By Neville Ladduwahetty Courtesy The Island

During his address to the Economic Dialogue – IMF and Beyond”, the President declared that Sri Lanka is at a crossroad and it was the nation’s last chance to forge ahead or fail (Daily FT, 31, 2023). Now that Sri Lanka has committed itself to the terms and conditions stipulated by the IMF to get out of its debt crisis, Sri Lanka has no option but to live by the commitments made.

The stated reason for canvasing the assistance of the IMF was to seek relief from the debt crisis. If this was the one and only compelling reason, why did the government not explore other options? For instances, several commentators have drawn attention to the existence of US $ 40 to 50 billion outside Sri Lanka belonging to exporters and importers. No attempt was made by the government to approach them and work out a deal, even to pay part of the annual installments of the debt payment in a manner that would have met their concerns as well as the interests of the country. Despite such recommendations being made and promoted by interested parties the Government stayed mute. Nor was any attempt made by the government to revise the Exchange Control Act to deter the provisions of the Act being abused. The fact that such strategies were not explored must mean that the IMF option had more to do than only addressing the debt crisis.

One such possibility is the importance of structural reforms needed for the long term. Without such external intervention, no government could, on its own, secure political support for tax increases; a fact that is evident from the protests, despite it being part of IMF conditions. Therefore, the deal with the IMF is expected to impact the short term in respect of the debt, and the long term with the introduction of structural reforms.

BEYOND the IMF DEAL

Now that Sri Lanka finds itself at a crossroads, the issue for the Sri Lankan nation is to decide which road should it take. The issue is whether it should be decided by the President as has been done in the past, or is there a way for the People to decide which road to take? The President has said, What I am aiming for in the next two years is to lay the ground work for highly competitive social market economy. We have to be competitive … emphasizing the opportunities in multiple sectors including agriculture, manufacturing and services…”. With all due respect to the President, even if what he wants is right for the nation at this moment in time, it remains that this is what this particular President wants for the Sri Lankan nation.

Since independence Sri Lanka has lived with what previous Presidents and other leaders wanted, and taken the good with the bad, the net effect of their visions being what the nation is facing today; a record that Sri Lanka cannot be proud of. On the other hand, if the notion is that the People of Sri Lanka do not have what it takes to decide which road to take, and therefore have to live by what is handed down from top, is flawed. The irony is that it is the same unsophisticated people who in the final analysis decide on whether to change the very character of the nation embodied in Article 83 of the Constitution through the will of the People expressed in referenda.

Whoever decides which road Sri Lanka should take, it has to operate and function within the contextual framework of global developments. The two overriding global developments are 1) the economic uncertainties that the world is witnessing daily have caused deep insecurities among Peoples that today have taken the form of political unrest to the point of threatening the security of nations and its Peoples, and (2) bilateral trade among major nations being undertaken in their currency of choice without any regard to recognised currencies that had dominated global trade for decades. For instance, Sri Lanka and India are trading in Indian rupees and India is buying oil from Russia in Indian rupees. China and Brazil have decided to conduct their massive trade and financial transactions directly exchanging renminbi for Riyals, and vice versa.

It is in such a beleaguered and uncertain landscape that Sri Lanka has to decide which road to take. If it chose to engage in competitive market economies, as suggested by the President, what would be the consequences? Competitive economies relating to manufacturing would involve importing raw materials which would be victims of global economies and currency fluctuations. On the other hand, competitive economies based on local inputs as with agriculture would be in a better position to be unaffected by global developments. This would be the case with the service sector as well. Therefore, Sri Lanka should focus on areas of economic activity that would be independent of external inputs. Adopting such an approach would mean that the government gives the highest priority to encourage the public by giving every possible opportunity for the development of an agriculture-based economy in order to reduce agricultural imports and encourage every form of organically based exports for Sri Lanka to develop a competitive export driven economy.

AGRICULTURE-BASED COMPETITIVE ECONOMY

A report in The Daily Mirror of March 30 refers to the successes achieved by farmers in the Ampara District. The report states, Ampara farmers cultivated using eco-friendly methods for three main seasons and achieved a successful harvest. According to the Department of Agriculture, farmers were able to achieve a yield of 5800 kg per hectare from the 4,880 hectares cultivated in the Ampara district using biofertilisers. This is an increase of 27.8% compared to the average yield of 4,540 kg per hectare using chemical fertilisers in Ampara over the past five years …. In addition, several agricultural lands have achieved remarkable outcomes from organic farming, and are even exporting their products. For instance, the Dankotuwa Lunuwila Farmers Organization in the North-West Province is successfully managing over 110 acres of paddy fields with the cooperation of more than 100 farmers. They harvest the paddy from these fields, process it into rice, and export it. Each farmer in the project was able to achieve a yield of 110 bushels per acre from 8 acres of organic farming”.

If one District-Ampara, can conclusively demonstrate that export quality paddy could be grown, the government should publicise the news and give national recognition to those engaged in the endeavour. Furthermore, the government should give all the encouragement needed for the achievements at Ampara to be repeated in the remaining 24 Districts. This would boost the incomes of the farming communities and become an impetus for others engaged in paddy production to follow suit. Starting with paddy the entire gamut of activities associated with agriculture such as paddy, fruits, vegetables, flowers, ornamental foliage, fertiliser, packaging and storage should be undertaken in each of the Districts using local materials at every stage of the manufacturing chain, for which the government should introduce incentives and inducements.

The byproducts of such a national venture would be to boost rural incomes and guarantee food security, and both of them would contribute to insulate Sri Lanka from global developments in other countries. Since nearly a third of Sri Lanka’s population is engaged in Agriculture in one way or another, a concerted impetus given to agriculture would mean a balanced income distribution. Given the choice, this is the road the people should opt for.

CONCLUSION

The President has declared the Sri Lanka is at a crossroads. His proposal for the next two years is to lay the groundwork for a highly competitive social market economy” in sectors such as agriculture, manufacturing, and services. Of the three sectors, what is advocated herein is to opt for agriculture as the road of choice not only because it assures food security but also because Agriculture is primarily based on local inputs, Sri Lanka would be in a better position to insulate itself from the uncertainties and instabilities affecting most countries. Furthermore, since nearly a third of Sri Lanka’s population is associated with agriculture incomes generated would help to minimise income disparities.

When giving agriculture the primacy of place, the government should give all the encouragement needed by way of incentives for People to develop new Agricultural products for export. In this regard, the lesson to be learnt from the farmers of the Ampara District is to grow paddy for export using indigenous technologies. The government must take the opportunity to give these farmers the national recognition they deserve and be humble enough to introduce such technologies in the other 24 Districts.

Agriculture is much more than just a way of livelihood. It is a way of life that lives by cherished civilisational values that made pre-colonial Sri Lanka a nation that was respected and one that the People were proud of. The keystone of pre-colonial civilisational values was self-reliance and pride in striving to achieve cherished goals. That spirit was deliberately undermined throughout the colonial period so much so that even chilies, onions and products used in indigenous medicine are today imported. Notwithstanding that past, those who have stayed engaged with Agriculture should be recognized and honoured by the nation because they protected and nurtured the civilisational values integral to their heritage, despite the distractions heaped on them. Therefore, the opportunity presented should be seized upon to rekindle and revive the spirit of the civilisational values that the Sri Lankan nation was once identified with. This then should be the new beginning, and the road for Sri Lanka to take.