• Need IMF programme to send signal to market of fiscal discipline
• RW Govt. going to IMF was right; issue was with how revenue was raised
• Other taxes will be needed if tax relief is going to be provided
• Govt. fielding many TU leaders for Parliament has created trust gap
• Other parties will have to be part of Govt. to bridge the trust gap
• Will introduce stolen assets recovery law, have already drafted it
• Independent public prosecutor’s office, digital public infrastructure needed

“The challenge facing the Government is to get Gross Domestic Product (GDP) growth going. You certainly won’t get this growth under a government that people don’t have trust in,” said former State Minister of Finance and Samagi Jana Balawegaya (SJB) Colombo District candidate Eran Wickramaratne in an interview with The Sunday Morning, addressing whether Sri Lanka could commence debt repayment by 2028 as agreed under its International Monetary Fund (IMF) programme. 

However, he noted that the current Government fielding many trade union leaders for Parliament had created a trust gap when it came to attracting much-needed foreign investment, adding: “I frankly don’t think that the National People’s Power (NPP)/Janatha Vimukthi Peramuna (JVP) will be able to bridge that trust gap on their own; they will need others also to be a part of the government.” 

Nevertheless, he said that the SJB would work with the President on certain matters, noting that while “there will be differences and those differences will have to be compromised on and handled,” there would also be points of strength, as they would “back the President on pursuing the corrupt and on the application of the rule of law,” among others. 

In the course of the interview, Wickramaratne outlined the SJB’s chances at the upcoming Parliamentary Elections, the party’s plans for economic recovery both for the country and for Colombo, as well as measures intended to be put in place to tackle corruption.  

Following are excerpts: 

Sri Lanka’s economic recovery plays a key role in the upcoming Parliamentary Election campaign. What is your take on the country’s economy at present?  

If you look at the Presidential Election, it was not fought on the basis of policy – it was more about people reacting to things they didn’t like. After the Presidential Election, there is a level of apathy with another election scheduled to take place, so there has been less debate.

I would say the biggest concern is that everybody should go to the polls, since when elections are held one after the other, the voter percentage can sometimes come down. The important thing is to vote because it’s a democratic right and we need to protect our rights. 

One big issue has been that we still need a resolution on debt. We have to come to an agreement with the International Sovereign Bond (ISB) holders for about $ 12.5 billion. There was some level of agreement that they would take a 27% haircut, which should bring the debt down to about $ 9.1 billion. They were saying that this can be done and were going to issue some Macro-Linked Bonds (MLBs). 

These are termed ‘macro-linked’ because there is a base growth rate. If the growth rate overperforms, then the lender should get something back, because they will be taking a haircut upfront. But if the economy does better than anticipated, then some of that should also benefit the people who have given the loans. The baseline was that the economy was at about $ 89 billion; if it does better, then they should also get something back. That’s the basic concept. 

There was some agreement on that, although it has not been signed yet. Now, of course, the present President and his party went around saying that they would renegotiate the debt service agreement. They were talking through their hats because they have never really sat in these places previously to figure out what can and cannot be done. So that challenge still remains. 

The sooner they actually sign, the better, because it will at least create some certainty. Once that certainty is created, we have to basically live within the IMF programme. There may be small details which we can renegotiate, but we have to broadly live within it. 

Gotabaya Rajapaksa came saying he didn’t need an IMF programme, while these people (the NPP) came saying that they will throw these things out and renegotiate the whole thing. That’s not possible either. Gotabaya Rajapaksa didn’t understand reality; these people will have to understand it. Otherwise, it will be a bigger mess.

We need the IMF programme because it sends a signal to the market that there is some fiscal discipline. This is important because we are off the ratings since we are bankrupt. We will then begin to get back on the ratings, which means we will get more market access. At the moment, there is no market access.

You and your party, the SJB, have been critical of the actions of former President Ranil Wickremesinghe’s Government as well as of current President Anura Kumara Dissanayake’s Government in relation to the economic recovery programme. What alternative solutions would you and your party propose to get the economy back on track? 

We were opposed to the Rajapaksa plan. Then Wickremesinghe went for a programme with the IMF and we were in agreement, because we had been shouting from the Opposition saying that we must go back. Therefore, we are in agreement with the fundamental decision. What we were critical of was, when adopting fiscal discipline and raising revenue, where they were raising revenue from. 

