In early May, Sri Lankans voted for a third time in a series —this time to elect members to the local authorities. The ruling National People’s Power (NPP) secured a majority of seats in 266 out of 341 local bodies in an election considered a popularity test for the incumbency. The NPP secured 43.26 percent of the vote, recording a dent in popularity, also reflective of the fragmented nature of votes at the local level.
Into its seventh month in office, the NPP appears tight-lipped on matters of policy and plans, preferring to avoid discussion and instead offering combative television performances by junior ranks on public concerns that beg answers. The May 6 vote can be best considered a quiet reprimand from the people, impatient with the slow delivery. While the government has a five-year term, it still needs to manage public expectations and prevent public outrage.
The brewing dissent is partly of the government’s making. The NPP, while indulging in rhetorical condemnation of corruption as the only reason for economic collapse, did not adequately explain to the public the severity of Sri Lanka’s economic situation. The NPP sometimes made it appear a management problem, which only the NPP could address. People still trust the government to have integrity but question its ability to fix the economy without passing further burden on to them.
The government is now saddled with the Herculean task of managing an economy that successive governments have mismanaged. It has also inherited a much-maligned reform agenda via the International Monetary Fund (IMF), from which there is no easy departure. The administration is naturally finding it challenging to explain that things are not as easy as they appeared to be when it was in opposition. Barring the occasional protest, it is unlikely that public outrage can be prevented from spilling onto the streets in some form soon if the administration does not take action to move the economy forward without compromising public trust.
Sri Lanka is currently attempting to negotiate the hefty 44 percent reciprocal tariff announced by US President Donald Trump. The surprise ruling by an American trade court blocking steep tariffs may offer the island some respite, but it calls for prudent handling. The island’s bulk exports head to the US, and the proposed tariff poses a serious threat to the country’s export earnings. How Sri Lanka negotiates and plans to use the small window of opportunity will depend on solid foreign policy and trade negotiating capacity.
This questions the current dispensation’s foreign policy, which is often unclear and, at times, raises doubts about strategy. Take, for example, how India’s neighbours have moved away despite its “Neighbourhood First” policy. Some have looked to the West, while others towards China. Colombo could use the opportunity to consolidate its trade partnerships with India in a manner that bolsters the economy and maximises its geostrategic benefits. During the economic crisis, India played a crucial role, although it was often viewed with misgivings due to its chequered past. As economists note, it may be a window of opportunity to collaborate with India to gain a better foothold in negotiating with the US, given the close economic ties between the two countries. In doing so, Colombo should not overlook long-term loyalties that have remained steadfast in their friendship or ignore China, Sri Lanka’s largest bilateral creditor.
This calls for a foreign policy that is rooted in economic, trade and geostrategic interests. In short, Colombo should work with all these powers to deliver the best results at home. Sri Lanka needs a well-crafted balancing act. The Dissanayake administration should learn from the Rajapaksa regime that playing one against the other does not yield long-term beneficial results. The singularly pro-China approach led the island into deeper debt, which eventually brought the economy to a grinding halt and created powerful enemies.
In short, the government must learn to balance the Neighbourhood First with Belt and Road. It also needs to strategically involve partners to resolve the US reciprocal tariff matter, which could otherwise deliver a deadly blow to an economy that has lost its shock absorbers. Now, it is a matter of carefully managing competing geopolitical interests to secure economic advancement. In this regard, there are lessons to learn from countries that maximised their geostrategic locations and others who repositioned themselves to meet new economic challenges.
It is this lack of policy coherence that prevents the country from moving forward and making strategic partnerships that can help Sri Lanka overcome its economic woes. Beyond bold action, it is now that the island requires innovative policy approaches that do not make choices that harm.
The NPP has been prudent in not abandoning the IMF formula despite firm election pledges to the contrary. This is essential for economic recovery and for maintaining a semblance of normalcy. It is equally important to prioritise strategy over old affiliations or political ideology, as challenging as it may be.
The reform agenda is quite unpopular among many, but it now appears to be the only available antidote to the island’s problems. Having opposed it before the polls, the government now finds it difficult to convince the people of additional tax revisions and other controls that pass the burden to them.
In addition, the government should avoid walking back on previous plans to restructure loss-making and underperforming state-run enterprises. As challenging as it may be, the government must reduce the massive public sector workforce, which exceeds 1.3 million, a political dumping ground where successive governments created jobs for political gain. What the country has also not seen is a move toward increasing productivity.
All the strategies in the world and partnerships cannot deliver Sri Lanka’s economy unless strategic attempts are made to improve productivity. Despite the stated policies, there remains significant confusion about how the administration intends to fix the island’s flagging economy. This, too, becomes a matter of policy intricately linked to foreign policy.
Meanwhile, time is running out, slowly but surely, for an administration brought to office with great expectations. Along with that, public patience too, is on the wane. For President Anura Dissanayake and his brigade, it is a wake-up call to review policies and adopt a pragmatic, geo-strategically prudent foreign policy and economic approach if Sri Lanka is to move forward.
Dilrukshi Handunnetti
Award-winning journalist and lawyer; founder and director of the Colombo-based Center for Investigative Reporting
(Views are personal)
(dilrukshihandunnetti@gmail.com)