Sri Lanka : Challenges for the New President

By Anupama Rajput

Sri Lankan Lawmakers voted in acting President Ranil Wickremsinghe as the new President on July 20. The six-time Prime Minister was able to garner 134 votes in the 225-member parliament, despite public anger with the ruling elite in the hope that his long experience in government could help pull the country out of a crippling economic crisis.

Denying his close proximity with the former President Rajapaksha’s clan, he said, “I am not a friend of Rajapaksha’s. I am friend of people.” In a highly divided Sri Lankan political environment, he also emphasised that “I would like to bring everyone together so that a national consensus is formed as to the way forward.” These utterances aim at rekindling the hope of the people of Sri Lanka which is badly shattered after months of severe shortages of fuel, food and medicines.

The tasks ahead for the new President would not be easy as the gravity of challenges facing the Sri Lankan economy are very grave and have come to a level from where recovery would need removing deep rooted structural problems and political will.  The task becomes all the more difficult and arduous because of the lack of credibility of the new President. The response to Wickramsinghe’s win in the Presidential poll was broadly muted with only around 100 people gathering on the steps of his Presidential Secretariat. Some protestors still vow to focus on dislodging him. 

For one reason Wickramsinghe’s appointment was a potential positive as he strongly backed IMF support as it could be surmised from a recent statement of the head of IMF Kristalina Georgieva that “the fund was looking forward to engaging with Sri Lanka’s new leadership” and that she was “very hopeful” of completing programme negotiations as quickly as possible, with some good technical groundwork already done.

The challenges, nevertheless, far abound and too many. The headline inflation is reigning very high at about 55% while Sri Lanka’s forex reserves have completely depleted and are already showing up in defaults on international payment obligations on one hand and import of essentials including food and medicine and petrol and gas.

The growth prospects of the economy have continuously deteriorated due to wrong policy choices and disruptions caused by Covid-19 outbreak. The chances of quick recovery are very slim, yet structural reforms are expected to help. According to the Asian Development Bank’s April forecast, Sri Lanka’s economic growth will dip to 2.4% in 2022 and only improve marginally to 2.5% in 2023. Some even feel these numbers as overestimates.  Even the Central Bank of Sri Lanka foresees a slump of GDP in the range of 4-5% this year. But hope is a beautiful word, nonetheless.

One of the biggest problems is that Wickramsinghe and his supporters represent the status quo and their intent and ability for structural reforms is suspected by many. Populist tax cuts and inefficient policy decisions to ban import of chemical fertilisers etc. were taken by Rajapaksha and these leaders did not raise any objection.

Over-reliance on China and its growth model needs to give way to sincere effort to promote industrialization and tourism along with diversification of the export basket, which till now is dominated by primary products. Development of human resources could help Sri Lanka to venture into emerging technology including IT and AI and to earn much needed foreign currency and remittances. Sri Lanka needs to be self-reliant and resilient and shun its dependence syndrome, especially its over reliance on countries like China.

History gives but a few occasions to prove that countries learn from past mistakes and rise from ashes like a phonics. It is to be seen whether the Sri Lankan government could stand up to its national symbol, the golden lion, after getting severely wounded due to exercise of wrong policy choices.  It is also in the interest of closer neighbours like India that Sri Lanka rises again and India, realising this has stood rock solid amidst the months of crisis. It is hoped that the bonhomie between the two countries never fails the test of true friendship.

 

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