Sri Lanka’s prime minister Ranil Wickremesinghe agreed to resign on Saturday while president Gotabaya Rajapaksa said he will step down on July 13 after protesters stormed the president’s residence and office as well as torched the PM’s house amid growing anger over the country’s worst economic crisis in seven decades. The island nation has seen months of protests which have nearly dismantled the Rajapaksa political dynasty that has ruled Sri Lanka for most of the past two decades.
In an exclusive interaction with News18, economist and political observer Shashi Dhanatunge, who has worn many hats, shed light on the reasons behind the spiralling crisis in the country, the current situation, and what the future may hold.
What is a short way of describing who you are and why readers can trust your assessment/thoughts?
I am a Sri Lankan-born British citizen. I returned to Sri Lanka in the year 2014 to invest in a real estate project. However, instead, I ended up being in the public service by invitation as the Chairman of Ceylon Shipping Corporation, Vice Chairman of Civil Aviation Authority and Board Member of Ceylon Petroleum Corporation during a span of just four and a half years. Currently, I am serving as an investment consultant, representing three investment groups in the US, Europe and Far East Asia.
Very succinctly, what and who is responsible for the current crisis in Sri Lanka?
The corrupt political system and the highly politicised public sector are totally responsible for the current crisis.
Why do you say that?
For many years, Sri Lanka’s national expenditure has exceeded its national income, and its production of tradable goods and services has been inadequate. Most of the large infrastructure projects undertaken during the last 20 years have been politically motivated. Even today, after several years of completion of those projects, none of those would qualify and justify through a simple PEST or PESTLE analysis. There are Cabinet of Ministers, a Parliament, Treasury officials and a Central Bank to keep monitoring the public expenditure and plan the government budgets regularly. If those aspects have not happened and are not consistent in their efforts, then who else is responsible other than those politicians and public officials?
Has it been coming for years and if so, do you think things are at rock bottom right now? Why?
As I said, this crisis was on the menu and on a slow cooking mode for the last 20 odd years until it began to accelerate due to multiple compounding factors like the Easter Sunday bombings in April 2019, unwarranted tax cuts in November 2019, money creation, a stubborn decision to shift to organic farming in 2021, and the impact of the Covid-19 pandemic. As a result of those, tourism income dropped, treasury income was lost, Sri Lankan Rupee depreciated drastically, the agricultural sector collapsed, and all other forex earning channels suffered, respectively.
Do you have family or friends impacted by the crisis? What are they facing?
Most of my family and friends are living in and around the city of Colombo. Therefore, they are mostly impacted by the shortage of fuel, gas and electricity. The shortage of food and medicines is not fully impacted, but there is only a limited choice and a range at a very high cost, 200% to 400% more.
When you walk along the streets of Colombo right now, what are you seeing, hearing, or feeling?
There are queues one to two miles long leading up to every fuel station, similar queues for LP gas and regular protests blocking streets by those naturally frustrated men, women and children. They are questioning and demanding the government to explain “what has happened to the Dollars and Rupees, and why cannot the government provide those essentials to them for which they are ready to pay?”
Apart from these, the non-stop 24/7 protest “Aragalaya” organised by the new generation of youth for over 90 days by surrounding the President’s Office, which brought the attention and respect of the whole world for its peaceful, brave, dignified, colourful and creative nature, finally, broke the barriers and entered the President’s official residence today. Those youths are demanding to “end the corrupt political system, the President Gotabaya to go home and give them to create a new country.”
Do you see a way out? What is it? What can be done to lift Sri Lanka out of this crisis?
Immediate action to create a new roadmap with short, medium, and long-term goals is the top priority for Sri Lanka right now. The roadmap should clearly address all the existing issues comprehensively, whilst the goals have to be set according to the urgency of needs and sustainability of recovery.
Unless, until a solid plan is in place there is less hope of attracting favourable responses from organised funding agencies such as the IMF, World Bank, ADB, JICA, EU or KOICA etc., especially because Sri Lanka’s political and public establishments have lost the confidence of all those establishments due to poor monetary policies, politicising regulatory bodies and state-sponsored corruption. So far it was only the Indian government that came forward with some immediate relief by way of credit lines up to USD3.5 billion and a few other friendly nations with some essentials like food and medicines.
If things continue like this, what will the result be for the people of Sri Lanka?
I am still a passionate believer in Sri Lanka’s potential to recover very fast, especially because I know the unique features, strategic geographical location, natural resources, magical attraction and of course the highly educated / intelligent new generation it possesses, which are all unexploited fully. Therefore, rather than thinking of what would happen if this crisis situation continues, I would rather be prepared for the new beginning post crisis with progressive reforms in the political, public sector and judiciary, as a result of this impressive victory today, July 9, 2022.
I presume that the exemplary behaviour and conduct of the youth of this country, and the general public throughout this severe economic crisis without resorting to any looting should provide the necessary confidence for all those funding agencies, the international community, foreign investors and well-wishers to stand by Sri Lanka and to support it to recover soon. Thank goodness, the corruption and irresponsible conduct demonstrated by the politicians and some public sector officials of this country have not mixed into the DNA of the new generation of this country.