After May Day: Now What?

By Kumar David –

The diagnostics and the prognostics after May Day are in. I discard the assertions of those who are committed to fixed opinions and repeat their convictions sans analysis. (“Everything is proof that the JVP/NPP is heading for a landslide victory”. “Only Ranil can deliver the goods and the people will rally around him”. “Sajith’s star is rising, he is our next president come what may”, etc). I have taken note only of intelligent people who have interpreted events and evidence with an analytical mind. For example, Mr X has access to several observers, police reports and what state officials and business leaders say and has sifted through all of this. Mr X may have political preferences of his own but he is “scientific” in interpreting evidence. This is the type of person I have given credence to in this piece.

The facts diligently extracted from such sources are as follows.

* The JVP/NPP rallies and meetings in Colombo and Matara were impressive, Anuradhapura was so-so and Jaffna was a failure.

* Ranil had the advantages of incumbency – streamlined train and bus services – but the showing was not impressive. Some who were expected, refrained from climbing on his stage The section below entitled Closing Arguments for the Novice is an important follow up this matter.

* Sajith’s show was, well ok, but not impressive enough; well, so-so again

* Mahinda’s SLPP was abysmal. People say the SLPP will be hard pressed to poll 10%.

* The SLFP showing was also poor; maybe 10% of the total poll.

Now let me move to the next set of questions. One that is often asked is “If it appears to Ranil that he is going to be hard pressed by the Anura, is he likely to cancel the presidential election that by law must be held in about October this year”. My sharp and peremptory response is “No ways. He dare not try that lark! The country will explode and the international community will roundly condemn him. The preservation of democracy in Lanka is the bottom line that cannot be crossed: It will not sit comfortably with the West, the IMF, its Extended Fund Facility (EFF) or with India. Nor is there anything in it for China or conversely for global imperialism (meaning the US) either. The presidential election will be held!

If the presidential election is as scheduled, what of the outcome? My informants like Mr X, separate from their own preferences, suggest that there is a fairly good chance that the JVP will prevail. Lots of people say “We have tried everything else and failed, might as well give the buggers a chance”. All of us have heard this and I am only repeating something familiar to most of you. Please believe me, though my own leftist leanings are familiar to many of you, this is not the motive for this avowal.

There is still the nagging concern “Can the 3% become 50%”? The JVP always showcased enormous rallies but come elections it rarely polled more than about 3%! Could this time also be another flash in the pan? Too early to tell but the trends will become clear in the coming months. Let’s watch.

My comment about democracy in Sri Lanka has another side to it. Nearly all of the moral pariahs who voted to turn this country into a dictatorship, that is nearly ALL who voted for a constitutional amendment permitting Mahinda a third term (and thereafter unlimited terms thus making the country another Idi Amin, Papa Doc state) are still sitting in the Chamber. They are worse than harlots since the ladies of the night have hungry children to feed or sick relatives to minister to. Our parliamentary pariahs were only fattening themselves or seeking renomination from Mahinda. Among them is Vasu – I confess I made the mistake of briefly joining a political faction led by him. Attorney Lal Wijeyakayake and Prof. Vijaya Kumar, also leftists loke me, did not make that mistake. Ceylon/SL parliament’s finest constitutionalist may have had hopes of nurturing Vasu as a future member of the leadership team. NM would be turning in his grave but he was cremated and spared that indignity.

Whosoever is elected president and forms the next government is certain to dissolve parliament and attempt to secure a working parliamentary majority at a fresh parliamentary election. He (no she in sight) will face monumental tasks. SL faces colossal challenges in attempting to dig itself out of the pit it fell into in 2021-22, namely default on international debt, downgrading by international rating agencies, conflict with Sovereign Bond holders (that is capitalist market agencies who want all their money back, and don’t want to suffer a hair-cut) and other complex and painful economic choices.

The four big challenges facing Lanka in order are as follows:

* Paying off a sufficient part of the country’s accumulated debt to satisfy the IMF and its Extended Fund Facility that the economy is in repair and that some part of the over $5 billion of currently blocked IMF funds can be released. The IMF Board is unlikely to play hangman and push Lanka into anarchy if there is proof of seriousness of purpose. And which is more difficult, if serious steps are taken to fight political corruption, leniency can be expected.

* Strengthening the export orientation of the economy because economic consolidation is critically dependent on the performance of exports.

* Persuading the people to accept a degree of belt-tightening; difficult in the light of widespread poverty (about a quarter of the population lives below the official poverty line). But people will be prepared to go with it if they are convinced that the burden is being equitably shared and this not a gimmick by the w, ll to do to retain their privileges and pass the buck. There are dozens of commentators in the centre pages of our newspapers who are buck-passers, that is apologists for assemblies like the Official Creditor Committee (OCC).

* Persuading the Left that an all-populist all-socialist agenda is not on the cards, anywhere, at this stage in world history.

In respect of the last point a significant matter has come to my attention. The NPP is not bereft of wise and mature advisors, as people had feared. It seems that there are informed economists and sombre advisors even on delicate topics like national security, working with the NPP. This is no longer the ludicrous Wijeweera JVP era; it is more sombre. Nevertheless, the May Day declaration by Lal Kantha (the JVP’s foremost buffalo and trade union leader) that an NPP government will devolve and vest judicial power in its own grassroots bodies and Harini’s acute embarrassment in Parliament to try to wriggle out, will worry people about repetition of Rohana era escapades. This is going to cost the NPP some votes.

Of Lanka’s national debt of $ 58 billion, $ 27 billion is owed to bilateral and commercial creditors. Hence, even after debt restructuring a largish burden still remains and arrears and instalments have to be serviced. Usable foreign reserves of the Central Bank are only $ 3.4 billion. Since my readers, like myself, are probably novices in economic jargon let me sign off with a summary of some terminology.

Closing Arguments for the novice

The Government and the State are different though they overlap and sometimes collide. Government is the Prime Minister, Cabinet Ministers, their immediate staff and to a degree Parliament which votes money for the Government (the Budget). The main sources of Government revenue are taxes, customs duties and excise duties and its main expenses are social-services like health, education, welfare-subsidies and development programmes. Ideally the budget should balance but rarely, in Lanka or anywhere else does it. Invariably the Budget is in deficit and this is what this Closing Argument is about.

For the sake of this section of the essay, only, I will define the State as the Central Bank (CB). Of course it is much more, the judiciary, the bureaucracy in general and the military. But let me move on with my point. The CB is broadly responsible for the nation’s finances; printing money, managing rupee exchange rates and interest rates, managing inflation, monitoring foreign asset movements, issuing Treasury Bills and doing the sort of things foreign lenders, bond holders, and the IMF are much concerned about.

Yes, there is constant bickering with Government and much interference in every country – you name it. But the big point I am making is that though the CB is responsible for the nation’s external finances, in the case of Lanka, the President and the Governor of the CB are singing the same arpeggio.  Ranil says my government is doing all the right things and Nandalal Weerasinghe (NW) says ‘we are on the right track, let’s go on as we are’. Ranil says “to the rupee has strengthened above LKR 300 to the dollar, we have brought total debt from about 128% of GDP to below 100%, analysts say GDP growth in 2024 will exceed 3% and foreign reserves are improving”. All this seems to be music to NW’s ears. However, since we have got it wrong so often in the past, nobody is as yet offering any bets.

The post After May Day: Now What? appeared first on Colombo Telegraph.