After the Government secured a ‘fail’ grade from the IMF as far as the debt restructuring process was concerned following the first review, leading to the multilateral lender withholding the second tranche of the $ 2.9 billion bailout, more bad news followed last week with the International Monetary Fund’s first-ever Governance Diagnostic Assessment (GDA) handing out yet another ‘fail’ grade – this time for governance, casting a shadow over the entire economic recovery effort.
The much-awaited assessment report had singled out 16 specific ‘priority recommendations’ that the IMF underlined as requiring urgent action if the country is to make any serious headway in turning things around. The IMF’s GDA report has not minced words in making the point that there is no easy way out for any of the country’s pressing issues other than the long and painful road of comprehensive reform covering almost every aspect of the governance structure.
Pre-eminent among them is eliminating corruption vulnerabilities, most notably in public procurement and money laundering, fixing governance weaknesses including poor tax administration, prudent fiscal management, independent Central Bank governance, and financial sector oversight among other key identified areas.
Interestingly, nine out of the 16 priority recommendations come under the authority of the Ministry of Finance, and it will be interesting to see how the ministry acts on them, given that the Minister is the President and the ‘to-do’ list will require some serious political resolve. If the President leads the way in fulfilling the nine recommendations coming under his purview, no doubt the remaining seven will automatically be done.
The report is a severe indictment on the failure of the country’s political leadership to put things right despite multiple opportunities in the past two decades. It is not that the politicians who have held the fort alternatively during this period were unaware of what needed to be done and the pitfalls of not doing so, which they have averred to during election campaigns and made solemn promises, only to forget them soon after. Foremost among that lot is the current President who, despite having promised good governance back in 2015, was tainted with the Central Bank bond scam after just two months in office. The rest is history.
Therefore, it is the ultimate irony that the man who dodged cracking the whip on those who faced all sorts of allegations from corruption to murder and everything in-between back then is now being called upon a second time to do what he promised eight years ago. The only difference being that the last time it was the voters who expected him to do the needful and this time it is the IMF, the lender of last resort.
In hindsight, the IMF’s GDA appears to be a blessing in disguise as far as the people of this country are concerned, for it will force the current leadership to either fall in line or face the consequences of bankruptcy. If it were to come to that, it will once again be the people who will have to face the brunt of it and not the politicians. As far as the people are concerned, if the 16 ‘priority recommendations’ are implemented, it will solve most of the issues they have been fighting for out in the streets over the past two years.
But, as is usually the case, assessments and reports – including of presidential commissions – are anathema to the political leadership and rarely ever implemented or even discussed, and generally consigned to some library to gather dust. The multiple commission reports on the Easter Sunday attacks are a clear indication of this pathetic state of affairs. However, the IMF that has been tasked by the Government of Sri Lanka itself to conduct the GDA has been smart enough to mitigate a similar fate through its Framework for Enhanced Fund Engagement, which means disbursements could potentially be linked to performance on the implementation of its recommendations.
This situation has come about due to no other reason than scant disregard for financial discipline, constant failure to uphold the rule of law, and failure to adhere to at least the minimum governance standards. This is why foreign lenders, both bilateral and multilateral, have reserved the right to question the leaders of this country at various fora on how this country is governed. The era of lenders disbursing funds carte blanche with no questions asked is long gone. Therefore, it is to be expected that uncomfortable questions will continue to be asked for as long as this country is dependent on others for survival. That is why it is said that beggars can’t be choosers.
By the looks of it, the leadership appears to be overwhelmed by the task at hand and seems incapable of leveraging the many opportunities that have come its way in the recent past to build confidence in the country’s recovery process. In fact, it has acquired a knack of quickly turning opportunities into massive public relations disasters. An episode that beckons focus is the recent interview of the President by Deutsche Welle (DW) Television. While much has been said and written about this epic interview, the bottom line is that a golden opportunity to build confidence in the country and woo both German tourists as well as investment was squandered.
It cannot be unknown to the President that DW is not some random YouTube channel or obscure media outfit. It is in fact Germany’s national broadcaster owned by the Federal Government of Germany and is funded by the German federal tax budget. Therefore, questions put forth by the broadcaster could broadly be assumed as representative of those of the German people. For someone who has “played the media game” much longer than the interviewer by his own admission, it was an opportunity to rally support for Sri Lanka.
For instance, when the interviewer sought the President’s views on the Easter Sunday attacks as portrayed in the Channel 4 documentary, instead of dealing with the core issue, the President sought to question the credentials of the messenger, namely Channel 4. As fate would have it, a few minutes later, the same President stated that multiple foreign investigative agencies including the US FBI had come to the common conclusion that there was no external involvement in the attacks, destroying the ISIS bogey as well as justifying Channel 4’s exposure that the entire operation was a homegrown project.
Instead of ranting against Channel 4, the President could have used the opportunity to assure Germany, one of the 22 founder members of the Paris Club, that he will honour his promise of a comprehensive investigation and ensure justice for the victims that included 43 foreign tourists. In doing so, he could have reassured prospective German tourists as well as investors of Sri Lanka’s commitment to ensuring justice, which at the end of the day would have gone a long way in building much needed confidence in the country.
Further, making matters worse, the President’s puerile attempt to draw a wedge between the Cardinal and the Bishops’ Conference backfired big time when the Church set the record straight that both held the same and identical view on all aspects of the Easter attacks.
By rejecting outright the UN Human Rights Council Report on Sri Lanka and running the risk of facing the attendant consequences and also by rejecting any sort of international collaboration in the Easter attacks investigation despite promising to bring in Scotland Yard to do the needful and despite the fact that all original local Police officers probing the attacks have not only been removed from the investigation but also have been penalised in various ways, and by resorting to introducing repressive laws under the guise of various other purposes, Sri Lanka is being pushed further towards global isolation.