Lanka’s debt crisis and global recession - EDITORIAL

Hit hard by the Covid-19 pandemic, rampant corruption, rising oil prices and economic mismanagement under previous governments, our country is in the throes of its worst economic crisis since it became independent from Britain in 1948. 

And, the worst is yet to come from the looks of it...
Recently the Bakers’ Association announced that with the increased price of wheat flour in the market, they would be forced to raise the price of a loaf of bread. According to the association, the new price for a simple loaf of bread could cost Rs.300/- per loaf!

No lesser person than our President himself has repeated often enough, that the next two years are going to be difficult. Figures released by ‘Economynext’’ ‘in September 2022, reveal in Lanka’s informal sector wages started to pick up in rupee terms, but are unable to keep up with racing prices, with real wages down after inflation.
In the agricultural sector, wages climbed 28% in the 12 months to June 2022. But the wages in reality were down by 11%, the organization has said. The NCPI (National Consumer Price Index) has rose by nearly 60% and food inflation soared by around 90% year-on-year in August this year.

In like manner while public sector wages rose in January, real wages decreased by 28.9% by June. On the plantation sector, the conditions are even worse, where many estates pay workers lesser than Rs.1,000/- per day.
Unsurprisingly, Sri Lankans from across the country are lining up at passport offices to get new travel documents or to get expired passports renewed - desperate for a way out of our crisis-marred country. Media reports a total of 156,179 have gone abroad in search of employment between January and the first week of July this year. 
Can we blame our citizens who are attempting to leave the country in droves? Even the government is encouraging public servants to work abroad for five years by offering them ‘no pay leave’ to cover their period of absence.

Yet, Sri Lanka is not the only country facing an economic crisis brought on in the aftermath of the Covid-19 lockdowns and corrupt practices by ruling elites. The crisis has affected the economies of diverse countries worldwide. A number of countries in Africa and Asia are in danger defaulting debt repayment and are seeking IMF bailouts. Among them being Pakistan in Asia and Zambia in Africa - both former British colonies - and as in Lanka’s case appealing for IMF bail outs.

Today even Britain, our former colonial master, is facing an economic crisis and until Tuesday (September 6), was in a political crisis of sorts, after former PM Boris Johnson was forced to resign amid the ‘partygate scandal’ following his breaking of Covid-19 lockdown rules when the pandemic was at its height in the UK. 
Britain’s new Prime Minister Liz Truss who took office on Tuesday, inherits a country gripped by its worst cost-of-living crisis in generations, with inflation into double digits and energy prices shooting up. Millions of families in the UK, surveys reveal, face a painful choice between eating and heating this winter.

The biggest price increases are for bread and cereals, dairy, meat and vegetables, with the rising cost of food leading to record increases for restaurant and hotel prices and pushing up the cost of takeaways. Helen Dickinson, Chief Executive of the British Retail Consortium (BRC) said “households and retailers are preparing for a particularly tough time ahead.”  
However unlike Britain, Sri Lanka needs to satisfy IMF guidelines to help restore economic stability and only then will that organization extend the 48-month US$2.9 billion loan needed to restore stability. The guidelines include a satisfactory debt restructuring, with creditor countries. 

Among other IMF guidelines, is a requirement for an autonomous Central Bank, which may require a new Central Bank Act, the IMF has said. Can our disparate political parties put aside their petty political differences even at this critical stage, to drag the country out of the bankruptcy they have collectively pushed the country into? Sadly, even today they are busy splintering and dividing instead of coming together to overcome the dire problems the country faces.

It is time our political leaders put country first above desires for personal aggrandizement. We would like to remind our politicians and fellow countrymen and women of the late US President John Kennedy’s stirring words: ‘Let us not ask what our country can do for us, but rather what we can do for our country’. 
Perhaps this was the poet’s cry when he wrote ‘Give me a bard said Lanka’.