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Academia to SL’s economic rescue and revival

14 Jun 2022

  • Academics propose across-the-board measures to establish economic and political stability 
BY Sumudu Chamara According to experts who have been vocal about the prevailing crises, the current situation is mainly a result of both political and economic mismanagement, and therefore, addressing both these aspects is crucial. While some steps are being taken by the authorities to bring some kind of stability to the economy, the people have been demanding measures to ensure political stability as well. Last week, the foremost trade union representing Sri Lanka’s academic community, the Federation of University Teachers’ Associations (FUTA), put forward proposals for economic and political stability in Sri Lanka. The proposals, which consist mainly of measures to address the economic and political crises, focus on rebuilding the economy through immediate, short-, medium-, and long-term steps. Economic revival  With regard to reviving the economy, the FUTA said it recognises that the current foreign exchange crisis is causing severe difficulties for the population and has placed considerable stress on the banking sector. Adding that essential goods such as food and medicines are running out and that it is likely that Sri Lanka will soon face severe food shortages, the FUTA said that therefore, addressing the problem of financing, including bridge financing, is the urgent responsibility of the Government. It however urged the Government to ensure that any conditions that the Government accepts from lenders, including the International Monetary Fund (IMF), be people-centric.  “The difficulties that people are facing should not be further exacerbated through ill-considered austerity measures,” it stressed. The FUTA put forward a number of recommendations concerning various aspects of income generation, expenditure, and ensuring food security and social safety, among others. Under this, the FUTA said that as Sri Lanka is expected to enter into a new IMF agreement, and that too with little bargaining power on Sri Lanka’s side, it is important to have a clear understanding of how it would impact the wellbeing of the people. It said that IMF loan conditions must be transparent, and that the people must be made aware of them.  “These conditions should not further deepen the economic burden and suffering of economically and socially deprived communities, which may currently include sections of the middle class. Furthermore, the process should not accumulate more debt and create severe debt traps in the future,” the FUTA said. It also noted that the IMF policies should not, in any way, undermine the people’s sovereignty and their right to their land, occupations, health, education, and access to resources in the real sense of the term, and force the Government to sell off State assets and natural resources including land. In the case of IMF loans and borrowing from other sources, the FUTA noted, a transparent performance auditing system should be made public. FUTA also pointed out the importance of taking measures to ensure social safety in the current economic situation. In this regard, it said: “In view of the fiscal discipline that is expected along with IMF conditionality, a strong and secure safety net that protects vulnerable groups, including the poor, the near-poor, children, and the elderly, is essential. Where possible, universal social welfare measures – a legacy of our progressive history of human development – should be enhanced and/or created. The existing Samurdhi programme should be restructured to rectify problems of leakage and undercoverage, especially the latter. Identifying the poor and near-poor should be based on the most recent data that provides information on their geographical and sectoral distribution. The updated Samurdhi programme should not be used as an instrument of patronage.” In addition, ensuring food security for all citizens was highlighted in the FUTA’s proposals, and it stressed that no decision or policy should adversely affect this principle, and that agricultural policies that are consistent with this principle should be followed. Furthermore, ensuring Government spending is allocated to the health and education sectors, at least at the current levels, was noted by the FUTA. The FUTA identified the elimination of corruption, patronage, and cronyism as an important element of Sri Lanka’s economic revival. It said that independent anti-corruption mechanisms should be established and that it should begin by revealing to the public the extent to which corruption has contributed to the economic crisis. It also noted the importance of ensuring that wrongdoers are prosecuted.  Establishing a zero-tolerance policy on corruption in any of its forms, at all levels, and ensuring that it is implemented, abolishing any form of special Government licences, as they promote patronage and corruption; and streamlining and professionalising the public sector, including by increasing accountability and productivity and by ensuring a culture of personal and institutional integrity, are among the other recommendations. With regard to taxation and expenditure, the FUTA put forward several proposals to streamline Sri Lanka’s tax revenue. It noted that indirect taxes should not be increased, while the tax base and the rates of direct taxes should be augmented, making transparency and accountability in spending the tax-based income a key requirement. What is required, therefore, is a tax commission that would create a robust tax policy for the country, which increases revenue to the Government while unburdening low-income categories from additional indirect taxes, according to the FUTA. The FUTA’s recommendations in this regard included implementing a viable pay-as-you-earn taxation system, implementing a progressive wealth tax, reducing Government expenditure on national defence, increasing expenditure on food security, health, education, and other basic needs, and reducing wasteful and ad hoc expenditure through open and accountable processes. Moreover, the FUTA has paid attention to securing workers’ rights and protecting the natural environment. Under this, it said that steps need to be taken to secure and implement labour rights for all categories of workers, both in the formal and informal sectors, ensure that all workers are entitled to and receive a living wage, provide pensions and/or universal retirement benefits for all workers, develop a more holistic understanding of sustainable development, and since neoliberal policies, dispossession, and extraction in Sri Lanka have accelerated the