18 October 2023 12:00 am Views - 430
Following the 2019 Easter Sunday bombings, our economy experienced a steady decline. The subsequent outbreak of the Covid-19 pandemic exacerbated the situation. A number of silly mistakes made by past leaders -like the sudden ban on the import of fertilisers without a plan to meet the disruption- ended any hope of recovery. A while later the country declared itself bankrupt and chaos took over.
In turn, it resulted in Premier Mahinda resigning and Mr Wickremesinghe being installed interim Premier. As the chaos worsened, the then President fled the country.
Following Constitutional requirements, Premier Wickremesinghe was elected President by Parliament.
However, chaos turned anarchic and unseen forces were attempting to grab power.
With years of Parliamentary experience behind him, Wickremesinghe was able to quell these anarchic forces.
He was able to also rally the support of international financial organisations and together with an Indian credit line was able to ease the economic burdens the financial crisis had heaped on the people.
Today, while a semblance of normalcy has returned, the outstanding financial debt has not been settled. Creditor financial agencies and nations have agreed to a debt restructuring process but, details have yet to be worked out.
Again, some of the creditor agencies have demanded that the local debt too, be restructured.
Worse, geopolitics is also playing a role in hindering vital agreements to restructure the foreign debt being put in place.
While the IMF has provided the first tranche of funds to help keep the country’s economy from sinking, a number of international creditor agencies from the Western bloc are demanding China (Which owns around 10% of our international debt) too needs to be on board.
Fortunately, this has now happened. China is one of the countries that has agreed to terms for restructuring the debt we owe that country.
At this point, it is good to remember that China has, over the years been a dependable source of support in times our country was facing near life and death problems. A classic example of this is the 1952 Rubber-Rice Pact.
Back in 1952 when there was a slump in the global economy and our country did not have the currency to import rice and was facing starvation, China came to our rescue via the Rubber-Rice Pact of 1952 –a barter deal- where China provided us with sufficient quantities of rice in exchange for our rubber.
China also valued the rubber at higher than world market prices in exchange for the rice it shipped to us.
From then onwards relations between the two countries grew closer. More recently, during our country’s ‘war on terror,’ China supplied the Government with equipment needed to end the insurgency.
Today President Wickremesinghe is in China to attend the 3rd Belt and Road Forum for International Co-operation (BRI). He has clearly stated the initiative will open up wide avenues for expanded trade, which in turn will help earn the much-needed exchange to emerge from the situation of bankruptcy we fallen into.
Our export trade has decreased. Compared to July 2022, there was an 11.79% decline in earnings. It is therefore necessary to find new avenues of income. The BRI presents such an opportunity.
Though limited quantities of basics are available in the market, many basics are beyond the means of ordinary citizens. According to UNICEF, 56,000 children in Sri Lanka are grappling with severe malnutrition.
Domestic restructuring is going to make the situation of the marginalized even worse.
It is therefore essential we grab all opportunities available to us. The BRI is one such opportunity with new markets being opened at lower costs.
It also opens up avenues where we can become part of the global production chain rather than producing only finished products.
Russian President Putin too will attend the BRI. Could it be possible that President Wickremesinghe will be able to clinch a deal similar to the rubber-rice Pact of 1952 with President Putin? Can we reach an agreement to exchange our tea for Russian oil and gas?
Here’s hoping Wickremesinghe can promote Sri Lanka’s cause and help drag this country out of the present mess.
We will be keeping our fingers crossed.