Mahinda, JVP and the economy
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Author:  Percy [ Mon Nov 07, 2005 12:37 am ]
Post subject:  Mahinda, JVP and the economy

Mahinda, JVP and the economy

@ DM / Monday, November 07, 2005
By Dinesh Weerakkody

Until recently Zimbabwe was considered as one of the success stories in Africa, a vibrant tourist industry, a dynamic private sector and a booming export sector. Today it resembles a typical African banana republic. Since last year prices have grown by 50%, the national currency has lost half its value in two years, and the country is indebted heavily and poverty has become so bad that people are running for cover to other countries. To add to all this, the IMF’s $ 650 bail out package has also been suspended.

Does this sound very familiar to us? In 2000 we had blackouts, aid was suspended and we had a – 1.5% negative growth. Today inflation is up, our foreign reserves are down, government borrowings are up and COL has hit record levels and legislation is either overturned or introduced to control the so called haves. Today the situation is no better with inflation running at 18%, the government in debt to many private institutions and is printing money to meet government expenditure.

The JVP and Mahinda for sure are not affected by this situation because their only focus is to create an opinion that the UNP will divide the country and sell state assets to foreigners. Inflation management is even not in the Mahinda Chintanaya. Perhaps the JVP thinks it is the job of Ranil to bring down the COL and manage the economy, while they will ensure that the NE problem continues into the future. We all agree with the JVP that providing subsidies to the poor is the responsibility of the state. But by lambasting the haves and reducing the right to private capital the JVP will push Sri Lanka to become a Zimbabwe in no time. This is why people are now asking whether Mahinda is representing the JVP or the SLFP viewpoint? Because today Mahinda sounds more like a JVP leader when he says NO to any privatization.

JVP Theories
In the theories of the JVP foreign investors are foreign invaders. When the Rupee began its slide in 2004 The JVP leadership proclaimed that it was actually some Central Bankers who were driving the Rupee down, later on they came up with a another theory that subsidies should be funded off a national lottery and our Dollar loans should be paid in Rupees. Sounds very much like the leaders in Zimbabwe. On the interest front, interest rates are 9% and inflation is over 15%. So we have now negative real rates. The gap can only widen and affect our pensioners very badly. Economic growth has fallen and inflation is now double digit. Other than a few economic planners no one really seems to be too worried about economic growth. Most people want are subsidies and jobs.

They forget that they are paying for these subsidies in the form of inflation and rising COL. Then the rich is still happy because for some reason the Stock Market sentiment is strong and tenders are also available. The investors are however worried with the escalating costs. As for the JVP they are not bothered at all as to what the private sector or the people are going through, because the only political issue that can get Mahinda elected is by creating an opinion that Ranil is going to divide the country, which they very nicely created to their advantage in the 2004 election. They are doing that in style again to effectively mesmerize the masses.

The fact that most of our people live below the poverty line and we need high levels of growth to get them out of the poverty trap is beside the point. The SLFP its main partner has also done next to nothing to give ear to public discontent and point the JVP in the right way. Perhaps this is why Somawansa and the JVP are more effective than Mahinda and CBK put together. If the JVP is serious about running this country they urgently need to get some lessons on economic management. In fact the JVP created mayhem in cabinet, prevented any significant reform constituted, as a result we lost millions of World Bank, IMF and ADB dollars. This is perhaps why CBK has called the JVP hooligans incapable of seeing reason even with regard to the national issue-the NE conflict.

JVP in government
The only thing the JVP is good at is rhetoric and confusing the public. The JVP was in fact part of the UPFA government for over 12 months, what did they achieve? Their only major program the wewa reconstruction effort was a disaster. They are responsible for the current economic bungling, they scared the living daylights out of some of our top investors and planners. They effectively pushed CBK to pass a few anti business laws that shocked many MNCs. The JVP pro war chanting only helped the JVP to retain their vote base because the fear of war effectively drove away some of the big investors who were contemplating of investing in this country.

If the JVP had total control in the government they would have with their policies definitely put us on the Zimbabwe path. The pathetic irony in sunny Sri Lanka is that many of our people are gullible and have very short memories. In fact most people in 2004 April believed everything that was told by the JVP about Ranil’s government and showed Ranil the door. However on his part he too failed to acknowledge the ground realities that confronted his government and his ministers as a result of this misinformation. As a result the people turned to the JVP to usher in the new political culture they promised i.e. discipline in government; eliminate corruption and delivering the list of promises. Six months into its term, it became abundantly clear that like the two major parties the JVP too were making a mockery of their pledges. Therefore unless the JVP changes track drastically they will find it hard to shed away its past where in the guise of patriotism they slaughtered the country ‘s best brains in cold blood.

The Economy
The debt burdened economy and the affect of the ever rising COL are now felt by the business community and the average citizen of this country. The nation after languishing in the doldrums from 1999 and a recession in 2001, the economy recovered with economic growth being as high as 6% in 2003. We cannot afford to lose this momentum and repeat history again. The majority of the people of Sri Lanka do not care who enables the economy, as long as it is effectively enabled.

It is high time the people of this country without watching in silence while the politicians do what they desire on an on going basis hold political leaders accountable and responsible for their actions. In this context the Chambers should exert pressure on both sides to at least work together to resolve some of the key national issues. The bureaucracy on the other hand will have to rise from its slumber and do the job it is paid to do by the taxpayer. To make any impact on the electorate the two major parties will have to give ear to public discontent and ensure the government delivers in the shortest possible time. Therefore the UNP and SLFP need to wake up fast and meet the challenge thrown to them by the JVP.

On the other hand the people of this country must realize that in 2002-2003 due to peace there was a resurgence of the economy, endorsement from the international community and optimism. The business community took the risk and began to invest and create employment. The benefit is today visible in the 2004 and 2005 corporate earnings. Therefore it would be tragic for the country if having come so far, we allow all the effort that was made in the past to be lost because the JVP is allowed to increase their tempo against the investor and the peace lobby. The JVP got a mandate not only to stop the division of the country, but also to deliver economic prosperity to the poor.

The reality was that they did not even attempt to bring about an amendment to the CFA, which they criticized so bitterly in the run up to the 2004 general election. So it is very clear that the JVP is only good at undoing the good and is not capable of leading this country into prosperity. They do not have the competence or the maturity to lead this country. For the sake of our future generations they should stop gambling with the country and allow people who know how to govern this country to govern the country.

Their role should be to ensure that our rulers are doing what is good for this country.. The JVP must also recognize the importance of international capital inflows as a strategy for accelerating economic growth coupled with export oriented industrialization. Making life difficult for private investment by promoting exchange control, price control will not help this country to expand the flow of goods and services, investment and technology.

In the final analysis all political parties after December 18th should shed political differences and unite behind a common vision to get the peace process restarted. If not the country will be confronted with a prolonged crisis on the economic, political fronts and they will only make Sri Lanka a sadder place for all of us to live.

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