Changing of the Guard

The radio was on full blast under the margosa tree where the trio sat this morning. With the radio on, I could hardly hear what was being said, except that the conversation was loud enough to get an idea of what the topic of discussion was. The chit-chat, like with everyone else on this Thursday morning, was all about politics and the new President’s thumping victory at the November 16 poll.

Reading from a local newspaper, Kussi Amma Sera paused to ask: “Nava janadhipathi apata sahana laba deyida (Will the new President give us some relief)?”

“Methivarana vyaparaya kale godak deval porondu vuna. Porondu etu kale nethnam, janapriya kama nethiwei (He has promised many things during the election campaign. If he does not deliver on his promises, he would become unpopular),” noted Serapina.

“Mama hithanne, aluth janadipathi jeevana viyadama adu karai kiyala (I think he will bring down the cost of living),” said Mabel Rasthiyadu.

The conversation, amidst the music from the radio, continued with politics being the centre of discussion. As I walked back to my computer reflecting on what the trio was saying, the phone rang. It was ‘ Reconditioned’ Ranjith, a know-all in the second-hand car market, on the line. I hadn’t spoken to him for a while and was thus interested in what he had to say.

“I say, the election result is good news for second-hand cars. The market will rise now,” he said, also discussing the election victory.

“Yep, Ranjith, you will now have a field day,” I replied. “All second-hand car dealers are happy with the news,” he said, before saying bye after a short conversation.

As I sat down at the computer, the phone rang again. Before picking it up, I sensed this would be another call on the election. This time it was ‘ Shifty’ Silva, the always-inquisitive IT expert, another friend I hadn’t spoken to in a long time. It seemed that everyone was on election mode this morning, as I gathered with ‘ Shifty’s’ first words.

“I say, will the President deliver on all the promises he has made in improving the economy, increasing exports and reducing the debt burden,” ‘ Shifty’ said. “If he doesn’t carry the baggage of the past like the alleged irregularities during the earlier Rajapaksa years and doesn’t repeat policies which included nepotism and family-centric politics, then he would do well,” I said, adding that so far the President’s decisions seem to be with good intentions.

“I hope he doesn’t allow the stock market mafia to rule the roost like they did in the previous Rajapaksa era,” he said. “I hope not,” I said, wondering about the fate of all the cases filed against Mahinda Rajapaksa supporters. Rajapaksa’s team has often said that these cases were a victimisation of political rivals.

The new President has an onerous task to uplift the economy, increase exports, reduce the budget deficit, pay off mounting local and international debt (much to do with loans taken during Mahinda Rajapaksa’s previous presidential term) and provide relief to the people in terms of cost of living (and not tamper with tax revenue to provide goodies). Another challenge is to stamp out any forthcoming irregularities in the stock market, a big issue some years back which brought back memories when trading in one particular company on Monday saw unusual price movements boosting the market index. The company, Waskaduwa Beach Resorts, was quick to respond to the Colombo Stock Exchange saying that there was no price sensitive information that was released and it was unaware as to why the stock price moved up sharply.

Another entity, the Central Bank, was quick on the draw to reject comments by Fitch Ratings which said that the election significantly increases policy uncertainty and “could prompt loosening that exacerbates fiscal weaknesses and a rollback of reforms”. Fitch said that the policy environment in Sri Lanka had improved following the resolution of the 2018 political crisis, supporting the resumption of fiscal and economic reforms and of Sri Lanka's IMF programme. However, political tensions could resurface ahead of elections to Parliament, where the UNP is the largest party. These are expected early next year. The new President's constitutional reform plans could resurrect controversial proposals to enhance the executive's powers, the rating agency said.

The Central Bank rejected the claims saying that all market indicators had improved – in stock market and money market trades – and it was too early to make such assessments and predictions. It is early days for President Gotabaya Rajapaksa’s regime. He is just settling in and his performance on the economic front would only be clear in the coming weeks and after three to six months of his entry.

The debt situation, which the new administration needs to come to grips with, is daunting. This year, the external debt payment due of government and state-owned enterprises is a total of US$6 billion of which around $2.6 billion was paid in the first three months of the year. According to Treasury sources, the total external debt in Sri Lanka increased to $55.47 billion in the second quarter of 2019 from $54.22 billion in the first quarter of 2019. Interest payments alone cost Rs. 852 billion in 2018, amounting to 42 per cent of Government revenue and 6 per cent of the GDP in 2018. The total interest burden for 2019 is Rs. 913 billion and Rs. 1,000 billion for 2020.

“This time, will he clash with the media,” asked ‘ Shifty’, continuing the conversation. “I hope not… I hope not,” I said. The former Defence Secretary and now-President had a running battle with the media during the period 2010-2015. His choice of former Treasury Secretary Dr. P.B. Jayasundera as Presidential Secretary was an interesting one. There were expectations that Dr. Jayasundera would be Treasury Secretary. The former public official, despite all his faults in the past, is clever and capable of driving the economy and turning it around.

As I wound up the column and ended the conversation with ‘ Shifty’, I was missing my second cup of tea. Walking to the kitchen, I made a cup of tea and watched as the conversation under the margosa tree, with the radio now silent, still being centred on politics. I could hear them talking about individual freedom and being able to voice an opinion freely. This was something that the former Maithripala-Ranil regime won and preserved. Let’s hope this freedom of speech and opinion continues to thrive under the new regime.