Dr Dushni Weerakoon, Executive Director of the Institute of Policy Studies of Sri Lanka (IPS), discusses the pressing issues confronting the economy as we head for elections later this year and delve deep into the attitudes and ideas that will influence our choices and determine our future.
Reflecting on the current socio-economic crisis, and the persisting challenges in governance, economic stability, and development, Dr Weerakoon also weighs the significant impact of ideological rigidity on policy-making, the need for pragmatic solutions, adjusting attitudes tilting towards entitlement and the need for reform in both public expectations and corporate sector responsibility. The noted economist also critiques the media’s role in shaping public discourse on fundamental economic issues. What follows are excerpts of Dr Weerakoon’s thoughtful musings:
Business-as-Usual
The realization that Sri Lanka has entered a significant economic crisis through its actions is deeply troubling. Looking ahead, the trajectory suggests we are falling behind, especially compared to our South Asian neighbours like Bangladesh and India, whose impressive growth rates and investments in infrastructure starkly contrast with our situation. Despite our high literacy rates and previous advantages over even some East and Southeast Asian countries, we find ourselves in a challenging position. The key question now is how to make the best of this situation, acknowledging that the responsibility for change lies with us.
The sporadic fixes we’ve been applying—akin to placing small plasters on large wounds—won’t lead to the fundamental shifts needed in our economy, politics, or governance. The crisis has regressed our development by years, yet there doesn’t seem to be a transformative shock on the horizon that could radically alter our economic operations.
The potential for change hinges on the political landscape’s capacity to evolve without destabilizing the country, coupled with a genuine appetite for economic reform among political leaders and the populace. However, the prospect of a structural break that could redefine our future remains uncertain.
Yet, it’s not all negative. Sri Lanka’s mature democracy has allowed it to navigate the crisis without the level of dysfunction seen in other regions. This resilience could be attributed to our society’s aversion to repeating past conflicts and a desire to maintain peace, despite the challenges. However, there’s a sense of lethargy, a shrugging acceptance that impedes active efforts for systemic change.
Reflecting on historical comparisons, it’s evident that Sri Lanka’s responses to economic challenges have been tepid compared to the proactive public reactions in neighbouring countries. Some attribute this to Sri Lanka’s historical economic stability since independence or the laid-back nature attributed to island life. Yet, these interpretations should not deter us from confronting the need for a decisive and unified direction.
For Sri Lanka to recover and progress, a concerted effort to align on a sustained, uninterrupted policy direction for the next decade is essential. Without this commitment to continuous progress, every setback could further hinder our ability to emerge from this crisis. The path forward requires a collective reevaluation and a dedicated pursuit of effective, long-term strategies.
Ideology and Attitudes
Ideology plays a crucial role in shaping a country’s development framework, dictating whether priorities are set towards social justice, market freedom, or a balance of both. Economic strategies are inherently linked to ideological beliefs, influencing whether a nation leans towards market solutions or prioritizes social equity. Historically, approaches have oscillated between being slightly left or right of centre, reflecting a blend of these ideologies without fully committing to the extremes of either.
In the face of challenges and shocks to the system, however, there is a pressing need for pragmatism. Recent hardships and their uneven impact on society demand a flexible approach that transcends ideological rigidity. It’s not feasible to purely focus on leveraging market forces or exclusively addressing social inequities. Given Sri Lanka’s integration into the global economy, decisions made locally resonate beyond national borders, affecting international relationships and financial support.
This moment calls for an understanding among voters and policymakers alike that the status quo cannot persist. Adjustments in areas like healthcare, education, and subsidies are inevitable, with savings redirected towards social protection for the most vulnerable. Broader reforms are necessary, raising questions about the education system’s ability to equip citizens with needed skills, strategies to address brain drain, and the role of the private sector in economic recovery.
The path forward involves recognizing key areas of focus, weighing the advantages and disadvantages of initiatives such as privatizing parts of the education sector, and exploring mechanisms to support those who might be left behind. Solutions are within reach, but achieving them requires a departure from business-as-usual. This entails greater government openness to consulting a wide range of stakeholders and securing their support for reforms. The lack of policy continuity, a consequence of the democratic process, further complicates the implementation of long-term strategies, highlighting the need for a cohesive and adaptable approach to governance and development.
Pivotal Elections
In reflecting on the roles of policymakers and the public, it’s clear that the responsibility for shaping policy lies with the former, while the latter chooses leaders based on the policies presented. However, a significant issue is that elections have rarely been policy-driven; instead, they often focus on personal attacks and unrealistic promises. This points to a need for voters to critically evaluate the promises made to them and to hold elected officials accountable for their failures to deliver.
Drawing on our experiences since independence, it becomes evident that despite initial promises, the country has struggled with consistency in policy and leadership. An illustrative example of this challenge was the attempt to establish a National Policy Commission in response to the economic crisis, aimed at ensuring policy continuity regardless of changing governments. Despite initial enthusiasm and a series of meetings to establish this commission, the initiative eventually lost momentum and was abandoned. This situation underscores the need for political reform and a commitment to sustained policy direction, which is critical for addressing long-term challenges.
The current economic landscape, including negotiations with the International Monetary Fund and efforts to restructure debt, highlights the absence of detailed policy discussion and public debate on the specifics of these crucial issues. This lack of discourse is particularly concerning as the country approaches important elections, with little focus on the concrete policies needed to guide economic recovery and growth.
