Being laidback and easy-going is part and parcel of life on a tropical island blessed with nature’s bounty. However, Sri Lankans seem to be taking this island vibe to a new level – to the extent that they have become gluttons for punishment. No one knows this better than the politicians who, by their buffoonery, keep mounting on the troubles – with little or no reaction from the masses other than a bit of hot air here and there every now and then – and all is forgotten in a matter of days. This national trait of quickly assigning every calamity to ‘fate’ (apey karumay) and then resigning themselves to that fate (‘what to do’) is also to blame for the nation’s past and present troubles.
To state that the people of this country are being pummelled left, right, and centre by a Government that appears oblivious to the pain that it is inflicting on them is quite the understatement. The wave of price shocks unleashed on a hapless population over the course of last week as a result of the sudden decision to float the rupee caught everyone off-guard, including the Cabinet of Ministers, which appeared clueless about it when questioned subsequently. As anticipated, it has set off a chain reaction that is likely to see the country plummet towards impoverishment sooner rather than later. The decision to free float is a story by itself, with rumours doing the rounds that Indian assistance would not have been forthcoming if that decision had not been taken pronto.
For India, a weak neighbour totally dependent on it for survival would be putty in its hands, and the perfect foil to check the advances of its Far Eastern adversary in the strategic Indian Ocean region. It is this level of influence and control of its southern neighbour that late Prime Minister Indira Gandhi was dreaming of by fomenting an ethnic war four decades ago – a dream that has now become reality without a single bullet being fired. India now holds the key to the nation’s fuel supplies as well as having a growing influence on the country’s power sector, with deals to set up mega solar farms in Mannar and Sampur being inked last week without much fanfare. All this comes on the back of India having secured useful footholds in the ports of Colombo and Trincomalee in the recent past. That Sri Lanka has come to a point where it has to sell off its strategic assets simply to put food on the table is the clearest indictment yet of the collective failure of its leaders.
Be that as it may, Sri Lankans are quite used to price hikes, tightening belts, and the lame excuses trotted out for the same by the politicians in power. But the sheer quantum of the latest wave of price hikes in a situation where prices of essential items were already sky high has got the people in a spin unlike ever before. For instance, just how unconscionable is a near 50% price hike on flour, the poor man’s staple, within a period of just 100 days? Feeling the heat after it raised flour prices by Rs. 17.50 per kilo last November, the Government announced a subsidy package especially for the plantation community that depends on this commodity for their meagre meals. Now three months later, a Rs. 35 per kilo hike is like a bolt from the blue, and millions of people will now have to face the stark reality of surviving on an empty stomach. A further increase is inevitable owing to the latest fuel price hike, which is yet to be factored in. This is in a scenario where salaries and daily wages remain stagnant while inflation continues to soar to unprecedented heights.
In most nations, including our own regional neighbourhood, the kind of economic punishment being imposed on the people would never be tolerated. Knowing the repercussions, politicians would do everything within their power to cushion the impact – even if such hikes are warranted by global events. But not so much here, where price shocks of the greatest magnitude are still par for the course. There is no point in blaming the Opposition for not standing by the people in lieu of directly blaming the Government for not doing its job of at least cushioning the impact of its ill-timed decisions. But as in everything, even in a tropical island where people have been used to accepting what comes their way without question, there is something called a breaking point and for all intents and purposes, that point is now within visible distance.
In an administration where its Central Bank Chief is of the belief that money printing does not lead to inflation and continues to keep the printer working overtime, averting the inevitable will be near impossible, unless of course it finds itself an economic messiah, fast, which under the present circumstances has the same prospects as a snowball’s chance in hell. In a world where timing is everything, even a correct decision will end up being wrong if it comes at the wrong time. One would have hoped that the administration might have learnt a lesson or two from its recent legacy, such as the delay in ordering vaccines to fight the pandemic that cost the better part of the 16k plus fatalities and also cost the exchequer more than it should have, or that the decision on transition to organic farming should have come only after the infrastructure was in place, but it appears that such basic lessons simply fly over its head.
