Corruption can bring a nation to its knees
SRI LANKA is going through the darkest period ever in history. The island nation has declared itself bankrupt following its inability to service foreign loans totaling US$51 billion (RM217 billion). Simply put, there is no money left in Sri Lanka and people are not able to have access to food, electricity, medicines and a host of other basic needs.
The retail inflation has gone up to 17% and food inflation has risen to 25%. Millions of students are unable to sit for examinations due to a shortage of papers. Scores have died just waiting in queue at petrol stations for fuel. This is not fiction but real people with real problems.
The monks who have been the backbone to the ruling party, headed by the Rajapaksas, have started speaking against the very people they supported to power in 2019. The discontent from the people has been growing over the months and has exploded into full-scale protests and street violence.
As I write, the Sri Lanka government is down to its knees, having declared itself bankrupt. It is pleading for monetary assistance from other countries, this despite the fact that India, its closest neighbour, has been pumping money into this ailing nation. Even with an urgent financial injection of US$1 billion from India a few weeks ago, the ship is sinking.
Last month while enroute to India, I had a few hours of stopover at Colombo airport. I did not notice any of these except that prices of food and drinks were exorbitant and beyond the affordability of locals. A cup of tea dispensed from the machine cost US$1, which is about Sri Lanka 277 Rupees. People who have money are also frustrated as they are unable to have access to food, goods and services.
How did Sri Lanka end up in this dire situation? It may have started as early at 2009 when its foreign debt started increasing phenomenally, and over the course of time Sri Lanka has approached the International Monenatry Fund (IMF) at least 16 times for financial assistance, of which it was successful nine times. This is not something any nation should be proud of.
As we know, IMF monetary assistance comes heavily loaded with conditions, and the borrowing country will more or less lose its authority over its own country. To begin with, IMF would demand to remove subsidies and increase taxes, apart from instructing the country on how the borrowed money should be spent. These would hurt the people and would push the country into further chaos.
Having said that, there does not seem to be much option for Sri Lanka as China has remained silent when approached for a loan. It is understandable as it would be unwise to extend help knowing that the borrower would not have the capacity to repay.
It is said that about US$3 billion to US$4 billion would be needed for Sri Lanka just for this year to be out of this “comatose” state.
It is no secret that Sri Lanka’s politics has had a direct influence in the economy, which has led the country to end up in this state. Friction between two ethnic groups have been the cause of civil wars, to the detriment of Sri Lanka’s economy.
It comes to mind that the current president was elected after receiving majority support from the people and the monks but that has changed now. Just last week when ethnic Hindus the world over were celebrating New Year, people in Sri Lanka took to the streets in anger and frustration. They claimed that collectively seeking to end the rot for a new beginning was more meaningful than celebrating the New Year at home.
Nowhere in the world will we see such blatant abuse of power as in Sri Lanka. The Rajapaksas, who lead the country, come in a package of four brothers who control the entire government machinery and politics in Sri Lanka. It is said that the family dynasty controls about 70% of Sri Lanka’s budget with highhanded ways and massive corruption.
Apart form China, Japan and India, Sri Lanka has the Asian Development Bank and other fund providers – not forgetting that Sri Lanka has fallen into the “China Debt Trap Diplomacy”, as it is popularly known, by leasing its new port to China on a 99-year lease. It is no secret that China offered the loan, fully aware that Sri Lanka would not be able to repay it. Pakistan too has fallen into this trap.
Sri Lanka’s calamitous situation can be blamed on three major reasons as I see it – the massive external debts, depleting foreign reserves due to higher imports and reduced exports, and the pandemic that has also contributed to this when tourism came to a complete halt. Tourism contributes 10% to Sri Lanka’s growth domestic product.
And the last would be the disastrous decision last year by the ruling government to ban chemical fertilisers, in what was seen as an ill-planned and executed policy to turn the agro-based industry fully organic, and this sent the country spiraling down on food production. The countrywide ban on agrochemicals and fertilisers backfired, big time.
If we were to take a leaf out of Sri Lanka as a lesson learnt, Malaysia can shine and outshine.
“Sri Lanka’s calamitous situation can be blamed on three major reasons – the massive external debts, depleting foreign reserves due to higher imports and reduced exports, and the pandemic that has also contributed to this when tourism came to a complete halt.