Who triggered Sri Lanka’s economic collapse and bankruptcy last year? Obviously, the Rajapaksas then in power who laid down the policy and the officials of finance ministry and fiscal institutions.
by R Hariharan
Sri Lanka political theatre, gingered up after the dramatic exit of President Gotabaya Rajapaksa in the wake of the Aragalaya agitation of the masses last year, added a few more episodes during the month of November. Though they were a mix of the good, bad and ugly, the month closed with the good news of Sri Lanka reaching an “agreement in principle” with its lenders including China, to restructure nearly $6.0 billion in loans. This was an essential condition to unlock IMF funding for a bailout. The bad news is party politics affecting Sri Lanka cricket after the team’s poor performance in the recently concluded World Cup leading to its expulsion from the International Cricket Council. Equally bad was President Ranil Wickremesinghe’s effort to override the Constitutional Council to get an extension for his favourite Inspector General of Police. Ugly news was aplenty. The Supreme Court passed a verdict holding the Rajapaksas were responsible for the nation’s economic collapse; but will it affect the family’s political fortunes? There was yet another allegation of government collusion in the 2019 Easter Sunday Jihadi attacks. Last, but not least bit of ugly news, is Wickremesinghe administration using local police and even slapping Prevention of Terrorism Act (PTA) to prevent the Tamils from mourn their war dead on November 27 despite court orders[RH1] . This exposed the government’s doublespeak on ethnic reconciliation.
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| Houses and Apartment Complexes seen from the top of Colombo, Sri Lanka, on August 7, 2023. The current metro area population of Colombo in 2023 will be 633,000, a 1.12% increase from 2022. The metro area population of Colombo in 2022 was 626,000, a 1.13% increase from 2021. The metro area population of Colombo in 2021 was 619,000, a 0.98% increase from 2020. (Photo by Thilina Kaluthotage/NurPhoto) |
IMF bailout package
Sri Lanka has reached an “agreement in principle” with its lenders, including China, to restructure nearly $6.0 billion in loans and unlock IMF funding for a bailout. Last month Sri Lanka had reached a deal with EXIM Bank of China on outstanding debt of $4.2 billion. China holds about 52 percent of Sri Lanka’s $46 billion external debt. The finance ministry statement said the deal included a mix of extending the tenure and reducing interest on $ 5.9 billion in bilateral loans granted earlier. President Wickremesinghe will be happy with the agreement as it is key milestone in achieving public debt sustainability to speed up economic recovery. The International Monetary Fund has welcomed the news and said it will “restore macroeconomic stability and debt sustainability” to unlock the country’s growth potential. After the IMF approval, the World Bank and the Asian Development Bank are expected to release $200 million and $100 million respectively for projects that have been held up due to the financial crisis last year.
Triggering the economic collapse
Who triggered Sri Lanka’s economic collapse and bankruptcy last year? Obviously, the Rajapaksas then in power who laid down the policy and the officials of finance ministry and fiscal institutions. Sri Lanka Supreme Court stated the obvious in a 4-1 majority judgement while disposing of multiple petitions by civil society and activist groups, spearheaded by Transparency International. It held the two former Rajapaksa presidents and their younger brother and ex-finance minister Basil Rajapaksa, two former central bank governors and other top treasury officials guilty of triggering the island’s worst financial crisis by mishandling the economy.
The judgement has a symbolic value as Transparency International and other petitioners had not sought financial compensation, but “sought a declaration from the court that the mishandling or inaction on the economy by the former heads of state and senior officials did violate the fundamental rights of the people.” But the moot point is will the judgement affect the political fortunes of not only the Rajapaksas or their camp followers, but entire polity sullied by misuse of office and corruption? Sadly, Sri Lanka public have short memories and may not remember the judgement when they go to the hustings next time.
Essentially, this is a political, rather than a fundamental rights issue to be handled by the elected members of parliament. But when legislators dithered, citizens spontaneously took to the streets triggering the unprecedented Aragalaya agitation against the rulers. So the SC judgement at best serves as a bench mark of conduct for politicians, beyond which they may face the Aragalaya again.
Politics of Cricket
Sri Lanka cricket is in a mess, not only because of the team’s dismal performance, winning just two of the nine matches it played, in the recently concluded World Cup. Cricket is big business in the island nation and highly politicised under the tight control of the Sports Ministry. The trouble started even before it played all the matches, when the team was dismissed by India for a measly 55 runs in reply to India’s score of 302. An irate sports minister Roshan Ranasinghe sacked the entire Sri Lanka Cricket (SLC) board on November 6 and named a 7-member interim committee in its place. Arjuna Ranatunga, the World Cup-winning former Captain, was named chairman of the committee. Minister Ranasinghe accused the SLC of corruption and blamed it for the declining standards. Ranatunga added penny’s worth by slamming the Board of Control for Cricket in India (BCCI) secretary Jay Shah for ruining Sri Lankan cricket. He alleged that the connection between SLC officials and Jay Shah has given the BCCI the impression that they can control and dominate SLC. Meanwhile, the Appeal Court stayed the Sports Minister’s decision to dismiss the SLC. The International Cricket Council (ICC) suspended Sri Lanka for not managing its affairs without government interference. The ICC also shifted the Under-19 world tournament which was to be held in Sri Lanka to South Africa. This created further chaos among players, the selectors and staff as the SLC muddle is unlikely to be resolved soon.
President Wickremesinghe was not amused at these developments as the Minister did not consult him before he dissolved the SLC. He took the unprecedented step of apologising to Jay Shah for Arjuna Ranatunga’s accusing him of trying to control SLC. The President explained this in an Indian TV interview and indicated he was thinking of bringing in a cricket law! That would be the last straw in autonomously administering the game!
Col. R Hariharan is a retired military intelligence specialist on South Asia associated with the Chennai Centre for China Studies
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