In a candid interview with the Sunday Observer, Former Finance Minister Ravi Karunanayake and the Colombo District Leader of the United National Party (UNP), acknowledged the need for International Monetary Fund (IMF) assistance while criticising the organisation’s demands and called for a more “human” approach. He also spoke regarding the recent salary hike of the Central Bank of Sri Lanka (CBSL) employees and stated that it cannot be justified on any grounds.
Excerpts from the interview:
Q: Are you happy with the way the country is progressing in terms of economic recovery? And is going to the IMF the only solution to our woes?
A: I am relatively happy that the situation is being brought under control. But the most pathetic plight is the bureaucracy that is decision-making which is so slow and procrastinating and it has an impact on the smooth recovery. Because what has happened is the country has gone into bankruptcy. Coming out of it, there is no choice but to hold the hands of the IMF. But holding the hands of the IMF does not mean that you jump and dance to the tunes of the IMF. There must be a fair discussion, which brings in financial discipline and a confirmation that the revenues increase and the costs are brought under control. So, then the fiscal space is brought under control.
Q: Both main Opposition parties say that they will renegotiate with the IMF to change or remove some of the conditions in case they come to power. Is this possible under the current economic climate?
A: Well, anything is possible but it has to be practical. These are the same people who had the opportunity to lead the nation when the country went bankrupt. When they were fluttering around and they were unable to respond, the only person that was able to take command was one solitary person from the UNP, and that happened to be President Ranil Wickremesinghe.
Now, while it is easy to profess in solitary confinement that you can do things, it is simply not possible to get those things done because anybody who governs has to be on certain financial credentials. That is increasing revenue, bringing costs down, and bringing a sense of ability to have debt sustainability. Surely an elected Government is not naive to the extent that they will put people in jeopardy. But my frustration is that the public servants negotiating this should be much more human in their approach and not just giving in to the IMF.
Q: But is an 18 percent Value Added Tax (VAT) rate justifiable? What led to this situation in the first place? And will it be possible to reduce the VAT rate at some point in the future?
A: The justification for the increase of the VAT is simply to pay the polluted Government sector. The increase of three percent is equal to the public servants’ salary increases that took place. The general economy was able to sustain, but owing to the salary increases, the Rs. 10,000 that was afforded to the people had to have a revenue backing, and that revenue backing came from this three percent.
My feeling is that, yes it has to be reduced. Unfortunately, the timing of bankruptcy, getting IMF approval, and saying, no, it will be going at low rates, does not gel. And the country will be back into the same doldrums as it was.
Q: Both major Opposition parties also say that around US$ 50 billion parked overseas by rogue politicians and businessmen can be recovered and brought back here. Is this a viable suggestion and what can be done about it?
A: Forget US$ 50 billion, get even Rs.10 million. The very people who shouted and protested were also people who led this type of investigation then, whether it was the Janatha Vimukthi Peramuna (JVP) or whether it was Samagi Jana Balawegaya (SJB). So, where is this fanciful story?
Any leader that comes in, who can do something, who can do some work, gets hammered by saying that they are corrupt. Whether it is J.R Jayewardene, Lalith Athulathmudali, or Sir John Kothalawala it is the same. As soon as you have leadership that is worthwhile and able to move forward, this is what happens. There was a period when they were doing all the investigations. Where did it lead to?
These are nice stories but this is the story we have been talking about for 76 years. And I must say that being in politics and being in a baptism of fire, I find these are unattainable stories.
Q: A huge controversy has arisen over the recent 70 percent salary hike for CBSL employees. Can this be justified because they have to be given higher salaries to retain their services?
A: It cannot be justified on any grounds. I believe 90 percent of our economic problems stem from the CBSL and I believe that this should be considered and controlled seriously. They live in a different world.
They have brought this country for what it is. I just cannot accept how things can be allowed to get to this point. Due to the insistence of a few and at the behest of the IMF, the salary increase happened.
I have been a great advocate of Western-oriented, pro-economic activities. That does not mean everything that spits out from a foreigner is what is right. We Sri Lankans can perform and turn out far better solutions than these people.
If this salary hike must be given to the CBSL to retain their services, what about other people? Doctors, professors, and Engineers, what about them? Aren’t they a part of nation-building? It is better for the country if they leave because the problem itself is the CBSL. I tell this with practical experience.
Q: Talking of that, people blame the politicians for bankrupting the country. But where do officials and bureaucrats come into this picture? Aren’t they also responsible for this situation up to some extent?
A: Politicians are the tomboy that gets hit at any point. There are around 9,000 politicians from Pradeshiya Sabhas up to Parliament. But there are 1.7 million public servants in a country of just 22 million. So if the politicians do not have chief accounting rights where does all this get involved? There are a very handful of politicians who do not know their subject matter who get elected and who try to earn power but are ably assisted by public servants that lead you to this, which makes it even worse.
