The Government’s plans for reviving the economy show signs of working out for the time being. The long awaited International Monetary Fund (IMF) loan has been granted. This would enable the Government to access other loans to tide over the current economic difficulties. The challenge will be to ensure that both the old loans and new ones will be repayable. Towards this end, the Government has begun to implement its new tax policy which increases the tax burden significantly on income earners who can barely make ends meet even without the taxes in the aftermath of the rise in price levels.
The Government is also giving signals that it plans to downsize the Government bureaucracy and loss making State enterprises. These are reforms that may be necessary to balance the Budget, but they are not likely to gain the Government the favour of the affected people. The World Bank has warned that many are at risk of falling back into poverty, with 40% of the population living on less than Rs. 225 per person per day.
Social contract arguments, brought into the political discourse in the 17 century by John Locke who is known as the father of modern political thought typically posit that individuals have consented, either explicitly or tacitly, to surrender some of their freedoms and to submit to the authority of the ruler or magistrate (or to the decision of a majority), in exchange for protection of their remaining rights. The social contract in Sri Lanka, in which the people expected the Government to develop the country and to provide them with a reasonable standard of living, was breached last year (2022).
Regain legitimacy
The situation today in Sri Lanka is that a President elected by the Parliament (and by the same ruling Party) (Ranil Wickremesinghe), and not by the people, replaced the President who resigned (Gotabaya Rajapaksa). The current President who was not elected by the people suffers from a legitimacy deficit, which he compensates for by utilising the security forces to ensure that protests are restricted. In addition, the President and his Government have entered into an agreement with the IMF to receive loans, but this has been at the cost of high taxes and job cuts imposed on the people. "No taxation without representation" is a political slogan that originated in the American Revolution.
Sri Lankans today are burdened by the taxes of a Government that many consider to be illegitimate since the previous Government breached the social contract. The problem for the Government is that the economic policies required to stabilise the economy are not popular ones. They are also politically difficult ones. The costs of this economic restructuring to make the country financially viable is falling heavily, if not disproportionately, on those who are in the middle class and below. Fixed income earners are particularly affected as they bear a double burden in being taxed at higher levels at a time when the cost of living has soared. Unlike those in the business sector and independent professionals who can pass on cost increases to their clients, those with fixed incomes find it impossible to make ends meet.
The economic hardships experienced by the people have led to the mobilisation of traditional trade unions and professionals’ organisations. They are all up in arms against the Government’s income generation at their expense. The conditions laid down by the IMF will be unpalatable based on Sri Lanka’s track records on earlier bailouts, with the last one being jettisoned without completing it in 2019. The token strike was successful in that it evoked a conciliatory response from the Government. A sympathetic review of the tax policy and making it more acceptable to the people will help to make inroads into the electorate. There is a need to reassess recent tax policies in view of the current sufferings experienced by low and middle income earners.
Temporary respite
So far, the Government has been unyielding in the face of public discontent. Public protests have been suppressed. Protest leaders have been arrested and price and tax hikes have gone ahead as planned. The Government has been justifying the rigid positions it has been taking on the basis of its prioritisation of economic recovery for which both political stability and financial resources are necessary. However, by refusing to heed public opinion, the Government has been putting itself on a course of confrontation with organised forces, be they trade unions or political parties. Exacerbating the political crisis is the Government’s continuing refusal to hold the Local Government (LG) election as scheduled on two occasions now by the Election Commission (EC) and demanded by the law. The Government’s stance is even in contradiction to the Supreme Court’s directives that the Government should release the financial resources necessary for the purpose leading to an ever-widening opposition to it.
The Government’s determination to thwart the LG election appears to stem from its pragmatic concerns regarding its ability to fare well at them. Public opinion polls show the Government parties obtaining much lower support than the Opposition parties. Except for the President, the rest of the Government consists of the same political parties and Government members that faced the wrath of the people’s movement a year ago and had to resign in ignominy.
The President’s options
The Government’s response to the pressures it is under has been to repress the protest movement through Police action that is especially intolerant of street protests. It has also put pressure on State institutions to conform to its will regardless of the law. The decisions of the EC to set dates for the LG election have been disregarded once and the election now appears to have to be postponed yet again. The Government is also defying summons upon its Ministers (Public Security Minister Tiran Alles) by the Human Rights Commission which has been acting independently to hold the Government to account to the best extent it can.
The Government’s refusal to abide by the judicial decision not to block financial resources for election purposes is a blow to the rule of law that will be to the long term detriment of the country. These are all negative trends that are recipes for future strife and lawlessness. These would have long term and unexpected implications not to the best for the development of the country or its values. As an experienced political leader, a student of international politics and a very well read one at that, the President would be aware of the dangers posed by precipitating a clash involving the three branches of Government.
A confrontation with the Judiciary, or a negation of its decisions, would erode the confidence in the entire legal system. It would damage the confidence of investors and the international community alike in the stability of the polity and its commitment to the rule of law. The public exhortations of the United States Ambassador (Julie Chung) with regard to the need to conduct the LG election would have driven this point home.Therefore, the pressures coming from both the ground level in the country and the international community may push the Government in the direction of elections and to seek a mandate from the people. Strengthening the legitimacy of the Government to govern effectively and to engage in problem solving in the national interest require an electoral mandate.
(The writer is the Executive Director of the National Peace Council)
The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication.