Gota And The Economy

By Kumar David –FEBRUARY 26, 2020

Prof. Kumar David

Until after the election and we know whether the constitution will be amended or not, it remains up in the air whether PM and Cabinet or President will drive economic policy. Gotabaya Rajapaksa has no particular ideology or philosophy; he is a pragmatist in the sense that he will adjust to take advantage of what it is most opportune at each stage. This means that at present, to quote him, he is putting “National Security foremost”; in the driving seat. The economy, “Prosperity with Splendour”, will be relegated to the backseat; reconciliation, that is accommodating Tamil and Muslim aspirations will be demoted to the luggage boot. This will be the order for the remainder of his administration. His three-month report card is congealing into a reliable predictor. 

In his January policy address Gota laid out an economic wish-list. Fair enough, a policy address is like a Throne Speech, an enunciation of broad intentions. It is in the nitty-gritty work of government activity that we expect to see promises translated into concrete actions. The rich in promises objectives were: Eliminating poverty; special programmes to combat corruption and fraud; increasing earnings from agricultural produce; technologies to develop inland fisheries; becoming a leader in UN Sustainable Development Goals; ensuring future generations are productive by nurturing knowledge, skills and abilities. Maybe it’s unfair to complain after just three months that there is still little sign of concrete governmental activities to launch these programmes.

Macroeconomic indicators are ambitious: Avoiding the middle-income trap; 6.5% GDP growth and $6,500 per capita GDP; unemployment below 4%, inflation below 5%, budget deficit below 4%, single digit interest rates and stabilising the rupee. It will be possible say if these macro-objectives are on track only after 18 months have elapsed. But PM Mahinda obtained $450 million financial assistance from India and appealed for a moratorium on debt servicing which augurs the government is bleeding. Lanka is falling deeper into the dept-trap.

Only a fool will expect any government to deliver economic nirvana in the medium term but what is missing up to now with the new regime is the silver bullet of an economic direction. There are three options for a country in our kind of economic conjuncture; a directed dirigisme (not state-owned) economy, market-led liberal capitalism and third neither here nor there wishy-washy staggering from one day to the next. The first, famously identified with post-Deng China is older and harks back to Singapore, South Korea and even Japan; the new champion is Vietnam. The second is exemplified from South and Central American banana republics that were once in thraldom to US imperialism, all the way through to democratic versions such as Sri Lanka’s 2015-2019 yahapalana regime. The third version is ever so common, but go no further than previous Mahinda Rajapaksa regimes. The feature that colours MR-type regimes is pervasive and corrosive corruption – Marcos, India’s Congress and BJP, Mexico (drugs and corruption), liberal democratic Africa and South & Central America. 

My concern is that Gota-pragmatism will be a practicality of survival bereft of structural economic perspective; that is the third option, again. Such pragmatism becomes opportunism of regime-survival where a president, whose personal probity may or may or may not be tarnished (but why was the Attorney General forced to drop the MiG case?), presides over a regime tainted by a corrupt extended family, ministers stained as rogues (loka horu) and a segment of the military-police apparatus with a history of democratic and human rights violations. The Swiss Embassy employee’s case, the hounding of judges and state officers who revealed inconvenient truths and the terrorising of relatives of missing persons who dare to protest, all point in the direction the “National Security State” and the bad old days. If things go this way Gota will be reduced to an impotent figurehead; real power will shift into the hands of second-level miscreants.

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