Q: There is no doubt that we have a bloated public service, made worse by Government monopolies such as the Ceylon Electricity Board (CEB). How best to address this issue? Is privatisation of State-Owned Enterprises (SOEs) the only answer?
A: Governments cannot run business. That is something that is very clearly manifested in our system. One lot can come and put a good person in but that does not feel good to the next lot that comes in. So as a result there is a change of policies. This has been the curse or the bane of our society. There has been no consistent policy in our country. That change is what leads to a lack of initiative or continuity in policy. So what happens is various people come in and have a learning curve. I believe governments cannot run businesses and the best is commercialisation. And the best example is the telecom sphere. The telecom industry has no monopoly now, there is a competitive arena.
Monopolies that are monopsonies are led by professionals who seem to be unable to be indispensable. The indispensable approach leads the entity into a somewhat of a threat exercise. CEB engineers say they go on strike and they get a 40 percent salary increase. So the Government is going to protect the six million householders, which is 22 million people. So are we going to look at the 30,000 ballooned CEB staff or the 22 million people?
Proper management does not exist in the Government sector because you have certain politicians interfere, so SOEs should be commercialised where you have the private sector initiative and the ability to govern as well.
Q: Your party the UNP needs to rebuild itself after the huge electoral loss it suffered. What are the plans to revitalise the party and will you be playing a major role in this exercise?
A: Being one of the most senior persons I would love to see a resurgence of the UNP. Unfortunately during the past three years the approach has been rather lackadaisical.
We have to ensure that we have a new approach. There was an electoral defeat in 2020 and one of the cardinal errors was that UNP is alienated. I mean the general feeling of the people was that. Unfortunately, we are a party that says what is good for the people and not what is popular for the people. Nevertheless, populism has led the country to bankruptcy. We are one of the oldest parties and have done a huge amount of development in the country.
While apologising for the mistakes that have happened, we are looking to move forward. It is mostly that the people have misunderstood us. We know the hearts and the minds of the people. Every political party has some black sheep and we are not an exception. We also have one or two black sheep who do not want to see talent and experience coming in. President Wickremesinghe has to play a neutral role because he was elected by the majority of the Parliament. But that does not mean that the UNP will be in hibernation.
Q: What is the response of other parties to the call to join forces with the UNP?
A: Discussions are very favorable and what needs to be there is credibility.
It is not just us forming alliances. It is the alliance of the hearts and the minds of the people. Sunshine stories and impractical solutions are not needed. There should be courageous, determined, long-term solutions to our day-to-day nagging problems.
That does not need a racial or nationalistic approach. We do what is good for the country and not what is popular. Unfortunately populism played a role but we had to pay a heavy price. I hope people realise this.
Q: While the President himself has not publicly said anything about contesting the Presidential Election, there is an opinion that he should be given another term to continue the economic gains. What is your take on that?
A: This opinion comes from a natural fraction, which says here is a person who was able to face the challenges and a general feeling of everybody, whether they voted or not, that President Wickremesinghe stood for us. When the country was burning, when people did not have gas, when they didn’t have food and medicine, when they didn’t have dollars, people were shivering. But President Wickremesinghe stood up to the test and gave a solution. But that solution does not come easy. You have got to make some hard-core decisions. I guess the time is short, and that is the reason why everybody in unison says let’s give President Wickremesinghe another opportunity. Whether he chooses or not, he may be propelled into contesting again and he has nobody to hand over power. So the only thing he wants is for the country to do well.
Q: What are the factors needed for the President’s vision of being a developed country by 2048 to succeed?
A: I would say before a developed nation, let’s get humanity into governing and extinguish poverty and ensure that we can put Sri Lanka on the World Map. The sad irony is that in 1948, when we were getting Independence, Japan, which is one of the developed nations, and Sri Lanka were actually on par, with the Per Capita Income in the US$ 47 to US$ 48 range. Today we are at US$ 4,100 and Japan is at US$ 55,000.
We get caught up in what we can get from the Government rather than what we can put into the country. We need to change that mentality. Recently one of the political parties that was cursing and blaming our geographical neighbour embraced it. We are so happy that they have woken up after a long time. Let us get back to reality.
Q: So in your opinion how can the country’s economy be resurrected?
A: We must look at changing areas of the society and the changing needs of the society. We must look at them with a sense of professionalism. Digitalising is one of the recommended remedies. Ensuring that we have a lean and mean Government service that is efficient and able to ensure that we have a value for money concept and able to reduce bureaucracy and we need education as a tool to chart our way forward, creating talent for the future and converting that into a tangible national asset.
SUNDAY OBSERVER