The best laid plans of mice and men of­ten go awry

Sunday Times (Sri Lanka) - - NEWS -

TSUNDAY, NOVEM­BER 12, 2017

he petrol cri­sis was some­thing the Fi­nance Min­is­ter could have done with­out as a fore­run­ner to what he fa­mously called his 'de­signer Bud­get'. The short­ages hit all parts of the coun­try throw­ing grave doubts over the man­age­ment skills of the Gov­ern­ment. When Sri Lanka's econ­omy was in the dol­drums in the 1970s, it was re­ferred to as 'ship-to-mouth ex­is­tence' i.e. the econ­omy had freight exchange and the peo­ple had food only when a ship ar­rived at the Colombo port. Buf­fer stocks were bare, it was said.

The week-long fuel cri­sis was a 'ship-to-petrol tank' ex­is­tence; the peo­ple get­ting a rude shock to dis­cover that the coun­try's state-run Pe­tro­leum Corporation (CPC) did not have suf­fi­cient buf­fer stocks when a sin­gle ship­ment of fuel and that too to its ri­val In­dian Oil (LIOC), had to be re­jected as poor qual­ity -- and that no con­tin­gency mea­sures were in place.

Con­spir­acy the­o­ries were aplenty. They came from the be­lea­guered Min­is­ter in charge -- and against him. The Min­is­ter was hit­ting round the wicket, to use crick­et­ing par­lance, ac­cus­ing LIOC for the dis­rup­tion of sup­plies. There was no ‘mea culpa’ on his part. He went still fur­ther throw­ing fuel to the fire and ac­cused his po­lit­i­cal col­leagues of ap­ply­ing pres­sure on him to have the sub­stan­dard oil ves­sel re­leased. That amounts to a se­ri­ous charge against his own Gov­ern­ment.

He must have thought, like in sports, at­tack is the best form of de­fence, but his pitch was not bought by the seething cit­i­zenry.

Clearly, much of this prob­lem goes beyond what hap­pened and lies en­tirely with the Gov­ern­ment hi­er­ar­chy. For one thing, this is not the first time sub-stan­dard fuel has come into the coun­try. The last time it ac­tu­ally seeped in and clogged many ve­hi­cle car­bu­re­tors, in­clud­ing that of the then Leader of the Op­po­si­tion, now Prime Min­is­ter. No one was pun­ished and though the Min­is­ter in charge was dis­creetly given a dif­fer­ent port­fo­lio later, he con­tin­ues to be a Cabi­net Min­is­ter in this Gov­ern­ment as well, with a bribery case pend­ing for years.

The other point is the ap­point­ment of the Chair­man of the CPC. He goes wher­ever his min­is­te­rial brother goes, to head big Gov­ern­ment in­sti­tu­tions. When the Prime Min­is­ter said soon after the 2015 elec­tions that ap­point­ments would be made to corporation jobs on a 'sci­en­tific ba­sis' un­der their good gov­er­nance poli­cies, this must be the fine art of the sci­ence of rel­a­tive mer­its.

The Gov­ern­ment has a stan­dard pol­icy when things go wrong and the wrath of the peo­ple de­scends on it. Be it nat­u­ral causes like floods and droughts, or man-made causes like the col­lapse of garbage dumps to the fuel short­age; it ap­peals for for­eign aid and ap­points a com­mit­tee to look into what went wrong.

It is clear that with the rise in fuel con­sump­tion, the CPC does not have the fa­cil­i­ties for stor­age, the cash to con­struct new ones or the pipe­lines to trans­port fuel. So, there's the 'con­ve­nience' of go­ing for pur­chases on the 'spot mar­ket' usu­ally at higher than the usual price. That is where money can be made. It might be use­ful for the Gov­ern­ment to an­nounce the de­tails of such ur­gent pur­chases, if it wants to fend off al­le­ga­tions of cor­rup­tion.

Notwith­stand­ing the fuel cri­sis com­pet­ing for the head­lines, Fi­nance Min­is­ter Man­gala Sa­ma­raweera man­aged to sal­vage the sit­u­a­tion for the Gov­ern­ment with his "clean, lean and green" Bud­get 2018 on Thurs­day.

Ini­tial re­ac­tions see the ship­ping in­dus­try up in arms (see Busi­ness Times Page 10). The Min­is­ter has re­sponded with an exclusive ar­ti­cle to the Sun­day Times (Page 16).

In the weeks lead­ing to the Bud­get, the two other key play­ers tasked with the man­age­ment of the econ­omy, the Prime Min­is­ter and the Gover­nor of the Cen­tral Bank also made their pitch, the PM with his Vi­sion 2025 doc­u­ment and the Gover­nor at the CMA (Aus­tralia) Hall of Fame in­duc­tion and later the Ga­mani Corea Memorial Lec­ture.

They spelled out plans for the fu­ture, but the prob­lem as they them­selves know only too well is that draw­ing up plans and im­ple­ment­ing them are worlds apart. That is why the Gover­nor said, that at the end of the day the three pri­or­i­ties are "ex­e­cu­tion, ex­e­cu­tion, ex­e­cu­tion". Oth­er­wise, all plans are sim­ply Utopian.

Eco­nomic plans are noth­ing new. Back in the late 1960s there was a ‘Grow More Food’ cam­paign and in the early 1970s, a Five-Year Plan, both in­tro­duced with much fan­fare, but those Gov­ern­ments faced dis­as­ter at the en­su­ing polls.

Not that there must be no plans and road maps for the econ­omy, but how much of cen­tral plan­ning is ar­chaic, is the ques­tion. The Gov­ern­ment's eco­nomic thinkers make one thing clear -- the im­por­tance of the pri­vate sec­tor in driv­ing the econ­omy for­ward. Whether this is in vari­ance with their coali­tion part­ner, the SLFP, is a mat­ter for con­cern, but PPPs (Pub­lic-Pri­vate-Part­ner­ships) is the fu­ture in the UNP’s book.

That's all well and good but where is the pri­vate sec­tor cap­i­tal of the top com­pa­nies go­ing? It is go­ing to pur­chase other com­pa­nies in the consumer goods and ser­vices sec­tor. Those com­pa­nies that are en­ter­ing into PPPs are the same com­pa­nies that en­tered into Gov­ern­ment con­tracts un­der the pre­vi­ous Gov­ern­ment and largely through du­bi­ous means.

Sri Lanka has had eco­nomic swings from so­cial­ism to cap­i­tal­ism, with a kind of mixed econ­omy that cush­ions the pub­lic. Ev­ery state venture - the CPC, CTB (Cey­lon Trans­port Board), SriLankan Air­lines, what­ever, was run on a po­lit­i­cal agenda.

That was why even Marx­ist Fi­nance Min­is­ters had to pay homage to the World Bank and the IMF seek­ing loan after loan -- aptly called the debt trap. That has hit alarm­ing lev­els with Chi­nese loans.

China, the world’s fastest grow­ing econ­omy has learned its les­sons from so­cial­ism and seen how World Bank/IMF pre­scrip­tions have trig­gered the down­fall of gov­ern­ments. It has its own form of ' au­thor­i­tar­ian-cap­i­tal­ism' with its pri­vate sec­tor com­pa­nies a front for the State. Its Exim Bank is there to sup­port these com­pa­nies when do­ing busi­ness abroad, help­ing to un­der­cut op­po­si­tion.

The Sri Lankan pub­lic will not want the Chi­nese model of au­thor­i­tar­i­an­ism through a one-party State, but there is much to learn from its con­trolled eco­nomic fore­sight.

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