• Agree with Govt. actions towards economic stabilisation
• Nobody is being held accountable for ongoing crisis
• Reforms being carried out at a heavy cost to the poor
• Food inflation completely out of control at 95%

By Marianne David Economic recovery is a long way off, asserted Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva, pointing out that the steps that had been taken thus far were only towards economic stabilisation. “I agree with the Government’s actions on trying to stabilise this economy. Immaterial of political parties, these things will have to be done. In the short to medium term, it is necessary to somehow get the debt restructured,” he emphasised, in an interview with The Sunday Morning. Once that is done, Sri Lanka can reach a doable International Monetary Fund (IMF) agreement and then hopefully go back to the World Bank and Asian Development Bank (ADB) and start getting some concessionary finance to bridge the deficit and also to spend on imports, he noted. “None of that can be done until and unless the reform agenda is implemented. That’s where the tax revisions have been brought in, the privatisation of State-Owned Enterprises (SOEs) is being spoken about, and the adjustment of price on fuel and electricity have been implemented. To give the devil his due, some of these things have been done, but at a very heavy cost to the poor who have still not been effectively looked after. As things stand right now, the burden is too heavy to carry,” he added. Following are excerpts of the interview: The Government has taken several steps with the aim of aiding economic recovery. How do you view its approach? It is not about economic recovery; it is still only about economic stabilisation. Nothing has been done to recover yet. Recovery is a long way off. We are only trying to stabilise.  For instance, we need to stabilise three things – prices (inflation), exchange rates, and interest rates. They are all interconnected. Before the calamity, Treasury bill rates were at 5%, now they are at 32%. Obviously, interest rates have risen through the roof. What they are expected to do is to stabilise both exchange rates and inflation rates. Exchange rates have been hovering at around Rs. 370 for the last 4-5 months. Inflation rates however have been on an upward trend, hitting almost 70% last month from under 5%. Food inflation is completely out of control at 95%. If they do not continue to hold interest rates at a high level, inflation rates may cross 100%. Exchange rates may continue to depreciate further. What they are saying is that they are trying to stabilise it and hold it. It depends on which point of view you are looking at it from. From the people’s point of view, they don’t see any stability. When it comes to individuals borrowing, temporary overdrafts are at 36%. It is impossible to borrow.  I don’t need to spell out the negative impacts of the inflation rate. The exchange rate has obviously fallen heavily. If you look at it from the policymakers’ point of view, they will say they have to make these difficult adjustments to keep things from deteriorating further. What are the short-, mid-, and long-term measures the Government can adopt to effectively address the economic crisis? First they need to stabilise. I agree with the Government actions on trying to stabilise this economy. Immaterial of political parties, these things will have to be done. In the short to medium term, it is necessary to somehow get the debt restructured.  There are severe restrictions on imports – whether it is fuel, intermediate goods, capital goods, or consumption goods. Those restrictions are there because, although the Government said that it would get bridging finance from Japan, China, and India, nothing has come through. No one has given us any money. Therefore we have to restrict imports severely, ration fuel, and cut electricity for many hours a day to continue to manage. However, by doing that, what is happening is that economic growth is faltering. It will be -9% growth this year. Growth will shrink by 9% this year and shrink by 4.5% in 2023. In 2024, we will not get to zero as it now stands. These are the repercussions of these kinds of restrictions. High interest rates would also mean businesses shutting down, jobs being lost, and all of that. Now, in the short to medium term, we need to get the debt restructured so that we can reach a doable IMF agreement. Once we get into a doable IMF agreement, then we can hopefully be able to go back to the World Bank and ADB and start getting some concessionary finance to bridge the deficit and also to spend on imports. None of that can be done until and unless the reform agenda is implemented. That’s where the tax revisions have been brought in, the privatisation of SOEs is being spoken about, and the adjustment of price on fuel and electricity has been implemented. To give the devil his due, some of these things have been done, but at a very heavy cost to the poor, who have still not been effectively looked after. As things stand right now, the burden is too heavy to carry. I think it is only in the medium to long term that we are going to be able to get back on a growth projectile. We have to somehow ensure that industry picks up again, that factories open again, jobs are created again, and the economy is directed in the most efficient and prudent path towards sustained and inclusive growth. That is where the Government has to make sure that it doesn’t mess up in the short to medium term. By saying that you are going to tax everyone at 30%, immaterial of whether it is exporting or a protected industry, just so that you can get tax revenue, you may fail in the medium to long term, although you may succeed in the short term. The incentives will not be effectively aligned with the kind of investment we need right now to have growth coming down the road. Do you believe that adequate steps have been taken to probe and hold accountable those responsible for the ongoing crises in the country? Nobody is being held accountable. It is crazy. We are talking about economic crimes, people who have essentially completely mismanaged this economy, probably robbed so much, corruption… no one is being held accountable. Not even a parliamentary committee has been established by the Government to look into this. You are looking into these issues as Committee on Public Finance (COPF) Chairman. Where do things stand now in terms of the committee’s investigations? The first time I tried to do something, the Government tried to censor me. They said I was violating privileges by asking the Auditor General, within my full authority, to audit the coal procurement, where the Auditor General said tender procedures had been violated. When I questioned why certain tax holidays had been given to individual companies when everybody was getting taxed, what did they do? They wanted to appoint a special commission to sack me. Does that show sincerity of purpose? Does that show that they are willing to learn lessons? Does that show commitment? No, it does not. In this backdrop, do you believe that the Government will actually move forward with the required political reforms? Now that the 22nd Amendment has been presented today (20), we will see if they will vote. We said we are supporting it. For political expediency, people will support Ranil Wickremesinghe on the surface, but I don’t think they are convinced that these reforms are necessary. We are having discussion sessions that I have started under the COPF. I hardly see a single SLPP member in Government participating in them. There doesn’t seem to be any real desire to understand the problems we are facing as a nation so that they can contribute in a positive way. Instead, they are trying to stop me from even having discussions and trying to effectively intervene in finding a lasting solution.  They are playing absolute politics, while saying ‘yes we agree’ on the surface. Right under the surface, they are trying everything to disrupt it and probably trying to tell the people ‘we don’t need to do these reforms, we will give you this, that, and the other thing’ and trying to fool the people one more time.