Sri Lanka is on the brink of an economic dictatorship

Whilst there may be certain elements of ambiguity about the constitutional authority of the chief executive (aka the president) of the country on the dismissal and appointment of a prime minister or the dissolution of Parliament, on the critical issue of public finances there is no such ambiguity. It is unambiguously crystal clear in the constitution that the legislature/parliament is the ‘sole’ custodian and authority of the public finances in Sri Lanka and indeed in any democratic country.

Parliament has the sole authority to entertain the expenditure proposals presented by the finance minister by way of an Appropriation Bill (first reading) and the subsequent revenue proposals presented by the finance minister in the budget speech (second reading) and debate both the expenditure and revenue proposals in committee stages (third reading) and approve the same.

Since the financial year of the Government of Sri Lanka is the same as the calendar year, i.e. January 1 to December 31, the foregoing processes must be completed by December 31 of any calendar year so that the finance minister could sign the necessary warrants latest by December 31 in order for the government to access the public money held in the Consolidated Fund of the Treasury.

In addition to the annual budget, any supplementary or temporary (for a shorter time period than a year) public financial bills have to be duly approved by Parliament.

The aforementioned separation of powers between the administrative executive (the president) and financial executive (the legislature) is a deliberate device of democratic governance in any democratic country. This separation of powers is akin to the moral practice of any private company where the chief executive officer (CEO) and chief financial officer (CFO) are always different persons.

However, whereas there is no legal requirement for the CEO and CFO of any private company to be different persons, it is legally mandatory in the business of the government.

Due to the aforesaid constitutional imperative, the former finance minister had presented the Appropriation Bill for 2019 to Parliament in early October 2018 and the revenue proposals were to be presented to Parliament on November 5, 2018. In the meantime, the president sacked the prime minister and the entire Cabinet of Ministers on the night of October 26, 2018.

Now that a new prime minister, who doubles-up as the finance minister has been appointed, there are attempts to present a temporary government expenditure bill to cover the public expenditures for the first three months of 2019.

However, there is no likelihood of this temporary expenditure bill being passed by Parliament before December 31, 2018 because the new prime minister and his Cabinet of Ministers appear not to have a majority in Parliament.

In this precarious scenario, the only option left to the president is to once again nakedly violate the constitution of Sri Lanka and access the Consolidate Fund illegally. It is often said that in order to tell one lie, one may have to tell many more lies to cover up the original lie.

Analogously, the President who is alleged to have violated the Constitution not once but twice within two weeks between October 26, 2018 (the day he dismissed the prime minister abruptly) and November 9, 2018 (the day he dissolved Parliament), may not hesitate to violate the constitution once again.

But the president might think twice before violating the constitution for the third time because his second alleged violation was suspended by the Supreme Court on November 13, 2018, until at least December 7, 2018. Once bitten, twice shy?

If indeed the president violates the constitution and robs the custodian of public money, it would be a greater robbery than what the former prime minster is accused of by the president in the great bond scam of February 2015. It would be ironical for the president to commit a greater crime than the person who he accuses of committing a heinous crime that prompted him to dismiss the former prime minster.

Irony and duplicity has been the hallmark of the incumbent president at least in the past one month; if not, how can one explain the replacement of an allegedly corrupt prime minister with an allegedly corrupt former president? Crying wolf of corruption against the former prime minister appears to be a smokescreen for the greed of political power beyond 2020 by the incumbent president.

The timing of the president’s violation/s of the constitution, that is during the critical stage of the budget cycle, is the most inopportune to say the least. It also demonstrates the illiteracy of the president as regards the constitutional provisions and the budgetary processes. No executive president of Sri Lanka has ever acted so recklessly and selfishly to throw the entire country and its people into abyss.

‘Black Friday’

Already the economy of Sri Lanka is feeling the pinch of the un-presidential diktats ever since the ‘Black Friday’ of October 26, 2018; please note that I am here drawing a parallel between the stock market crash on Friday, September 24, 1869 in the United States, which is popularly referred to as the ‘Black Friday’.

