Mirihana Protest
Posted on April 4th, 2022

Sugath Kulatunga 

“The clarion call in Mirihana and many other demonstrations and opposition protest meetings was a clear message of Gota go. Even a few political commentators have gleefully echoed this call. Gota can be expelled only under Section 38 of the Constitution where he resigns or ceases to be a citizen of Sri Lanka or ousted by a resolution passed in Parliament with a two thirds majority. The forces behind the agitation cannot be ignorant of this fact. But their attempt is to destabilize the government as much as possible. One critical factor they have not taken into account is the loyalty of the military to the government. The agitators and the opposition should on no account create a situation which will lead to military rule which Sri Lanka has been so far fortunate to avoid.

It cannot be denied that the masses have been driven to desperation with the denial of basic amenities like electricity and continuing scarcities of fuel, milk foods and high price of medicines, groceries, fruits and vegetables. On top of the existing scarcities fixed income earners have been severely affected by the dubious devaluation and high rates of interest. Peoples’ anger is exacerbated as these problems should have been anticipated, communicated to the people and remedial action taken. People are convinced that a few politicians and officials are guilty of negligence and incompetence.

 I am amused at a statement that In Greece a competent economist was made the Minister of Finance to resolve the economic problems. In a Ministry like finance the Minister is guided by his professional officials. Officials who managed our economy were PhDs in Economists borrowed from the Central Bank and the result is the current economic debacle. The last of them who was called an economic assassin” by a former Minister resigned from his post.

By early 2021 Corvid 19 had taken its toll. Tourist income had trickled down to a minimum. Income from foreign employment had dried up. The balance of trade continued to be negative.

Following are statements made by the Central Bank in several of their Press Releases on the balance of trade.

Sri Lanka had a total export of 11,741,036.79 in thousands of US$ and total imports of 21,316,199.95 in thousands of US$ leading to a negative trade balance of -9,575,163.16 in thousands of US$

The trade deficit widened on a year-on-year basis for the third consecutive month
in May 2021 to US dollars 716 million, compared to US dollars 407 million recorded in May 2020.

Expenditure on merchandise imports in May 2021 increased notably by 61.7 per
cent to US dollars 1,607 million from import expenditure of US dollars 994 million in May

The deficit in the trade account widened in December 2021 compared to a year earlier, mainly due to
excessive surge in imports recording the highest ever monthly import expenditure…”

The signs were clear. A crisis was in the making. But the government was complacent. There were instances of allowing massive import of luxury vehicles to gain revenue from customs duty without any regard to future consequences. Government was distracted by an organic food campaign. Even for a token increase in fuel prices proposed, the Minister of Energy had to face a no confidence motion originally suggested by the General Secretary of the ruling party. Criticism was taboo. Even in the last Address to the Nation On the 4thof of February 2022, the President did not mention about this looming debacle. The Government perhaps expected a miracle to take place and a miracle man Basil R took charge of Finance in mid 1921.There are no miracle in this game, only hard facts demanding hard decisions.

The miracle proposed was a sudden massive devaluation of the currency.

It must be repeated in simple terms that the focus should be how to earn an extra dollar and to save one. The past experience is that devaluation has neither increased exports nor reduced imports whereas our competitors like Bangladesh have adjusted their currency gradually and increased their exports. Maldives with an exchange rate of Maldivian Rufiyaa 15.42 is getting more tourists. The consequence of devaluation will bring more hardships to the bulk of the population of the country. Out of the 80 billion US dollar GDP of Sri Lanka the contribution of exports is only 20 billion dollars. Only that sector which is one quarter of the population will reap some benefits in the short term.

In his Independence Day speech, the President had said ‘Special attention must be paid on ways and means to enhance export revenue whilst encouraging local production.” But there is no concrete program to implement the suggestion. This needs further elaboration which will be done later. But the spike in import value in December 2021should have been closely examined. It is the standard subterfuge that importers over invoice their invoices and exporters under invoice their invoices and try to retain part of the dues abroad which is then kept in tax havens abroad. This is a global phenomenon the extent which is callosal. Customs department is not known for honesty and cannot be depended upon to investigate the individual transactions. They should be trained for this, or new group of officers should be assigned this task.

The outcome of the present political crisis cannot be predicted. In all probability it will be and all-party interim government as proposed by the dissidents within the government. The opposition should not ask for the pound of flesh at this juncture. They should think of the country before party politics. It is time that they present to the public their solution to the immediate problem.

One last suggestion is that the former President move out of the present residence and Gota must move into that house which should be the residence of the incumbent President. That will reduce the security risk of residing in Mirihana and the cost of additional security involved. 

All politicians and officials who were negligent or incompetent to prevent the present crisis must be penalized. “

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