The economy is beginning to give indications of macro stability which President Ranil Wickremesinghe has made his primary objective. The most visible of these is the appreciation of the rupee against the dollar and other international currencies which signals a shift from the previous trend of depreciation. Over the past year the cost of the dollar rose by as much as 80 percent in the official exchange rate and even more on the black market. The current appreciation of the rupee is attributed to the rise in foreign exchange earnings including the upswing in tourism. But it is still contingent upon import controls and also non-repayment of foreign debt due to the declaration of bankruptcy.
The confirmation by government authorities that the much delayed IMF loan facility of USD 2.9 billion will be finally coming through would be a confidence booster. This is in addition to the forthcoming USD 400 million currency swap with the World Bank. These are all indicators of a positive outlook for the economy. It suggests that the government’s economic strategy to regain macro stability is working to the country’s benefit. However, the government needs to bear in mind that the recovery of the macro economy needs to benefit the population at large and not be monopolized by the high income segment within it. There is a need to initiate a sustainable system of economic recovery based on indigenous inputs and outputs. The plan is yet to be revealed.
A good society and economic plan to attain it would be one that protects the least in it. This weekend I attended a funeral. The person who had died looked more than 80 years old. But the real age was 63. The cause of death was cancer. The tragedy was that when the cancer was first detected there was no chemotherapy drugs in the government cancer hospital which primarily serves those who are economically less resourced. According to the dead person’s family, the patient was strong and could have coped with the chemotherapy at the outset of the disease. When the chemotherapy drugs became available several months later the patient had been weakened by the cancer which had also spread. The patient’s weakened body could no longer cope with the strong medicine. The family has to bear the loss.
The reluctance of the government to conduct local government elections at this time becomes clear. It is aware that there are countless stories like the one recounted above. The government would rather go to the polls after showing the people more substantial signs of economic recovery which will benefit them. Most of the voters are poorer rather than richer, and are likely to want to vote against a government that has an economic policy in which the costs are borne by the poorer rather than the richer. The government has therefore preferred to offer the people free rice for Rs 10 billion rather than spend that amount on financing the local government elections. There is a need to get away from the culture of dependence on government patronage to empower people to earn their own living. The date fixed by the Election Commission, March 9, was too soon and so the government ensured that the elections would be postponed.
Last week the Supreme Court issued an interim order in which the Finance Secretary and the Attorney General were directed not to withhold the funds allocated for election purposes under the 2023 budget. This court ruling would provide the government with a face saving way in which to back off from its stance that the local government elections would not be held at this time or anytime soon. The Finance Ministry has immediately issued a statement that the government would release the necessary financial allocations to enable the elections to be held. The course is now clear for the government to heed the decision of the Election Commission with regard to the new date for elections. The Elections Commission has stated that it would consult with a number of stakeholders before fixing the new date.
In making this landmark judgement, the Supreme Court has had the benefit of a similar decision being taken by the Supreme Court of Pakistan where a similar issue has to be addressed. In Pakistan the government claimed that the provincial elections could not be held due to the lack of financial resources. The Supreme Court in Pakistan set a deadline of 90 days from the date of dissolution of the provincial assemblies for the elections to take place. There was the concern in Pakistan, as there is in Sri Lanka, that permitting a government to postpone elections citing lack of funds will set a dangerous precedent. As developing countries like Pakistan and Sri Lanka constantly face a shortage of financial resources, this justification could be used at any time to postpone an election that the government feels it might lose.
It is interesting that in both countries the elections to be held are not parliamentary elections but elections at the sub-national level. Although permitted to slip out of public consciousness, provincial elections have been postponed in Sri Lanka for more than four years. In both countries there is the concern that a heavy electoral loss by the government would lead to a demand for early parliamentary elections even if they are not legally due. Unlike the local government elections which are legally due to be held at the present time, the parliamentary elections are not due for more than two years. This would account for President Ranil Wickremesinghe being quick to assert that the government cannot be changed by an unfavorable verdict at a local government election, but only by a parliamentary election.
Due to the economic hardships that the people have been facing over the past year, there is the likelihood of the government facing a severe election defeat at the present time. Although the legal position is that parliamentary elections are only due in another two and a half years, a government defeat at the local government elections is likely to lead to a demand from the opposition political parties for it to step down and this could lead to protests on the streets. This concern has prompted the president to say that “It is important to note that any changes to the government must be made through the proper channels, such as a parliamentary election. The streets are not an option for the parliament, and any attempt to subvert the established process would be a violation of Sri Lanka’s constitution and the rule of law.”
The president’s statement that only parliamentary elections can change the government is an early warning that he will not call for early parliamentary elections even if the ruling party performs poorly at the local government elections. There are examples from the past when governments that have lost local government elections badly have not collapsed but have continued in power until the next parliamentary election falls legally due. In February 2018, the government lost the local government elections badly. However, the government continued in power for the full duration of the parliamentary term and elections were held only in August 2020. At those elections the government experienced a severe drubbing as was expected. On this occasion too, the government led by President Ranil Wickremesinghe appears determined to stay on in power till the very end of their respective terms.
The challenge to the government would be to avoid the fate of the government that lost the February 2018 elections. The present situation is one in which President Wickremesinghe wields a maximum of power unlike in 2018 when he was only prime minister. As the parliamentary term has now passed the halfway mark at two and a half years, the president has become empowered to dissolve parliament at his will. The ruling party members of parliament are likely to be subservient to the president as they would not wish him to dissolve parliament and subject them to an election at this time which they are likely to lose. Therefore, the president has the opportunity to impose his authority on the two areas he has set his mind—the recovery of the Sri Lankan economy (being mindful of those neglected like the cancer patient) and the resolution of the country’s ethnic conflict and obtain the support of the parliamentary majority.
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