Daunting task for government amid sliding economy

By Sunil Thenabadu

The landslide resounding victory of the SLPP sweeping aside all opposing political parties in year 2020 like a “tsunami” would never have been even in the wildest dreams of any staunch supporter of the party. However the top-notch politicians prior to the postponed election knew well the pathetic situation our economy was in, was aware of a daunting task for any new government.

Although the victory at the polls was a cake walk, astounding music to the ‘SLPP”,  the new government which is burdened with an enormous intimidating state of affairs to place the system on track in the midst of a global recession and rising job losses. With negative growth predictions, no budget for the entire 2020, with negligible taxes figures with another hurdle is the climbing of tax issues in year 2021.

So far, figures indicate at least half a million workers – directly and indirectly – have lost their jobs largely in tourism and garment-industry related industries. According to recent stats, Sri Lanka’s apparel exports in the first half of this year reduced to US$1,8 m compared to $2,6 m in the first half of the year 2019, a drop in earnings by $7.9 m.Apparel exports for the whole of 2020 are likely to be $2 b lower than last year, a 40 per cent drop in a worst-case scenario, according to some reports. Industry officials have said that the toughest period would be from September to December, while exporters anticipate orders to pick up from January 2021 onwards.

The gross domestic figures (GDP or economic growth) have come in for the first quarter of 2020 and they are not at all positive. Growth is minus for this period and shows a GDP contraction of 1.6 per cent according to the Department of Census and Statistics (DCS), The related authorities of the DCS (Department of Census and Statistics) have confirmed that the economic growth estimates in the first quarter reflects continued negative effects of the Easter attack in April 2019, combined by the deep repercussions since the onslaught of the COVID-19 pandemic.

Data collection to compute these figures was difficult this time, added the DCS. While normally the first quarter data are released on June 19, this time the DCS faced many travails and challenges in gathering data and information during May and June from government, semi-government and private sector institutions in the country. Further, the data accessibility of most institutions and the accuracy of the data, were not at acceptable levels due to the functional draw backs at base level due to the limitations imposed by the government and the regulations provided by the Ministry of Health regarding the spread of COVID-19 such as curtailing of staff during the lockdown period.

Our economic growth has been sliding since it grew by 5 per cent in year 2015. Economic growth has diminished in the following years with the growth diminishing to 4.5 per cent in 2016, 3.6 per cent in 2017, 3.3 per cent in 2018 and 2.3 per cent in 2019.The authorities of the Central Bank expected the economy in 2020 to grow by 1.5 per cent, which is doubtful now in sure to end in negative growth.

While victory at the polls is sweet music to the SLPP, the new government nevertheless has daunting challenges to put the economy on track in the midst of a global recession with rising job losses. With negative growth predictions, no budget for the entire 2020 with revenue figures from taxes also in descending trend another hurdle amid mounting tax problems is the 2021 budget which is expected to be presented in November 2020 by the new government.

Apparel exports for the whole of 2020 are likely to be $2 billion lower than last year, a 40 per cent drop in a worst-case scenario, according to some reports. Industry officials have said that the toughest period would be from September to December, while exporters expect orders to pick up from January 2021 onwards.

Even if Sri Lanka is to reopen its borders by end August or early September, tourist arrival numbers would be much lower since many of the country’s source markets in Europe and Asia are still closed for regular outbound traffic.

What the new government needs is  a macroeconomic orientation, an accelerated economic revival post- through an inclusive national development strategy, debt refinancing and strengthening public finance.These are among the foremost economic challenges facing Sri Lanka. Going forward, there should be a hefty focus on agriculture in ensuring food security, along with more attention being given to local manufacturing and industries,as suggested by the authorities of the Ceylon Chamber of Commerce. Among other things, that energizing the local SME sector is one of the core areas of concern.

There should be structural reforms compulsorily to secure growth in several key focus areas such as digitization, health, education, food security, energy sufficiency and public enterprises. There should be a greater focus on agriculture in driving food security. More attention should give to local manufacturing and industries.  This focus would drive competitiveness in the industry so these sectors not only cater to the domestic demand but also reach foreign markets. How best could Sri Lanka’s export sector be revitalized. The continuation of the National Export Strategy by the government is welcome as it was a joint public and private sector strategy to drive exports.

In the wake of these challenges, it is high time for all stakeholders, transcending party politicians, ethnicity, religion, language, or any of other identities which divide our people to join hands by resolving to work for the uplift the social and economic reforms. Although, it is easier said than done, this course of action, would stand in good stead to omen well for the country. Hence, the obligation lies on all citizens of this country to turn over a new leaf cooperating with the incumbent government sans diverse political affiliations. The need of the hour has to be agile proactive action to reverse the status quo of our economy, with the same vigour as is now been successfully adhered to curb the spread of Covid-19.Importantly foreign investments need to be brought in by offering positive concessions and incentives to lure the multinational companies interested in investing in our country. The dwindling tourism industry need to be revamped and developed to its full capacity in order to increase the numbers of tourist arrivals. New and ingenious ways of attracting tourists have to be dug-ed out by going the extra mile beyond the traditional beach side luxurious hotels, safaris, ecotourism etc. Special attention has to be focused on foreign exchange influx  ventures including migrant workers employed in Middle East and elsewhere. As the main source of foreign exchange generators, this sector has to be given all  robust realizableboost and mount.

The big wigs need to start thinking differently and out of the box to energize their subordinates the need to work efficiently and effectively. Inevitably, they need to be proactive, rather than being passive and reactive, so as to lead in using their professional prowess, leadership and their acumen to make things happen. Thereby, we may be able to fast track development and put our economy on the right course.

Soft pedaling, procrastination, playing the second fiddle shouldn’t be allowed to turn asthe order of the day. If this tendency is not kept in check, obviously inefficiency,  lethargy could cascade down the rank and file of public institutions. Importantly, honesty, hard work and minimizing waste have to be practiced, promoted and rewarded. Obviously an end to corruption will benefit the treasury.

Beliefs, values, discipline, new thinking , attitudes ,law and order need be instilled securely in the society, through discourses, lectures and bysetting examples. In this respect parents, school teachers and religious leaders could play a vital role to bring about a positive change in attitude starting from childhood years. Focus has to be on cherishing pluralism, tolerance, amity, coexistence etc; Main emphasis has to be on racial harmony through amity and coexistence. Undoubtedly, amity, peace and coexistence will enable in enhancing fast tracking development.

Now that all cabinet and state ministers have been sworn to cover all areas, all of whom have vouched to deliver as never before augurs well for our future.No doubt, that HE the President and the Honourable Prime Minister at the helm with their foresightedness and wisdom will overcome this herculean task ahead.

Sunil Thenabadu in Brisbane