Sri Lankan government grapples with legitimacy crisis
Upon his return from international engagements in Cuba and New York, President Ranil Wickremesinghe found his home country in turmoil. While he held his own on the global stage alongside world leaders, back in Sri Lanka, economic and political challenges are eroding his government’s legitimacy.
At the G77 Summit in Cuba, President Wickremesinghe emphasized the role of science, technology, and innovation in the development of emerging nations. He addressed the growing technological divide in the 21st century and the need to adopt digitalization and cutting-edge technologies like Big Data, IoT, AI, Blockchain, Biotechnology, and Genome Sequencing. He also reaffirmed Sri Lanka’s support for the new Havana Declaration, advocating for the collective voice of G77 and China in international forums.
Addressing the UN General Assembly, the president drew on his experience in peacebuilding to call for reforms within the UN Security Council, emphasizing its role in maintaining world peace. He also highlighted his government’s efforts in economic, financial, institutional, and reconciliation reforms, aiming to rebuild trust between the people and the government.
However, Sri Lanka’s economy presents formidable challenges. The country experienced a sharp economic decline, with a GDP contraction of over 7 percent last year and an 11 percent decrease in the first quarter of this year. In the second quarter, the economy shrank by an additional 3 percent. The apparent absence of shortages and queues is not due to improved economic performance but rather because people have less money to spend.
With inflation effectively halving real incomes and high taxation further impoverishing middle-income and professional individuals, many are leaving the country, creating significant gaps in key economic sectors. The government’s attempts at tax reform and increased sales taxes have not been sufficient to cover the country’s financial shortfall. Government revenues fell short of the agreed-upon revenue target by Rs 100 billion, casting doubt on the possibility of IMF support. Concerns persist regarding the efficient utilization of tax funds, amid widespread belief that misallocation and pilferage remain prevalent.
The burden of economic restructuring appears to fall disproportionately on the poor rather than the rich, causing widespread discontent. Dr. Nishan de Mel of Verite Research disputes the government’s stance that banks would collapse if the banking sector bore some domestic debt restructuring burden. He argues that other countries that restructured debt shared the burden with the banking sector, emphasizing the need to protect banks during such processes.
The government’s legitimacy is further undermined by perceptions of unfair decision-making. Ministers currently in office were compelled to resign just a year and a half ago due to public outrage over alleged corruption and mismanagement. While these ministers were legally reappointed, the government’s legitimacy remains questionable.
Addressing these concerns and ensuring fair decision-making is essential to bridge the trust deficit. However, the government’s engagement with the IMF may be at risk if remedial measures are not taken. A public opinion survey by Verite Research revealed that 45 percent of Sri Lankans believe the IMF will worsen the economy, while only 28 percent believe it will improve it. Mounting economic difficulties could lead to protests and agitation campaigns.
Some government members have suggested that safeguarding the IMF program may require postponing elections, raising concerns about democracy. Two draft laws, the Anti-Terrorist Act and the Online Safety bill, have been criticized for restricting freedom of expression and political communication. The Bar Association has called for their withdrawal, citing potential impacts on democracy and the rule of law.
As economic woes persist and the suffering of the population grows, repression through laws and security forces may prove unsustainable in the face of public discontent. The government must address economic challenges while upholding democratic principles to regain legitimacy and foster stability.