Counting the costs

It was bright and sunny this Thursday morning and Kussi Amma Sera and her buddies – Serapina and Mabel Rasthiyadu (the down-the-road gossip) – were in a good mood, laughing and cracking jokes, while reading the daily Lankadipa newspaper.

They appeared to be reading the gossip column in the newspaper and giggled and laughed their way through, not at all perturbed by the constitutional and political events that have gripped the nation since President Maithripala Sirisena’s master-stroke on October 26, which he must be regretting now.

For that matter other than we city folk, is the rest of society in the villages of the deep North, East, South and West concerned about these developments?

“Not as much as we feel it in Colombo,” declared Koththamalli Fernando, the Kokatath Thailaya (oil for any ailment) expert who has a remedy for any issue. “Our pain is often not recognised by them as their problems are about daily life and not so much national issues,” he said.

“Here in Colombo, we feel all these issues,” asserted Koththamalli, during an early morning call to discuss the country’s constitutional crisis, adding that the independence of the judiciary through the eyes of laypersons is one bright spark in the crisis.

Saliya Peiris, a well-known lawyer, had this to say in a Facebook post: “The last several weeks have seen a vibrant judiciary in action -- not only the higher courts but also the original courts -- in public law cases as well as criminal cases. It is a proud moment for all those who value the rule of law and the independence of the judiciary in our country.” There has been a leap of faith in the judiciary for most Sri Lankans.

While those outside major cities might not feel the impact of the post October 26 happenings after President Sirisena sacked Prime Minister Ranil Wickremesinghe, eventually they would if and when Sri Lanka has to raise taxes and other revenue-seeking measures to overcome slippages in tax revenue and other hidden costs arising out of the current crisis.

Referring to added costs and the burden to the individual, one Facebook post said: “Whenever a helicopter flies over my house I think – Aiyo Ape salli (our money at play).” He was referring to the number of occasions post-October 26 leaders were using helicopters to travel nowadays which literally means the abuse of tax money for personal gain.

In fact, the added costs to the country from the October 26 fiasco, where the country is held to ransom by two people – the President and former Prime Minister in which Maithripala wants Ranil to quit and the latter is not prepared to do so -- is increasing day by day.

Has anyone wondered how much it costs to upkeep the new Government – or the one in suspense and also the cost to undo the damage – if the United National Party (UNP)-led rule is restored? Consider this:

Cost of new ministers and their paraphernalia; new offices,

new staff, new name boards.

Cost of political meetings at the new PM’s office.

Cost of political meetings at Temple Trees (don’t be surprised if the UNP attempts to recover these monies once they are back on track).

Cost of ministers and their political trips to all parts of the

country – in the guise of development.

Use of unused budgetary allocations for political work

under the guise of developing villages.

Increasing fuel prices – if and when the UNP returns -- to keep to the promises made to the IMF to ensure that Sri Lanka gets the remaining US$500 million in loan money.

Cost of undoing all the decisions that Mahinda Rajapaksa

and his Cabinet makes.

Compelled to pay state sector salaries from the Consolidated

Fund which is already overdrawn by Rs. 230 billion.

The cost of setting up a new Government (October 26 deci

sion) and unravelling it.

Uncertainty over the Vote on Account.

According to a report in the Business Times last week, the political crisis is seen causing a revenue slippage of over Rs. 72 billion. This includes both the economic loss and the tax revenue loss.

It has been stated that the revenue loss from a drop in tourism arrivals, the impact of the rupee depreciation pertaining to foreign exchange outflows from the stock and bond markets alone was estimated at over Rs. 50 billion.

Revenue losses from taxes like the telecommunication levy, VAT threshold increase and WHT on interest income are also going to be high, according to a preliminary report by a group of Government officials.

Add hidden elements of a negative political sentiment in encouraging foreign investment … and then the costs keep adding to the country’s shaken economy, investor sentiment and political instability.

Furthermore, downgrading of the country’s rating by international rating agencies makes it costlier to borrow funds internationally with the Central Bank saying these decisions are unwarranted as the country’s finances were in line with expectations.

Several chambers have thrown their hat into the ring of concern, urging the President to immediately resolve the constitutional deadlock. Last week business leaders, according to a report in the Business Times, urged the business community to back social movements raising concerns over the crisis.

On Wednesday, the European Chamber of Commerce of Sri Lanka, the American Chamber of Commerce and the Delegation of German Industry and Commerce in Sri Lanka, in a joint statement said they were concerned about the present political uncertainty and upheaval in the country.

“We are of the view that the current situation will result in many adverse economic and social consequences to the country if it remains unresolved. We would like to highlight that foreign investors and potential businesses are increasingly losing confidence in the reliability of the business environment of Sri Lanka and are reluctant to enter the Sri Lankan market due to the current instability,” the trio said in the statement.

Thursday morning appeared to be a day of calls since Kalabala Silva, the often agitated academic, also wanted to discuss the crisis, soon after Koththamalli’s call. “I say…..….what will happen in the Supreme Court,” he asked, referring to a decision by the court to postpone until Saturday, a decision on the validity of the dissolution of Parliament by the President.

“Wait and see,” I said, endorsing a popular expression (waitand-see) these days. The situation, expected to be resolved days after the President sacked Ranil Wickremesinghe, has stumbled from one crisis to another and the latest timeline came on Wednesday when the President promised to resolve the issue in seven days.

“Mark my words…….the crisis won’t end in a week’s time,” said Kalabala Silva. Watching Kussi Amma Sera and her friends throwing caution to the wind and happily chatting away, I was inclined to agree, whether the economy suffers or not.