For example, while we need to meet revenue targets, we need to take it from people who can actually pay for it. What we were saying is that we would have done it differently. There are many people who live with dignity – they go to work and look after themselves, their families, and their ageing parents; then you tax them and push them against the wall. We already have a set of the population that is dependent on the State and these people should not be made dependent on the State as well.

Right from the beginning, we argued that the tax-free component needs to be increased. After that, the loss of revenue will obviously need to be taken from somewhere else. There will have to be other taxes – capital, property, etc. will have to be looked at to get revenue. The vulnerable need to be protected. 

Those were our criticisms of the programme that was going on. If we come into office, we will work on those changes. 

The SJB has said that it would reduce the burdens on the masses by reducing taxes that have been imposed to meet the revenue targets set out by the IMF while also engaging welfare measures. How will the SJB balance the revenue targets and engage in providing relief to the masses?

As I said, we will have to introduce other taxes. If tax relief was going to be provided, particularly for the people who are at the bottom, and the tax threshold increased, such as on tax-free income – which we proposed and included in our manifesto as well – we were going to have this by introducing new taxes. 

We were also calculating based on economic growth; we had some incentives we were going to give to encourage economic growth. We were going to reduce VAT and then we would have looked at the withholding tax to increase tax efficiency. 

Obviously, taxes are a balancing game, but the principle was to relieve people at the bottom rung and then make that up through other taxes.

Do you feel that Sri Lanka, by making changes to the ongoing IMF programme, could build its economy to a level where it could commence repaying its debts by 2028 as currently agreed upon?  

Yes. The challenge is that the economy has to be rebuilt and the huge challenge facing the Government is to get GDP growth going. You certainly won’t get this growth under a government that people don’t have trust in. 

The trust factor will be very important because before an investor looks at a project, particularly a foreign investor, they will first consider the country. They will consider whether they can trust whether the courts will uphold an agreement based on judicial principles, or if there’s an agreement with the government, whether that will be upheld. It’s a trust issue.

The second important issue is the people behind it. If you have people who are trustworthy, foreign investors will invest. For example, the Government is fielding a lot of trade union leaders for Parliament. If you start making them ministers and expecting investors to put their money, consider that these are the same people who, for decades, have gone on the streets and crippled industries, struck work, and made lots of demands on businesses.

That’s why I said there’s a trust gap. I frankly don’t think that the NPP/JVP will be able to bridge that trust gap on their own; they will need others also to be a part of the government.

On the issues of anti-corruption and the need to reform the loss-making State-Owned Enterprises (SOEs), do you subscribe to the IMF-Sri Lanka agreement on introducing anti-corruption/transparency measures into law? What approach will you and the SJB take in this regard?  

The IMF talks broadly about it (introducing anti-corruption mechanisms). The fact that it has recognised that governance is an issue in Sri Lanka is a big thing. A lot of IMF programmes don’t have governance as an issue, but for Sri Lanka, it has highlighted governance. 

What we will do is introduce the stolen assets recovery law. We have already drafted it and we will introduce it almost immediately and put the mechanisms in place, because to recover stolen assets, particularly those hidden abroad, we will need to have the mechanisms in place. It cannot be done without having those mechanisms in place, because we will need the cooperation of other countries and governments, and so on.

We are also going to create an independent public prosecutor’s office, because presently the lawyer for the government is the Attorney General, who advises politicians, ministers, and high officials. When those ministers and high officials are corrupt, you can’t expect their lawyer to file a case against them. That conflict has to be eliminated. That is why we are arguing for an independent public prosecutor. That’s a mechanism we will put in place.

We will create a digital public infrastructure, which will be useful as well because citizens will have an ID and financial transactions can be tracked. We also want to create a centralised revenue collection authority. 

We will be looking at it from a practical point of view in putting these institutions and mechanisms in place, in addition to the law.

Sri Lanka is in a difficult and transitional period. If elected to Parliament, how will you work to form a policy consensus to further the country’s national interests to achieve economic stability and growth while improving good governance?  

It depends on the outcome of the election. If there is a clear majority then we can just carry forward our policy. We have presented our policy in our Economic Blueprint, which contains our economic and financial policy, and we have given our other policies in our manifesto. It will involve two years of work; we are definitely ready. 

However, if we don’t get a majority on our own and we have to rely on coalition partners, then clearly, we will have to come to an understanding and prioritise what we are going to do.