The depreciation of the domestic currency, Sri Lankan rupee (LKR), has accelerated since the Black Friday of October 26, 2018. The International Monetary Fund has suspended the disbursement of the next tranche of US $ 250 million under an Extended Fund Facility. The Millennium Challenge Corporation of the United States has put on hold the disbursement of funds (amounting to a total of US $ 500 million), which was to begin during 2019. The Japanese government has stalled the process of funding a light rail between the administrative capital (Sri Jayewardenepura) and the commercial capital (Fort) of Sri Lanka. The European Union (EU) Delegation in Colombo has threatened to review the GSP Plus tariff concessions to Sri Lankan exports into the EU markets.

The peak tourist season in Sri Lanka, especially for tourists from advanced western countries, is from October to April the following year. More importantly, the Lonely Planet has designated Sri Lanka as the most preferred destination for tourists during 2019.

However, the tourism sector has been severely hit by the adverse travel advisories to their citizens by the governments of the United Kingdom, United Sates and some other European countries in the aftermath of the Black Friday of October 26, 2018.

The tourism sector is the third largest earner of foreign currencies (circa US $ 3 billion per year) to the country after foreign remittances and the exports of apparel.

Above all, three international credit rating agencies have downgraded Sri Lanka’s credit rating. The Moody’s has downgraded Sri Lanka’s credit rating from B1 to B2 negative and Fitch Ratings and Standard & Poor have downgraded from B+ to B. All these downgrades will significantly increase the interest rates for borrowings from the international capital markets by Sri Lanka.

Because of this downgrade, the Central Bank of Sri Lanka has suspended the issuance of sovereign bonds to raise money for the government in the international capital markets. Alternatively, the government has vowed to borrow domestically.

Additionally, the Moody’s has downgraded the credit ratings of three commercial banks viz. Bank of Ceylon, Hatton National Bank and Sampath Bank.

The proposed increase in domestic borrowings by the government will crowd out capital for investments by the private sector thereby negatively impacting economic growth. Moreover, increased domestic borrowings by the government will result in the rise in inflation, which will severely hit the ordinary people.

There is capital flight by the foreign portfolio investors in the Colombo Stock Exchange, who have pulled out nearly US $ 200 million in the past one month, ever since the Black Friday of October 26, 2018.

The repayment of maturing sovereign bonds to the tune of US $ 3 billion is due from 2019 onwards for the next three years, which requires heightened foreign exchange earnings through foreign direct investments, remittances, exports and the earnings from tourism. The foregoing four critical sources of foreign exchange earnings are in jeopardy due to the irrational and untimely constitutional expediency of a power hungry economic illiterate president.

The current political and economic crisis in Sri Lanka highlights the greed for political power between the rural elites and the urban elites; both groups are elites nonetheless. It is also a battle between authoritarianism and democracy. In ideological terms, it is a war of ideas between populism and pragmatism.

In an unprecedented crisis of governance in Sri Lanka, where the executive and the legislature pillars of governance are at loggerheads with each other, the third pillar of any democratic governance, viz. the judiciary, has been called upon to uphold the inviolability and sanctity of the constitution and democratic governance in Sri Lanka. Would the judiciary of Sri Lanka rise up to this precarious historical occasion? (Muttukrishna Sarvananthan

(PH.D. Wales, M.SC. Bristol, M.SC. Salford, and B.A. (Hons) Delhi) is a development economist

by profession and Founder and Principal Researcher of the Point Pedro Institute of Development, Point Pedro, Northern Province, Sri Lanka, (http://www.pointpedro.org/index. php?option=com_content&task =view&id=32&itemid=59). He has been an Endeavour Research Fellow at the Monash University in Melbourne (20112012) and Fulbright Visiting

Research Scholar at the Elliott School of International Affairs, George Washington University in Washington D.C. (2008-2009). (http:// scholar.google.com/citations?hl =EN&USER=CYGACWQAAAAJ). He can be reached at sarvi@

pointpedro.org)