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Due diligence, way forward

26 Jun 2022

The Prime Minister last week confirmed in Parliament what the majority of people have been suspecting for some time now – the country’s economy is on the verge of “complete collapse”. He went further and warned Parliament that the country was looking at the prospect of “falling to rock-bottom” if help did not materialise in the next few weeks. He also outlined in detail the predicament facing the nation’s fuel supply with no one, leave alone lending, willing to touch the State-owned Ceylon Petroleum Corporation (CPC) even with a barge pole, which on its own is in debt to the tune of around $ 700 million. Probably unknown to the Prime Minister and his boss the President, along with the rest of the governing party members, who are yet to empathise with the public for the pain they have collectively inflicted on them, the lives of millions of people have already hit rock bottom. One has to see to believe the clamour that is taking place, most significantly by people who once proudly identified themselves as supporters of the current dispensation and who are now desperately attempting to see the back of this country. The Department of Immigration and Emigration has been overwhelmed by a tsunami of applications from people who, three years ago, did not in their wildest dreams think of leaving this country simply to put food on their table. Yet, the leaders they elected have let them down badly and given them little option but to pursue that particular course, whether they like it or not. There are others who cannot even afford the cost of obtaining a legal travel document nor the wait for one, and prefer to risk it all by braving the high seas simply to get ‘somewhere else’. The brain drain that is currently taking place is unprecedented in the history of this nation even though it has experienced such phenomena at regular intervals in the past. The post ‘Sinhala Only’ era in the late ’50s when the cream of the country’s top notch civil servants – yes ‘servants’ – were forced to seek greener pastures, then in the ’70s, when like today, acute shortages in everything drove people to seek a better life elsewhere, then in the ’80s and ’90s when the Tamil community was forced to flee the country en masse, come to mind. The result of this mass exodus meant that the best brains who did not wish to put up with what was being dished out took flight, while the B-team, which was susceptible to political manipulation, remained. It is this segment that forms the voting majority today and has consistently played the leading role in electing dud after dud more often than not, easily falling prey to political treachery time and again. It is therefore safe to assume that we have been saddled with the leftovers of six decades of continuous brain drain, the result of which has been the creation of a public service packed to the rafters with political lackeys that has become a burden to the nation slowly sucking the life out of it, a Parliament that has become the bane of the nation and indeed a beacon of failure, and a leadership that has been mediocre even at the best of times compared to our peers. One cannot help but dread the consequences of the current wave of migration, where the best we have are making a beeline to the airport.  However, all is not lost yet. It is indeed encouraging that in the midst of the greatest wave of migration ever witnessed in this country, there is another wave slowly but surely sweeping across the country where the youth, irrespective of religious or ethnic divisions, are digging in their heels to take on the establishment that has thrived on nothing but treachery to get to high places and preside over the ruination of this nation. This is the generation that has seen through the deceit and is ready to put their foot down and say enough is enough. If our current set of leaders heaved a sigh of relief that the worst was over on 9 May, they are likely to be sadly mistaken, as like in a tsunami, it is the second wave which is now building up that will inflict the biggest damage, not in physical terms but in replacing mediocrity with substance. Helping the cause of the youth is the global attention that is being directed this way, likely paving the way for greater introspection as to how we got here, what needs to be done to get out of it, and how to prevent a recurrence. That global support which has been the missing ingredient in the reformation process is now manifesting in multiple ways – most notably the pressure being applied on the administration for transparency and accountability in return for assistance. That is not all. The heat is being turned up specifically targeting those individuals identified as responsible for the present crisis. Interestingly enough, while the IMF team is currently in Colombo, there is immense pressure emanating from various quarters in the US itself, calling for greater accountability for the economic catastrophe – most certainly a much-needed shot in the arm for the ‘People’s Struggle,’ which of late has become the target of a State vilification campaign, where its leading proponents are being hounded by the long arm of the law. Therefore, there is much more to it than mere coincidence that an IMF team, and a high-powered Indian delegation, followed by an American one, are all making their way to Colombo in sync with each other. It points to a coordinated effort on the part of the three who are at the forefront of the nation’s economic revival effort, sending a clear message that the regime’s preferred method of setting one against the other is now past its expiry date while transparency and accountability will be the order of the day if Colombo is serious about obtaining assistance.  