Its a question that the 2015 presidential election talk seems to avoid. Sri Lanka’s feudal politics is exciting. Economics is dull and dismal. In the minds of many economics has little to do with politics. The king always has money. We have all enjoyed his gifts. Come on, admit it. Even you, who grumble about corruption, brutality and “splashy” infrastructure built on borrowed money must like at least one of the highways. Breakfast in Galle? Lunch at Dutch hospital? Fun trips “up north”? Strolls in the wonderful parks?
Whoever wins on the 2015 presidential election, someone will have to pay back the loans that made such goodies possible. Chances are it is you or your children. After all who else is there?
The ruling political class (as they do in any country) may admit sacrifices must be made – just not by them. The connected money will buy their exemptions. A small fraction of unconnected rich who didn’t move their wealth overseas in time will be stripped bare by the government. Which won’t cover a fraction of the bill.
The majority of the population won’t have much. The indirect taxes they pay on the costs of essentials will spike out the little they have. The prophets of doom proclaim a Greek style meltdown. Without an annoyed Germany to offer crumbs of hope. Political unrest will follow. Not the kind that can be brushed off with tear gas or by mowing down protestors. Who ever takes power will have to deal with the same problems.
Of course what’s described above is a bit over the top no? Moody’s website section on the Sri Lanka government’s credit rating has less dire titles. Most of them are not publicly accessible. The most oft quoted is the only “free one” : Moody’s: Sri Lanka’s economy shows strong growth potential, but government finances remain weak. It sounds almost cheery.
Yet it echoes a familiar theme of most overseas articles about Sri Lanka’s finances. Cautious optimism with plenty of warnings. The ifs and buts pointing to our dependence on the slippery world of global lending. Basically if we loose the ability to borrow we’ll be in a fix. All it takes is some financial algorithm to go bad in some first world market.
Some hope that China will bail us out in such a situation. With their “strategic interests” in the Indian pond and all that sort of thing. Maybe they might even bankroll us. In the way the US backed Mobutu Sese Seko. I wish I was that optimistic.
Countries are communities, not businesses. So we can’t expect any to “run” at a surplus. Just as being a nonprofit is not a license for going bankrupt. Every country borrows money. Yet that is no reason to treat loans like a natural resource like oil.
Conveniently there are plenty of people to blame for “THE Problem”. Leaders with a blurry grasp of economics. Voters (for countless reasons) who elect leaders without a glance at what is being done in their name. For a broader canvas, there’s history. Infinite conspiracies. Motions of stars. Whims of gods. Karma. I could go on typing endlessly. While I am at it, one day the question of who will payback Sri Lanka’s loans will have to be faced.
Perhaps I should be more “positive”. Have faith in the far sighted wisdom of our leaders. Believe that they see something in the far horizon that faeces like me cannot. A genius economic policy that will raise living standards for everyone WHILE paying off the current borrowing.
Unfortunately the only faith I have is in my own cynicism about politics and power. Which is not doing me any good. I doesn’t help that bloggers who terrify me are echoing similar thoughts in sharper terms. A constant reminder that the lights at both ends of the tunnel are headlights of oncoming trains.
Perhaps I shouldn’t worry in the abstract about what happens to future generations. If such concerns are consequences of being a parent I should focus on making more money. Even consider my own father’s advice. Certainly not waste time in futile writings such as this.
So what to do? I’m obviously a flickering low milliwatt bulb to come up with answers. Perhaps you reading this can shed some light. Even credible hope (yes yes that is asking a lot). While you are at it, tell me who will payback Sri Lanka’s loans?