If The Speaker Had Become The President, The Economic Crisis Might Have Been Eased By Now

By Hema Senanayake –

By any means Ranil Wickremesinghe is not an economic expert. The worst is that he is not a unifying political leader but a divisive character.  

When President Gotabaya Rajapaksa was about to vacate his Presidency, people demanded that the then Prime Minister Ranil Wickremesinghe too should simultaneously resign from the Premiership paving the way for the Speaker of Parliament Mahinda Yapa Abeywardena to become the President as per the constitutional provisions. Had this has happened Sri Lanka would have had a true all-party government formed in which even SJB, NPP and other opposition party leaders taking responsibilities. Since cabinet portfolios limited to less than twenty could have been shared appropriately among party leaders or their nominees, such a political arrangement could have appeared as “corruption-free, united, super-democracy.” This kind of political consensus is crucial in resolving our economic crisis. This is what Ranil Wickremesinghe has prevented sadly for the country. However, still this option is available and is important even before an election or after an election. Other than this, I do not count any political party’s expertise in resolving this crisis even after an election. Now, let me explain why such a political consensus is important to revive the economy. 

The most important parameter in reviving the economy is to have the “optimum business confidence.” This is a subjective parameter but it has a power to increase the inflow of debt-free dollars (foreign exchange), stabilize or strengthen the domestic currency the rupee, bring the interest rates down and finally increase the total proceeds (or sum of total sales) of the country that affects positively to the Gross Domestic Product (GDP). When there is a political consensus before an election or even after an election, the business confidence will be high. 

Economic process or theory is complex but can be simplified for anybody to understand. No economy will grow or even revive from a crisis, if we cannot do two things. Not much, just two things. One is to increase country’s total capital allocation and the second is to increase consumption allocation part of which is usually transferred to the government as taxes to produce unsellable common interests. Both these allocations are originated from one single source that is from the total proceeds or total sum of sales which positively affect to the Net Exports (Exports – Imports). Then the solution would be to increase the total proceeds of the country. Who can do this? It can only be done by entrepreneurs. The solution must be to expand entrepreneurial base. This is why we need to have optimum business confidence. 

Non-economic strategy which cost nothing, that is “political consensus” can bring this business confidence to a higher level now and even after any election. President Ranil’s every action, political or economic ruin the business confidence. If he organizes an economic round table with economists of the country, they will explain it to him. Dr. Harsha De Silva being the key figure of SJB economic team, says that they have the best internationally recognized team so that they will fix the economy. If they are ready to form a government of political reconciliation, then I agree with them. NPP too, says their team is honest, prevent corruption, recognize private sector participation in the economy, and fix the economy quickly. But if they are ready to form a true corruption-free unified government, then I agree with them. 

Higher level of political consensus will lead to have optimum business confidence. As I mentioned earlier business confidence has a power to increase the inflow of debt-free dollars (foreign exchange), stabilize or strengthen the domestic currency the rupee, bring the interest down and finally increase the total proceeds (or sum of total sales) of the country that affects positively to the Gross Domestic Product (GDP) via increased entrepreneurial activity. I earnestly request all parliamentarians to think about this. The Central Bank is the official economic adviser to the government. Why do the Central Bank not advise the government on this matter?

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