destruction of the environment, recognising that while global warming and environmental pollution affects everyone, the poor and the vulnerable are at the greatest risk. Uplifting the agriculture sector towards food and nutrition security, empowering livelihoods, import substitution, and enhancing the industrial sector for exports, are among the other matters discussed by the FUTA. To achieve it, the FUTA recommended mobilising the agricultural sector to increase production, supporting home gardening within households, addressing the food security needs of the country, enhancing rural livelihoods, stopping the import of locally available agricultural products, addressing the fertiliser crisis, and enhancing support to farmers and fishers. Also while recommending the promotion of locally oriented farming and fisheries, deploying new technology, and creating access to global markets where possible, the FUTA stated that interventions should be based on short- and long-term planning and strong mobilising programmes. It further recommended removing the existing barriers to the industrial sector and establishing new export industries, particularly in value-added industries that are using available raw materials, while also introducing an appropriate import substitution policy and relevant administrative mechanisms.  Supporting sectors that can bring in foreign earnings was another recommendation. Political stability Moreover, the FUTA identified addressing the prevailing political crisis as another step that requires attention. Noting that the economic crisis was precipitated by the incompetence and authoritarianism that pervades governance, the FUTA said: “A governing class and system disconnected from the people, unresponsive to their needs and distanced from global and local developments, are now unable to pay loans and attract sufficient foreign currency in order to ensure the supply of essential goods for the people. In response to the protests, President Gotabaya Rajapaksa enforced a state of emergency and there was violence unleashed on peaceful protestors by the regime on 9 May. The regime can no longer claim any legitimacy to govern.  “Therefore, it is of the utmost urgency that an interim governance arrangement is formulated that includes representation from those protesting. The appointment of United National Party (UNP) Leader and National List MP Ranil Wickremesinghe as the Prime Minister by the President is yet another instance of the political sleight of hand against which the people are protesting. It remains undemocratic and may undermine the democratising trajectory of the country, leading to repeated and deeper political crises in the future.” In its recommendations, the FUTA said that the Government must acknowledge its loss of legitimacy, and that a credible interim Government be established while the President should also immediately resign. It also said that the Premier working on the basis of support from the Sri Lanka Podujana Peramuna (SLPP) is not a viable option.  Abolishing the Executive Presidency and reverting to a Parliamentary system of governance were also recommended. The FUTA added: “Given that the Government has lost legitimacy, it is important that a mechanism is formulated to enable a people’s council with which the elected officials will be able to consult in planning, policy formulation, and implementation. It must act as a permanent or semi-permanent body that critically interrogates policies and aids and provides feedback to political bodies on economic and political policies and the implementation of those policies. Such a process is essential in the immediate term; but, it must also be considered for the longer term.” Ensuring the freedom of expression and association, including the free functioning of social media, is also among the FUTA’s recommendations. With regard to constitutional reforms, the FUTA said: “Introduce economic, social, and cultural rights – in particular, the right to food security, equal access to the highest attainable health care, holistic education for all, and the right to an adequate standard of living – through the 21st Amendment to the Constitution. In formulating the 21st Amendment to the Constitution, bring back strengthened formulations of the positive features of the 19th Amendment to the Constitution. The Constitutional Council must be re-established with a majority of citizens over Members of Parliament (MPs). All independent commissions should be immediately reconstituted. Re-establish the rule of law and an independent Judiciary, ensuring redress for past human rights violations and other proven grievances, after due process is followed. The 21st Amendment to the Constitution must also facilitate the independent functioning of the Attorney General’s Department and the Police.” Recommending to address core ideological issues, and to ensure that majoritarianism and special privileges are replaced by equal citizenship and the equal participation of all communities, the FUTA said: “Ensure that mechanisms are in place to prevent the marginalisation of communities and individuals at all levels on the basis of ethnicity, religion, caste, gender, gender identity, disability, and sexual orientation. An open public dialogue which engages with all communities should form the basis of a new national consensus. Do away with the excessive power held by line ministries by strengthening power-sharing mechanisms that enable the greater participation of people in governance. This should include devolving powers to the regions, provinces, and Local Government (LG) bodies, so that minorities, communities on the peripheries, and historically marginalised people have a greater say over social, economic, and political issues that affect them.” The FUTA further said that in taking forward these recommendations, it will form its own expert committees, and will engage with trade unions, the legal fraternity, the administrative service unions, LG, and other bodies working closely with the people in order to ensure that the academic expertise of the FUTA membership is mobilised through an inclusive, consultative, and community-friendly process. The FUTA will also mobilise its network of sister unions across the country to enable close engagement with the communities at the regional level.  While some of the points raised by the FUTA are currently discussed, there are many more steps to be taken to bring the prevailing crises to an end. Many experts have already come forward to support the Government, and the Government should consider engaging more experts in its efforts to restore political and economic stability.  


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