Harim Peiris

Political and Reconciliation perspectives from Sri Lanka

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Archive for November, 2017

Budgetary Challenges for 2018

Posted by harimpeiris on November 24, 2017

By Harim Peiris

(Published in the Daily News of 23rd Nov 2017)

 

“Good economics is good politics” goes the old adage and Finance Minister, Mangala Samaraweera, relatively new to his crucial portfolio of public finance has presented his maiden budget, styled a blue green budget, which in characteristic Mangala style, is optimistic, forward looking and environmentally friendly, highlighting the opportunities and the promise available to an economy emerging from nearly three decades of civil conflict.  The budget debate as it proceeds through Parliament, reflects the many economic challenges ahead for the Finance Minister and economic Yahapalanaya.

That the National Unity Government of President Sirisena and Prime Minister Wickramasinghe inherited an economy, which had been badly mismanaged together with significant corruption in the preceding term, is widely accepted not just in the commercial world, both local and international, but also among the general public. However, the public expectations from the Yahapalanaya Administration has been quite high, as the Rajapaksa’s and corruption were largely blamed for Sri Lanka’s economic malaise. The end of the Rajapaksa’s in 2015 raised public expectations, that a “good governance dividend” would be forthcoming. It is this good governance dividend which now, the leaders of Yahapalanaya have called upon Mangala Samaraweera to deliver. Mangala is no stranger to state sector reform. It is worth remembering that it was Mangala twenty years ago, who as the then Minister of Telecommunications and Media, who implemented the entire telecom sector liberalization, ending the state sector monopoly and privatizing Sri Lanka Telecom, resulting in Sri Lanka today having South Asia’s most advanced telecoms infrastructure and its highest mobile and internet penetration rates.

The Standard and Poor’s rating outlook upgrade

 

A few days ago, the international credit rating agency, Standard and Poor’s revised upwards, Sri Lanka’s credit rating outlook from negative to stable. In practical terms, this should make Sri Lanka’s access to the international capital markets to refinance its maturing dollar loans easier and somewhat less costly. On a more policy recognition level, the outlook upgrade recognizes what the rating agency calls the “improving reform momentum” including the passage of the new Inland Revenue Act, the proposed Liability Management Act and the recent independence of the Central Bank.

The political challenges of reform

 

However Standard and Poor’s also states that “we continue to observe significant challenges to the policy making environment”. Economically the Rajapakse post war policy of foreign, largely Chinese, commercial borrowings spent on projects of dubious utility value, such as a little used port, airport and a loss-making budget airline together with the world’s most expensive highways was no longer fiscally possible. Besides the astrological predictions, the other more rationale political reason for Mahinda Rajapakse calling the presidential elections two years before his term was over, might well have been the advice of his economic guru’s that the borrow and spend good times, just could not be sustained. The Yahapalanaya Administration though is faced with dealing with both the decades of economic reform stagnation, as the civil war sapped our national energy and more importantly the mismanagement of the immediate post war era. This mismanagement ballooned the national, especially foreign debt, while making precious little contribution to sustainable economic growth. The challenges of a low productive agricultural sector, an education system which produces graduates for non-existent white-collar jobs, inflexibility in the labor market through archaic regulations, are all long overdue for reform. The immediate challenges of stagnant or declining expatriate worker remittances, undiversified exports and especially significantly below peer group average foreign direct investment and tourist arrivals, all remain to be addressed.

The Poverty Legacy of the War in the North and East

 

The Blue-Green Yahapalanaya budget 2018, though addresses and deals with one of the key effects of the decades long civil war in the Northern and Eastern provinces. The recent survey by the Census and Statistic Department denotes that average median household incomes are considerably less in the North and East than they are in the rest of the country. The destruction of community infrastructure has resulted in serious livelihood and income generation challenges especially in the rural parts of the North and East. Amid the rural poverty, the food security, health and overall vulnerability of certain social sub groups, such as women headed households and children in low income families is acute.

The budget also allocates funds for the implementation of the much delayed fifty thousand houses program in the North and East. This time directly under the President in his capacity as Minister of Reconciliation. It is somewhat regretted that this flagship project, much awaited and anticipated in the North and East was delayed due to the controversy over the proposal to build the houses in steel rather than the common and culturally acceptable brick and mortar constructions.

In terms of reconciliation, while the Government works through the constitutional framework for political reform, it is also important to recognize and address the effects of the war, especially on the most vulnerable sectors of the population. It is expected that the fifty thousand houses program if targeted correctly will make a significant contribution in that regard.

It is interesting to note that the Government enjoys a two third (2/3) majority in Parliament for its annual signature finance bill and that both the first and second readings of the budget has passed with greater than one hundred and fifty (150) votes, being a two third majority in the House. A Government which commands that much support in the legislature should not waste this majority on business as usual, but move towards effecting the economic, democratic and reconciliation reforms which Sri Lanka, so badly requires.

