writer WFH)