No clear direction

As Aldoris, the choon-paankaraya, came down the lane happily blaring his signature tune, the trio appeared to be angry and waiting to pounce on him at the gate. “MaeAldoris,mokadaoyagemuhunuavaranayanaththe (I say, Aldoris, why are you not wearing the face mask),” shouted Serapina.

“EihMiss,ekadenanivaryanaene (Why Miss, that is not compulsory now),” he said, as he confronted angry faces.

“Ow,ethCOVID-19viyapthawasangathayathamathiyenawane.Ekahindamuhunuavaranaona-ney (Yes, but the COVID-19 pandemic is still there and all of us should wear masks),” said KussiAmmaSera.

“Denapahugodadenektaledehadenawane (Many people are getting infected once again),” noted MabelRasthiyadu, adding that though the Health Ministry has said wearing face masks is not a requirement anymore, it has advised that this can be an individual choice. Thereafter, Aldoris sheepishly grabbed a mask from his tuk-tuk and wore it immediately.

The resurgence of the pandemic may not be the worst news these days. Even more worrying is the fact that there is clear evidence that the government doesn’t have a short, medium and long-term plan to deal with the fuel crisis and instead is resorting to daily pronouncements as to when the next shipment of fuel is arriving.

Last week, it was stated that the shipment would arrive anytime soon, then on July 10, followed by the Minister of Power and Energy saying he was not sure as to the next shipment schedule. This week it was stated that the next petrol shipment would on July 27! Again this date cannot be believed because the government seems to be gasping for breath in dealing with the crisis and any of its proposed schedules of shipments cannot be relied on. In the meantime, the public continues to form long queues at fuel filling stations.

The new token system also doesn’t seem to be working since those not joining queues – with the government urging people not to form queues outside fuel sheds as there is no fuel in stock – won’t get the tokens. Where does it put them for diligently following instructions from the government?

Just as I finished watching the trio’s antics at the gate and grabbed a ‘ maalupaan’ and a mug of tea from the kitchen, the phone rang. It was Ruwanputha, my friendly, young economist.

“Do you know that while we are seeking US$3-4 billion dollars from the International Monetary Fund (IMF), the country doesn’t still have a plan on how to repay the debt arising out of the new inflow of dollars from various sources? We are only putting together a plan with foreign expertise to reschedule the repayment schedule of previous foreign loans amounting to over $50 billion,” he said.

He was right. While between $6 to $10 billion of new money is likely to come in through India, China and other sources, there’s a need to prepare a plan on its repayment, that too in dollars. We don’t seem to have any such plan.

“At some point (in the future), we would be faced with the same scenario: Not enough dollars to pay debts! We are borrowing left, right and centre from any source willing to lend to us and building a mountain of new foreign debt. In a few years, the same problem will arise – not enough foreign reserves to pay the debts. Shouldn’t we also come up with a future plan to meet our (new) foreign currency payments?” he asked.

Clearly the country is lacking a proper plan to deal with the current crisis, and adding fuel to the fire, the Public Utilities Commission says power cuts will continue for another two years!

The private sector and industry desperately need to know proper schedules of fuel shipments, when the crisis would end (dates, months, years) to be able to continue with their businesses. Without that planning schedule, they are doomed. The government at the moment is issuing a daily report of when the next shipment is scheduled but there is no long-term plan as to when the crisis would be over!

In the meantime, the export sector so far has managed to rake in $5.1 billion in January-May 2022, slightly up from $5 billion in 2021 and $3.6 billion in 2020. If there are dollars coming in from exports, why is there a shortage of foreign exchange for basic needs, one may ask?

That’s simply because export earnings totalled $12.5 billion versus imports that cost $20.6 billion last year. Even by adding $5.5 billion from worker remittances and a little tourism income, there was a shortage to match the import requirements.

The Ceylon National Chamber of Industries (CNCI) also this week raised the lack of a structured short and long-term plan for recovery. “Unfortunately, the government is yet to extend policy responses and create plans for (an) economic recovery,” CNCI Chairman Canisius Fernando said in a statement.

Another headache is the action filed in a US court by bondholder - Hamilton Reserve Bank Ltd seeking full payment with interest of its $250 million invested in International Sovereign Bonds (ISBs), the payment of which is due on July 25.

The government will be up a gum tree if the court holds with the petitioner, as other bondholders might follow this process, leaving the restructuring of the repayment of ISBs (amounting to over $50 billion), in jeopardy. At stake would also be the proposed IMF bailout package.

The lack of planning is clearly seen in a statement that the Central Bank (CB) issued on February 9, 2022 in response to reports that the government may default on its foreign debt obligations. The statement said that Sri Lanka will meet all its debt payments without any default adding: “The CB wishes to state that such claims are totally unsubstantiated and also regrets that these reports carry many obviously factual inaccuracies.”

But then in April 2022, the government admitted that it would “temporarily” default on its foreign debts. With all these unreliable statements, what assurances are there that the problem would be properly addressed by the government to convince the private sector and industry that there is a short, medium and long-term plan to deal with the crisis? The export sector in particular needs a clear plan as to when the crisis would end to plan export shipments, schedules and meeting with buyers’ targets.

As I reflected on these issues, sipping from a mug of coffee (not tea), the reality is that the authorities don’t have a clue about where the future lies – with their response being to issue daily statements as to when the next fuel shipment is due, and that too contradictory!