Should there be a hung Parliament, the advice to the President would be to let the party with the largest number of seats form a government. It could be us or it could be someone else. If we are in Opposition, we will support the Government in whatever progressive measures it brings. But obviously, on things which we think are not progressive, we will not give it support and block it instead.

Your constituency, the Colombo District has widespread poverty, as well as many issues related to planned and unplanned urbanisation, congestion, etc. If elected as a representative of Colombo, how do you plan to address these issues?

There are many issues, so we will have to prioritise. On the infrastructure side, we will try to improve housing. We want to make sure that we provide better housing to the population, especially those who are living in poor housing conditions. 

That makes a huge difference, because if you give someone a house with a room, a child can use the room with facilities such as a light and a fan, causing the child’s education level to rise immediately. That’s just very fundamental; it’s not like saying we’ll send them to a tuition class. 

That’s why housing is one priority area, while the other is public transport. Currently, transport is very slow, inefficient, and leads to pollution, whereas public transport will be a priority particularly in the urban areas so that people can move quickly, efficiently, and also safely.

Therefore, housing and public transport are very important if you look at urbanised areas and the Colombo District. There are other things, such as giving priority to education; we want every child to have a higher education.

Moreover, women’s participation in the labour force is very low, about 32%. However, in education and in universities, etc. there are more women than men, but this doesn’t really translate, so we have to look at that.

The SJB has been critical of former President Wickremesinghe and his new alliance over its affiliation with dissident members of the Sri Lanka Podujana Peramuna (SLPP). However, there are SLPP dissidents in the SJB-led alliance as well. How do you justify the criticism?

The big difference is that Wickremesinghe was propped up by them and they ran a Government. In our case, the people we have are very residual and they’re certainly not in the decision-making process or anything like that. Wickremesinghe was actually propped up by them and they were his Government and ministers and so on. So I think that there is no comparison at all.

The SJB has sent mixed signals, from calling for the formation of a strong Opposition in the next Parliament to saying that the party was prepared to work with President Dissanayake. What exactly is the SJB’s position with regard to the party’s role in the next five years? 

We are basically contesting this election to form a government. Governments are not formed by presidents; governments are formed by the party which has the largest number of seats in Parliament – that’s the democratic system. 

We are going to form a government if we get the majority. Obviously, this political system is such that you have to work with the president. The president can come from a different party, which will be the case with us, but that’s what we will be doing.

That model can work, because we know that sometimes the president can come from the same party that the government is formed from, which has also failed previously. President Gotabaya Rajapaksa won with a huge majority, after which he won an election with a big majority in Parliament, and in one year the country was bankrupt. So it doesn’t necessarily follow that if you have the same party, you will succeed – you can fail. 

Here, there will be differences and those differences will have to be compromised on and handled. But there are strengths as well, because we will back the President on pursuing the corrupt and on the application of the rule of law. We will also back him even if he wants to abolish the executive presidency and on constitutional reform. 

But I think on the economy, he will benefit by having us, firstly because of our policy and secondly because we have people who have experience. Experience is very critical because talking is one thing but having experience is another, since in implementing policy, you must have educated people. I think that from the country’s point of view, it can work and we will work with the President if we are the largest party, and form a government.

How confident are you of winning at the Parliamentary Polls?  

We are campaigning and our challenge is this: if the voters go out and vote, we will definitely end up as the party with the largest number of seats. The concern is that there is a level of apathy when having another election after one election. If voters keep away, we will be disadvantaged. That is why we are saying to go and vote. 

Look at it in another way: when a Sri Lanka Freedom Party (SLFP) or United National Party (UNP) president wins, they have the SLFP base of 40% that makes them president or the UNP base of 40%, which makes a UNP president. Accordingly, the [additional] 10% or 15% they get is the floating vote. That’s how it actually happens. 

This time we have a President from a party that has a 3% base. Let’s exaggerate it and assume it is 10%, but 32% still has come from other parties. At the General Elections, the consideration is not one individual; they look at their district, town, villages, and the people they know and voting happens on a different basis, through their representatives. 

When considered like that, the NPP vote base will go down. If their vote base goes down relative to ours, we will gain in terms of Parliament seats. But if our vote base goes down, then my argument fails. But if we hold our voter base, we will end up as the largest party in Parliament.