Globally-renowned economist Steve Hanke, who has had a razor sharp focus on Sri Lanka’s deteriorating economic situation in the recent past, had measured real inflation at a staggering 130% per year, almost three times the official rate as of Friday (24). In a blistering attack on the country’s current leadership, he tweeted last week, “Sri Lanka is being reduced to rubble by the President. He has proven to be an emperor of incompetence.” It is these very same sentiments that the People’s Struggle has been based on and now it appears those sentiments have the stamp of approval of global thought leaders. Therefore, if the current leadership assumed that the post-9 May respite was in fact reflective of the country having turned the corner, where – in their tunnelled opinion – the only thing that needed focus was the rebuilding of (their) burnt houses, they are likely to be mistaken, and the Prime Minister’s statement about the status quo in Parliament last week should in fact be a wakeup call that more is in the making both here and abroad. A preview of what’s in store was the legal action instituted by an American financial institution against the country for defaulting on a bond payment last week, yet another first in its history. Titled ‘Sri Lanka default – Hamilton action; Hamilton Reserve vs. Sri Lanka, 22-cv-5199, US District Court, Southern District of New York (Manhattan),’ the lawsuit claims that “default is being orchestrated by officials at the highest levels of Government,” a thinly-veiled strike at the President’s family who, until the events of 9 May, controlled an estimated 70% of budgetary allocations. Meanwhile, a top American diplomat, issuing a statement, has warned the IMF to be risk averse in its attempt to bail out Sri Lanka. US-based Open Society Foundations President Mark Malloch-Brown notes that Sri Lankan governments have a track record of ‘diverting aid’. He stated that the IMF must first acknowledge the reason as to why the country was in this mess by putting it on its agenda with the Government. “Otherwise they risk bailing out corrupt politicians instead of people in need,” he has said.  Steve Hanke, Hamilton Reserve, and Mark Malloch-Brown all seem to share the same sentiments as to who should be held responsible for the nation’s economic woes. Their collective effort, independent of each other, seemingly aimed at drawing the attention of the IMF during its staff-level engagement with the Government, points to the prospect of a level of due diligence not seen before in the nation’s 16 previous engagements with the IMF. It also points to the spotlight slowly, surely, and necessarily shifting to those perceived as being responsible for the crisis as much as the crisis itself. As Malloch-Brown points out, IMF due diligence must necessarily extend to the incorporation of measures to prevent a similar economic meltdown in future, which, as in the present instance, will not only directly affect the people of Sri Lanka but also ordinary American and other global citizens who invest their life savings in our International Sovereign Bonds. Be that as it may, it is said that people get the government they deserve. Our leaders in recent times have proven time and again why this country is in the state it is. When the power crisis first surfaced, the solution offered by the former Finance Minister – who was touted by his supporters as having seven brains – was to switch off street lights. The apparent solution for kidney disease – which research is yet to prove correct – was a blanket ban on chemical fertiliser. We all know how that turned out. Now the new administration is asking people to grow their own food while farmers are idling and driven to despair by the lack of said fertiliser.  Meanwhile, the Premier has also joined the circus and is pushing to increase taxes in order to refill the empty State coffers. While there is no doubt about the need for such revision, it is the timing that will likely kill the goose. A tax hike at this critical juncture, when industries – from agriculture to manufacturing to services – are all struggling to stay afloat, will most likely be counterproductive, with businesses likely to resort to layoffs and other mitigatory measures to absorb the impact, much the same way that the latest tax hike on liquor resulted in an estimated 30% drop in sales. Interestingly enough, the Prime Minister, who is obsessed with appointing committees to study even the most insignificant of matters in the current context, appears to have failed to appoint one to study the impact of the proposed tax revision. The bottom line of the Prime Minister’s latest update in Parliament is that the people of this nation will have to tighten their belts much further in the days ahead. However, this time around, it will be the turn of the leadership and every one of the parasites in the political chain to lead the way through example. In order to keep the peace, tough austerity measures beginning from the very top will be the order of the day for quite some time to come, while the economic messiahs get down to work with a fine-tooth comb.


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