Economic revival and accountability in governance

by Harim Peiris

As we approach the end of 2023 and with about a year to go for the next presidential election due before end 2024, President Ranil Wickremesinghe’s frequent refrain and indeed the rationale for his administration is the revival of the national economy after it was spectacularly destroyed by his predecessor’s administration, ironically elected on the platform of bringing about vistas of “prosperity and splendor”. Instead, the third Rajapaksa administration bankrupted the state, impoverished the nation and plunged about 40 percent of the population, especially its most vulnerable lower income sections, into relative poverty, food insecurity and malnutrition, according to UN research and other sources.

A few weeks ago, Sri Lanka’s Supreme Court, in a landmark ruling, given in a public interest fundamental rights application filed by several social activists, found the Rajapaksas, namely siblings Gotabaya, Mahinda and Basil, respectively president, prime minister and finance minister in the third Rajapaksa administration, as well as several of their key political appointees and officials, including the then Governor of the Central Bank, the Treasury and President’s secretaries, responsible and liable for and/or causing the collapse of the nation’s economy through gross mismanagement and deliberate actions of commission and omission. Argued in a lengthy over 200-page judgment, a five-judge bench of the Supreme Court, headed by Chief Justice Jayantha Jayasuriya, delivered the landmark ruling. The lone dissenter did not contest the substance of the culpability but argued more narrowly that it did not constitute an infringement of fundamental rights, the basis for the case.

Link between governance and the economy

The Supreme Court judgement, Sri Lanka’s agreement with the IMF and the public debate around economic revival and its various components from enhancing tax revenues, to reducing inflation to restructuring state owned enterprises, all focus on one key factor, the importance of public sector governance in the performance of the national economy. Sri Lanka during its two and a half decade long civil conflict, for all the economic and political challenges posed by it, recorded on average a 5.2% annualized economic growth in real terms. However, as President Mahinda Rajapakse was to note in 2009 at the end of the war, there was now no conflict to blame for economic non-performance and Sri Lankans can and will rightfully expect an economic renaissance and revival. That this did not occur and instead that the opposite became true, namely that the economy was destroyed, is surely largely due to both corrupt and inept stewardship of the nation’s public affairs. In rather staid, legal language and with judicial restraint, Sri Lanka’s highest judiciary argues lengthily and convincingly that deliberate actions and inactions of the Rajapakses and their key acolytes were responsible for Sri Lanka’s economic collapse.

The issues that arise in the context of remedial measures and non-reoccurrence is that there exists in Sri Lanka laws and institutions which are supposed to act as a check and balance on the executive’s arbitrary and ad-hoc decision making, including the Central Bank, its monetary board, parliamentary oversight and civil society. However, these institutions failed to be an effective check or balance on arbitrary, ad-hoc and entirely unreasonable actions of an all-powerful presidential administration. These arbitrary actions included ill-conceived tax cuts of December 2019, the refusal to go to the IMF when government finances were running down, the ad-hoc banning of chemical fertiliser impoverishing farmers and especially continuing to pay off Sri Lanka’s foreign currency obligations to the point of letting the fuel pumps run dry and hospitals run out of medicines rather than pulling the plug earlier on foreign debt obligations while previously increasing the amount of foreign, mainly Chinese debt, on white elephant projects of dubious economic and utility value.

Powerful presidency the cause rather than the preventor of national collapse

Sri Lanka’s economic collapse of 2022, was by far the worst national disaster to have occurred in our nation’s post-independence history and the Supreme Court, has after much deliberation, judicially informed us, what everyone on the streets, during the “Aragalaya,” more instinctively knew that this was a man-made disaster by a small coterie of overly powerful and popularly elected politicians. Sri Lanka has a democratically elected government, but not democratic, participatory or accountable governance.

There has been and continues to be much debate about Sri Lanka’s all-powerful executive presidency. The argument has been that such an all-powerful centre was required for our national wellbeing. However, our national experience has now been that this all-powerful centre, became an unaccountable centre of power, which overshadowed all other institutions, overran all checks and balances and finally became the architect and vehicle of disastrous national collapse. There is a democratic deficit and a lack of accountability in Sri Lanka’s public governance, that still persists in the reconfigured regime which assumed state power after the Rajapakse retreat. The administration lacks both a popular mandate and public confidence, though having perhaps elite support, sufficient for it to govern, increasingly repressively till the next election. It has postponed all elections, local and provincial, until the day of reconning a year hence. The real debate on economic revival is about strengthening Sri Lanka’s national governance, to make it more accountable, transparent and responsive rather than what we have at present.

(The writer served as Presidential Spokesman and Advisor to the Minister of Foreign Affairs)