Addressing these issues requires a comprehensive approach that includes not just macroeconomic stability but also strategies for sustainable growth. The significant brain drain, marked by the outmigration of young professionals, poses a grave threat to the country’s future, underscoring the urgency of implementing policies that can reverse these trends. For Sri Lanka to achieve its potential and avoid falling behind faster-growing economies, both policymakers and the public must engage in more substantive discussions on the country’s economic direction and the policies necessary to ensure a prosperous future.
Reflecting on attitudes towards subsidies and protection, it becomes clear that a pervasive sense of entitlement is a significant issue. Many of us have grown up with the expectation that the government should provide education, jobs, and healthcare.
This expectation is especially strong among middle-class families, who place a high value on education. However, when confronted with the idea of the government reducing funding for tertiary education, there’s clear resistance. Even among students and young researchers who understand the financial challenges faced by the government—such as limited revenues and high expenditures—they struggle to accept the notion of paying for higher education.
This mindset extends to the corporate sector as well. While there is general support for Sri Lanka opening up and integrating with the global economy, businesses often seek incentives and concessions when their interests are directly affected. This approach complicates the pursuit of open and transparent policymaking. It underscores a broader responsibility among the corporate sector to support government reforms, even when these may not align with their immediate interests.
This is particularly true for industry associations and chambers of commerce, which can amplify diverse business voices. Yet, even within these groups, conflicts arise due to differing priorities, such as domestic production versus trade.
The dialogue between the government and the private sector is crucial. For instance, during a webinar during the lockdown period, when the private sector was asked how they could contribute, the suggestion to revise fiscal policies and rethink tax strategies was met with silence. This indicates a reluctance to address difficult issues proactively, underscoring the need for a collective effort to advocate for necessary reforms.
Think tanks like the IPS and others play a role in this ecosystem, pushing for reform through quieter, less public avenues. We aim to influence progressive political leaders, policymakers, and government officials by providing insightful analyses and advocating for change behind the scenes. This approach is vital, as it contributes to a broader understanding and implementation of reforms necessary for sustainable development and financial stability.
On the Media:
The media landscape has undergone significant changes in recent years, particularly with the shift away from traditional print media towards online platforms, including social media, following the COVID-19 pandemic. This transformation has raised questions about where people now source their news—whether through television, social media, or other digital channels. Understandably, media outlets focus on headlines to attract viewers or readers; after all, their goal is to draw attention to their content. However, this approach has also impacted the depth and quality of reporting, especially on complex issues.
Some media outlets do grasp the intricacies of the topics they cover, but they are in the minority. Many reports lack a deep understanding of the fundamental economic issues at hand, which is evident in both written articles and TV panel discussions. Despite invitations to participate in such discussions, it’s rare for participants to be challenged with hard questions, possibly due to a lack of background knowledge on the part of the interviewers. Nonetheless, the media does play a role in presenting various viewpoints, even if the depth of understanding may be lacking.
Economic news coverage, for instance, often misses the opportunity to ask critical questions that could help the audience understand the implications of political decisions, such as negotiations with the International Monetary Fund or debt restructuring. This could stem from a reluctance to confront interviewees or a lack of comprehensive knowledge on the interviewer’s part.
Furthermore, the ease with which individuals can present themselves as experts and make unsubstantiated statements on public platforms without adequate fact-checking is concerning. It underscores the need for both media professionals and the public to critically evaluate the credibility and background of those making public statements.
As participants in these discussions, we must hold ourselves accountable for the accuracy and depth of our contributions. This includes recognizing that solutions like privatization cannot be universally applied across all sectors due to varying implications for equity and efficiency. For instance, while the government may not need to run airlines, there are essential services where government involvement is crucial to ensure equitable access.
To elevate public discourse, we need to focus on evidence-based analysis and encourage both the media and political leaders to engage more critically with complex issues. This effort should aim to enhance the general public’s understanding of the implications of various policies and decisions, ensuring that discussions are informed, nuanced, and relevant to the real-world impacts on citizens.
Concluding Thoughts
My primary concern is finding a way for us to emerge from this situation. Unless we’re prepared to implement substantial reforms, such as reallocating fiscal resources towards skill development and encouraging private sector involvement, our efforts may fall short. Even if it means enduring painful tax increases, this sacrifice is necessary. By laying this foundation, we could potentially achieve and maintain a growth rate of 5-6% over the coming years, thereby preventing the continuous emigration of Sri Lankans by presenting them with viable opportunities to stay.
Without these changes, we risk settling for meagre growth rates and facing recurring economic setbacks every few years, which is a disheartening prospect.
The current political debates and legislative discussions, including those in the media and private sectors, have not shown signs of leading to significant change. The hope is that the announcement of elections and the presentation of manifestos might prompt a closer examination of specific policies, ensuring we are moving towards resolving these issues. It underscores the importance of the choices we make at the polls, highlighting concern about the type of politicians we elect in Sri Lanka, particularly the absence of young, skilled candidates. This issue, however, is not unique to Sri Lanka but is evident worldwide.
There was a moment, two years ago when there seemed to be a consensus across parties that we could not continue in our previous direction. Sadly, that consensus appears to have faded. This situation underscores the need for a significant electoral change, although it remains uncertain whether the upcoming electoral cycle will mark such a shift.