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The SLFP contribution to devolution and constitutional reform

Posted by harimpeiris on November 13, 2017

By Harim Peiris

(Published in The Island of 11th November 2017)

 

The recently concluded three-day debate by the Constitutional Assembly on the Interim Report of its Steering Committee was an excellent exercise in seeking to move forward the State reform process in Sri Lanka. The debate demonstrated that there was a degree of common ground and areas of sufficient consensuses not only between the two major parties in government, the UNP and the SLFP but even with wide sections of the opposition. Old hackneyed terms such as why we need reform or there is no need for devolution etc. was largely absent from the mainstream discourse. With the Parliament focusing its attention on the national budget to be concluded with the December parliamentary recess and January being dedicated to the scheduled local government elections, further progress on the constitutional reform will be after the dust settles from the local government elections. The outcome of the elections, while very local in focus and scope will nonetheless impact the politics of the reform process.

Within this context, it is worthwhile for the Sri Lanka Freedom Party (SLFP), which finds itself both heading the government through the presidency but having a divided parliamentary group in both government and opposition to reflect upon its rich tradition of contributions and commitment to state reform including devolution of power.

SWRD Bandaranaike’s advocacy of Federalism

 

It was SWRD Bandaranaike, the founder of the Sri Lanka Freedom Party (SLFP) who even before the formation of the party, at the time when he was articulating his political vision for the then Ceylon, who advocated the concept of a Federal State. The arguments made at that time by Mr. Bandaranaike was that federalism would be the best method to enable us to reflect the diversity of our society.  He articulated these views on federalism in six letters which he wrote in 1926 to “The Ceylon Morning Leader”. Accordingly, the Bandaranaike-Chelvanyagam pact was a reflection of his own belief that devolution of power was an appropriate, suitable and desirable state structure for Sri Lanka. In more recent times, his daughter and subsequent SLFP leader Chandrika Bandaranaike Kumaratunga was to bring the SLFP back to power after a long spell in opposition with a clear political pledge to bring about devolution of power and other constitutional reforms.

President Chandrika Bandaranaike Kumaratunga (CBK)’s proposed new constitution

 

This return of the SLFP to power in 1994, under the leadership of CBK was with a clear commitment to constitutional reform and devolution of power. The SLFP proposals of 1994, popularly referred to as a “package”, resulted, after a nationwide dialogue and consultative process, in the proposed new constitution of August 2000. As the SLFP led People’s Alliance Government of 2000 had only a single seat majority in the house, it was a miracle that the proposed constitution of 2000 came as close as it did to securing the required two thirds in parliament, falling only about eight votes short according to the then chief government whips office.

President Mahinda Rajapaksa’s commitment through the All-Party Representatives Committee (APRC)

 

The Mahinda Chinthanaya “Love Dinnana Maga” or the Mahinda Chinthanaya – Path to Success, the election manifesto of President Mahinda Rajapakse from which he sought re-election in January 2015, has a clear commitment to constitutional reform including the devolution of power. In its section two (2) titled, A Wide Political Reform – A New Political Culture, President Rajapaksa’s manifesto of 2015, states as follows.

“We have been battered for 36 years by the 1978 Constitution which was thrust upon our people and country, without an appropriate debate or discussion. We must also collectively acknowledge that our Constitution is now further distorted due to the various amendments over the years, some of which are not consistent with others. Therefore, instead of amending the Constitution further with piece-meal changes, I will take action to formulate a new Constitution that reflects the peoples’ ideas, aspirations and wishes, within a period of one year.”

It further goes on to state “The entire Parliament will be formed as a Constitutional Council consisting of peoples’ representatives belonging to all political parties, which will identify the peoples’ expectations and aspirations in order to formulate a new Constitution.”

That this publicly stated commitment on which Mahinda Rajapakse secured his unsuccessful support base of forty-seven (47.5%) of the electorate was not a flash in the pan, because President Rajapakse had been making such policy statements before. In his keynote policy speech on 11th July 2006 as President, to the inaugural session of the All Party Representative Committee (APRC) convened and established by him with the objective of seeking a consensus on reforms to the Sri Lankan State, he stated as follows.

“Our objective must be to develop a just settlement within an undivided Sri Lanka”. He further states “We must explore past attempts from the Bandaranike-Chelvanayakam Pact onwards. We must draw appropriate lessons from the experience of other countries”.

With the stated commitment of President Rajapakse at the 2015 presidential election, that it becomes clear that both candidates at the presidential election in 2015, Mahinda Rajapakse and Maithripala Sirisena, committed themselves and their political program and objectives to constitutional reform.

Accordingly, over ninety seven percent (97%) of the people who voted for these two candidates have given an overwhelming mandate for constitutional reform. Accordingly, the process of constitutional reform through the Constitutional Assembly, is a process which has a popular mandate. The actual reforms themselves or what would be the exact output of this process is left to the apex legislature of our country to devise through a process of dialogue and discourse, including civil society consultation.

As the country moves forward on the constitutional reform process, especially leaders and members of the SLFP should reflect on Sri Lanka’s lost opportunities of the past and not let the country lose out yet again on the window of opportunity presented by the unity government and the consensus around constitutional reforms, to enact the state reforms which Sri Lanka so badly needs.

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