It seems that the administration is more interested in peripheral distractions rather than what it should be dealing with, as witnessed with the decision to free float the rupee a good six months too late. The impact of that belated call, as prophesied by nearly all the Opposition parties, has to be borne by a people already scraping the barrel and barely managing to make ends meet. The political cost of it will surely be telling and the administration might as well brace itself for the worst. Even if this price shock tsunami does not end up being the straw that breaks the camel’s back, it will surely render it sick, distraught, and dependent on life support into the foreseeable future.
That things have come to this state simply due to the intransigence of two individuals in the administration is now a foregone conclusion. While one individual was pliable to universal advice to seek debt restructuring through IMF intervention, the other stood steadfastly opposed to such moves, banking totally on so-called home grown solutions, none of which have been able to stop the slide. It appears that the only way the helpless Executive could make the two arrive at some middle ground was to set up a mechanism that manifested in the form of an Economic Council. This conclusion is vindicated by the fact that the council consists of the very same people who created this mess in the first place, and how they can now suddenly resolve the mess they created beats the imagination.
Former Minister Weerawansa’s post-dismissal revelation that no meeting had taken place between the two for six months and no less than nine requests had been made for a meeting between the two not only confirms the status quo but also hints at the extent of polarisation of the administration between these two figures and the factions they represent within the SLPP. The Opposition highlighting the fact that the Finance Minister had not spoken a word about the crisis for more than three months in Parliament has only made a bad case worse.
It is in this background that news is beginning to seep through that saner counsel appears to have finally prevailed and hectic efforts are now being made to engage the IMF. A delegation of the IMF is expected to begin consultations in Colombo as early as tomorrow (14), which will be followed up with a meeting in Washington where the Finance Minister is expected to submit a recovery action plan. Given the state of affairs, the inevitable question that will be posed by the people at some point is, who is to be held responsible for the economic carnage that has ensued? Can a battle of wits between two egocentric individuals be allowed to imperil the lives of 21 million people?
There is no escaping the fact that Sri Lanka is in the eye of an economic storm and weathering it to some extent at least will depend on how proactive the Central Bank is in shaping monetary and fiscal policy, taking into consideration the current ground realities.
Eye of the storm
12 Mar 2022
Eye of the storm
12 Mar 2022
Being laidback and easy-going is part and parcel of life on a tropical island blessed with nature’s bounty. However, Sri Lankans seem to be taking this island vibe to a new level – to the extent that they have become gluttons for punishment. No one knows this better than the politicians who, by their buffoonery, keep mounting on the troubles – with little or no reaction from the masses other than a bit of hot air here and there every now and then – and all is forgotten in a matter of days. This national trait of quickly assigning every calamity to ‘fate’ (apey karumay) and then resigning themselves to that fate (‘what to do’) is also to blame for the nation’s past and present troubles.
To state that the people of this country are being pummelled left, right, and centre by a Government that appears oblivious to the pain that it is inflicting on them is quite the understatement. The wave of price shocks unleashed on a hapless population over the course of last week as a result of the sudden decision to float the rupee caught everyone off-guard, including the Cabinet of Ministers, which appeared clueless about it when questioned subsequently. As anticipated, it has set off a chain reaction that is likely to see the country plummet towards impoverishment sooner rather than later. The decision to free float is a story by itself, with rumours doing the rounds that Indian assistance would not have been forthcoming if that decision had not been taken pronto.
For India, a weak neighbour totally dependent on it for survival would be putty in its hands, and the perfect foil to check the advances of its Far Eastern adversary in the strategic Indian Ocean region. It is this level of influence and control of its southern neighbour that late Prime Minister Indira Gandhi was dreaming of by fomenting an ethnic war four decades ago – a dream that has now become reality without a single bullet being fired. India now holds the key to the nation’s fuel supplies as well as having a growing influence on the country’s power sector, with deals to set up mega solar farms in Mannar and Sampur being inked last week without much fanfare. All this comes on the back of India having secured useful footholds in the ports of Colombo and Trincomalee in the recent past. That Sri Lanka has come to a point where it has to sell off its strategic assets simply to put food on the table is the clearest indictment yet of the collective failure of its leaders.
