New burdens of the New Year

Despite President Ranil Wickremesinghe and Central Bank Governor Dr. Nandalal Weerasinghe having attempted to paint a rosy picture of the current economic situation of the country, the situation does not seem to be so rosy, going by various other moves by the government. 

The President in his New Year message said “I understand the great burdens that are placed on all of us and the setbacks that a majority of us suffered due to the country’s abject economic collapse. Yet, I believe that we have already gone through the worst of these times.” Dr. Weerasinghe on his part told media after meeting the Asgiriya Mahanayake Thera in Kandy on Sunday (January 1) that the inflation has started to come down. 

During his New Year message, the President while saying that we have not done as well, as other ex-colonies (of the British Empire) told in the same breath “Therefore, we must boldly implement the proposed social, economic and political reforms to build a prosperous and productive Sri Lanka in the coming decade.” He seems to mean the reforms involving the International Monetary Fund (IMF).

The country is not out of the woods even after suffering severely due to the economic collapse and the resultant declaration of bankruptcy, despite the miles-long queues for fuel and gas having vanished. The hunger and malnutrition have been mounting according to the international and UN agencies that are concerned about the situation. Prices of essential goods and services also continue to increase in spite of the depreciation of the rupee seeming to be fluctuating between Rs. 360 and 370 against the US dollar, for the past few months. 
The 2023 New Year is to see a new tax regime and a steep rise in the electricity tariff. The new personal income taxes will definitely hurt the middle class as the majority of them earn more than Rs.100,000, the amount from which the new increased taxes are to be imposed. The lower stratum of the middle class - leave alone the poor is already struggling to strike a balance between their income and the expenses for their basic needs, including schooling of their children. 

It is against this backdrop that the government is planning to increase the electricity tariff as well, which definitely would have a chain reaction on the prices of other essential goods and services.

 Although Janaka Rathnayake, the Chairman of the Public Utilities Commission of Sri Lanka (PUCSL) has been stressing that there is no need to increase the electricity tariff, citing absence of hikes in the prices of diesel and coal in the world market besides the illegality of increasing tariff without the permission of his Commission, the possibility of the government defying him seems to be imminent. Since the President too is in favour of increasing tariff, Power and Energy Ministry and the Ceylon Electricity Board (CEB) might find a loophole in the law to bypass the PUCSL to do so. 

In fact, the government is implementing the advices or the conditions - as they are called by the Opposition parties - of the IMF to increase the government income and reduce the government expenditure on which the entire IMF bailout package hangs. Hence, the Power and Energy Minister Kanchana Wijesekara and the CEB engineers warn the people to face long hours of power cuts unless electricity charges are increased, as if it was the people of this country who are to blame for the current economic crisis. Obviously, many industries would be  affected by the increase of electricity charges and the ultimate burden of it would fall on the ordinary people. 

People are going to bear the brunt of bringing down the retirement age of the public employees to 60 as well. Already, on the first working day of the New Year train service which is anyway a nightmare for the commuters has been affected by the decision, which also seems to be a part of IMF reform process. People would have to further suffer at public offices which are anyway already highly lethargic. This issue too, if not resolves within days would have a chain effect on many services, since hundreds of thousands of workers would not find any means to reach their workplaces. One can only pray that the year 2023 would not become politically tumultuous as the just departed year 2022, owing to these new burdens heaped upon the people, irrespective of whether the IMF programme would bailout the country or not.