Can we make it out of present financial crises? - EDITORIAL

Sri Lanka is facing its worst economic crisis in years. The acute shortage of US dollars in the country has pushed up the price of basic food items including milk, an essential ingredient for a nutritious meal. Our country is facing a situation that is bad in two different ways - increasing prices and high external debt.
UNICEF reports show over 5.7 million people, including 2.3 million children, require humanitarian assistance, making this country among the top ten countries with the highest number of malnourished. 

In other words, Lanka is now in the company of countries such as Afghanistan whose economic and humanitarian crisis has deepened since the Taliban took control in August. 
Acute malnutrition is a single factor uniting the country caused food shortage and threatening food security. A report by Human Right Watch states at least 55% of the population is “expected to be in crisis or emergency levels of food insecurity.”

In Venezuela where the economic crisis has been ongoing for a longer period of time. One out of every three Venezuelans is food-insecure and in need of urgent food supplies, according to the World Food Programme (WFP). Lebanon, Syria, Iraq, Libya and Yemen are teetering on the brink of humanitarian catastrophe. In 1995, Mexico too was facing a somewhat a similar economic crisis to ours. 

Last Thursday Mexican Ambassador designate Federico Salas met with journalists at a round table discussion where he revealed that in January 1995, Mexico was on the verge of defaulting on its foreign obligations (debts). The US government, through the IMF contributed and helped align the contribution of others, with a financial rescue package to avoid it.
The US, under President Bill Clinton (despite Congressional disapproval), in February 1995, provided a loan package of up to US$48.8 billion meant to solve Mexico’s liquidity crisis in full. It was not a measure to provide interim financing to give the Mexican government additional time to negotiate a work-out with its creditors an accord with the IMF. The bulk of the loans were to be repaid on a long-term basis between June 1997 and June 2000.

Mexico’s people underwent tremendous suffering and shortages during that period. But by the time the loans were due, Mexico was able to repay the US loan in full.
There is much for us in Sri Lanka to learn from the experience. Everyone - from politicians to the ordinary man on the street - had to tighten their belts. Prices of essentials kept rising or were not available. Government came down heavily on corruption and those found to be cutting shady deals dealt with.
But as mentioned earlier, Mexico was able to come out of the crisis. Today Mexico’s economy is out of the woods. Tourists flock to the country. Mexico hosts the third highest number of tourists worldwide. 

So, can Sri Lanka come out of its present crisis?
On October 31, the Colombo Consumer Price Index (CCPI), announced food inflation (Y-o-Y) decreased from 94.9% in September 2022 to 85.6% in October 2022, people could not have been blamed for saying, ‘for God’s sake don’t jinx it. 

Last morning; 13 days later, even as this editorial was being written, the government announced to its already price-hike-shocked nation, an increase in the price of diesel and kerosene. Diesel is the commonest form of fuel used for transport purposes. Whether it be public transport or transport of goods, diesel is the fuel most commonly used today. 
The price of kerosene - the fuel used by ordinary citizens for cooking as well as for lighting, too has also been increased.

In other words, our people are about to witness another round of price increases at a time when UNICEF reports show over 5.7 million people, including 2.3 million children, require humanitarian assistance. The UNICEF report adds Lanka is now among the top ten countries with the highest number of malnourished children.
True, times are hard, but countries like Mexico too faced similar crises and made their way out of the mess. Among the measures taken was government cracking down hard on corruption. 

During recent discussions with the IMF, that organization too has drawn attention to the ever-growing problem of corruption and its detrimental effects. Sadly for our country and its people, corruption continues to ride supreme, despite the nation’s children literally starving. A case in point is the recent alleged coal scam. Medical bodies too have drawn attention to misuse of funds for essential drugs.
The question that arises is, whether or not, our leaders have the political will to crack down on ongoing corruption OR whether they too are part of these corrupt schemes and practices.