Be that as it may, Sri Lankans are quite used to price hikes, tightening belts, and the lame excuses trotted out for the same by the politicians in power. But the sheer quantum of the latest wave of price hikes in a situation where prices of essential items were already sky high has got the people in a spin unlike ever before. For instance, just how unconscionable is a near 50% price hike on flour, the poor man’s staple, within a period of just 100 days? Feeling the heat after it raised flour prices by Rs. 17.50 per kilo last November, the Government announced a subsidy package especially for the plantation community that depends on this commodity for their meagre meals. Now three months later, a Rs. 35 per kilo hike is like a bolt from the blue, and millions of people will now have to face the stark reality of surviving on an empty stomach. A further increase is inevitable owing to the latest fuel price hike, which is yet to be factored in. This is in a scenario where salaries and daily wages remain stagnant while inflation continues to soar to unprecedented heights.
In most nations, including our own regional neighbourhood, the kind of economic punishment being imposed on the people would never be tolerated. Knowing the repercussions, politicians would do everything within their power to cushion the impact – even if such hikes are warranted by global events. But not so much here, where price shocks of the greatest magnitude are still par for the course. There is no point in blaming the Opposition for not standing by the people in lieu of directly blaming the Government for not doing its job of at least cushioning the impact of its ill-timed decisions. But as in everything, even in a tropical island where people have been used to accepting what comes their way without question, there is something called a breaking point and for all intents and purposes, that point is now within visible distance.
In an administration where its Central Bank Chief is of the belief that money printing does not lead to inflation and continues to keep the printer working overtime, averting the inevitable will be near impossible, unless of course it finds itself an economic messiah, fast, which under the present circumstances has the same prospects as a snowball’s chance in hell. In a world where timing is everything, even a correct decision will end up being wrong if it comes at the wrong time. One would have hoped that the administration might have learnt a lesson or two from its recent legacy, such as the delay in ordering vaccines to fight the pandemic that cost the better part of the 16k plus fatalities and also cost the exchequer more than it should have, or that the decision on transition to organic farming should have come only after the infrastructure was in place, but it appears that such basic lessons simply fly over its head.
It seems that the administration is more interested in peripheral distractions rather than what it should be dealing with, as witnessed with the decision to free float the rupee a good six months too late. The impact of that belated call, as prophesied by nearly all the Opposition parties, has to be borne by a people already scraping the barrel and barely managing to make ends meet. The political cost of it will surely be telling and the administration might as well brace itself for the worst. Even if this price shock tsunami does not end up being the straw that breaks the camel’s back, it will surely render it sick, distraught, and dependent on life support into the foreseeable future.
That things have come to this state simply due to the intransigence of two individuals in the administration is now a foregone conclusion. While one individual was pliable to universal advice to seek debt restructuring through IMF intervention, the other stood steadfastly opposed to such moves, banking totally on so-called home grown solutions, none of which have been able to stop the slide. It appears that the only way the helpless Executive could make the two arrive at some middle ground was to set up a mechanism that manifested in the form of an Economic Council. This conclusion is vindicated by the fact that the council consists of the very same people who created this mess in the first place, and how they can now suddenly resolve the mess they created beats the imagination.
Former Minister Weerawansa’s post-dismissal revelation that no meeting had taken place between the two for six months and no less than nine requests had been made for a meeting between the two not only confirms the status quo but also hints at the extent of polarisation of the administration between these two figures and the factions they represent within the SLPP. The Opposition highlighting the fact that the Finance Minister had not spoken a word about the crisis for more than three months in Parliament has only made a bad case worse.
It is in this background that news is beginning to seep through that saner counsel appears to have finally prevailed and hectic efforts are now being made to engage the IMF. A delegation of the IMF is expected to begin consultations in Colombo as early as tomorrow (14), which will be followed up with a meeting in Washington where the Finance Minister is expected to submit a recovery action plan. Given the state of affairs, the inevitable question that will be posed by the people at some point is, who is to be held responsible for the economic carnage that has ensued? Can a battle of wits between two egocentric individuals be allowed to imperil the lives of 21 million people?
There is no escaping the fact that Sri Lanka is in the eye of an economic storm and weathering it to some extent at least will depend on how proactive the Central Bank is in shaping monetary and fiscal policy, taking into consideration the current ground realities.
Kapruka
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!