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Time for economic truth telling

15 Dec 2021

How and when the Government is going to change the trajectory of the economy is everyone’s question, and the Government seems determined to try and find the answer to this question on its own, still holding on to the promise that economic recovery is possible and that it is just a matter of time and a few more austerity measures. However, the amount of time Sri Lanka has to pull off such a recovery before the economic crisis becomes unbearable to the common Sri Lankan is anybody’s guess, and recent statistics imply that the next few months are going to be more challenging than the past few months. As per the latest reports, Sri Lanka’s foreign reserves, on which many imports that affect everyday people and businesses depend, have plummeted to $ 1.5 billion, and the country’s ability to import even the most essential of goods has been severely weakened. The people and businesses need to be prepared to face this reality; however, that seems to be more difficult than it should be, as the Government is not explaining to the people the situation of the economy with any clarity, and has not paid attention to getting the support of experts outside the Government. Much of what the Opposition parties say about the economic crisis are routinely dismissed by the Government as politically biased viewpoints. However, this week, Sri Lanka Podujana Peramuna (SLPP) Government Parliamentarian and veteran politician Anura Priyadarshana Yapa stated that the current economic crisis must be resolved through honesty, and that it can only be done with leaders and officials who deal with, and speak, the truth. He also noted that this is an issue that has to be resolved with the support of everyone. The general public, especially the middle income and lower middle income segment of the population, may not understand what the Central Bank of Sri Lanka’s (CBSL) reports, say about the dire, and worsening, economic situation. However, they are the persons who are more likely to be affected than other segments of the society, and in the coming few months, they will experience harsher living conditions. Businesses will also be affected. It would not be an exaggeration to say that the country’s foreign reserves declining to $ 1.5 billion is more or less equal to Sri Lanka nearing a final stage of the gradual economic collapse the country saw during the past few months, especially after the outbreak of the Covid-19 pandemic. If the Government does not find a solution at least at this late stage, the number of goods and services that are going to be scarce and expensive in the coming few months would rise rapidly. The reality is, the Government’s decision to extend some of the import bans and restrictions could be just the beginning of many more such measures. The central question is, how many people are aware of this imminent, and highly likely, economic disaster? The Government clearly does not raise awareness among the people about the true state of the economy, and even though certain information about the same are conveyed at times, most of the time, they are dressed up as temporary economic declines that can be effectively addressed with few months of austerity measures, and are followed by promises to make people’s lives better. However, this should not be the Government’s response, and the Government has to be prepared, and prepare the people, to face the next few trying months. First and foremost, the Government has to be honest, and apprise the people of the current state of the economy. It also has to effectively and plainly explain to the people what independent economists and the business community project the economic situation to be in the foreseeable future. Most importantly, the Government has to educate the people on, and promote ways to deal with, the rising cost of living, which the Government has not done despite several parties having stressed the importance of it. The Government has not paid attention to at least educating the people on cheaper alternatives for the goods of which the prices have increased during the past few months, which is the most obvious first step any country would have taken. The Government has to be more honest, acknowledge the problem, and start discussions with those outside the Government. If the Government does it, even if it is not able to prevent this potential massive economic collapse, it could prepare the people to weather the storm.

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