Speaker’s letter to President

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Speaker Mahinda Yapa Abeywardena sent a letter to President Gotabaya Rajapaksa, outlining possible solutions to overcome the present economic crisis, on Wednesday (8).

The full letter is reproduced below:

Your Excellency,

Sri Lanka is facing the most-difficult economic conditions in its recent history and facing these challenges without rallying the support of the people will prove to be difficult. The Prime Minister has been updating the Parliament and the public on the present situation and has repeatedly warned that things will get worse before they get better. Thus, keeping the Nation on the planned path while it appears to get worse until it gets better is no easy task, but not impossible. To this end, I would like to propose the below.

During a crisis of this magnitude, the Government, the State workers, the private sector, and the public must all work together to come out of it. The biggest impediment for all these parties to work together in the present context is the lack of trust. The quickest way to gain trust is to govern as if from within a glass box, where you lay bare the information, the processes, the decision-making, the plans, objectives, and achievements, so that every interested party is aware of what is going on, what is likely to happen next, and the role each must play to ensure the end objectives.

The biggest threat to governance today globally is misinformation. Rather than trying to control or respond to misinformation, the best weapon against it is full information. Once full information is made available on a particular subject, it leaves no room for misinformation. When the people are privy to all the important discussions, ideas, plans, etc., such knowledge of the background, circumstances, plans and objectives will help gain commitment and single-minded focus of all. If the public can see and know why things are done, then there will be greater patience, understanding and even more creative solutions.

Glass box governance will also improve responsibility, accountability, efficiency, and will reduce corruption. As we have seen in COPE and COPA meetings, the veil under which irresponsibility, unaccountability, inefficiency and corruption are hidden is the lack of information. Because the public is unaware of the processes, implications, priorities, plans, circumstances, and objectives of the state machinery, they are forced to accept outcomes that are less desirable.

To give a few examples on how this could improve the present situation, I highlight the following:

1. Allowing live telecast of meetings related to economic revival and releasing of Minutes

The recent COPE meetings raised a lot of concern on the conduct of the Monetary Board. In most developed countries, detailed minutes of these meetings are released to the public soon after to guide expectations and explain the rationality of the decisions taken. Had this been practiced, it would have provided fair, timely outcomes for both the public and the officials. Releasing of detailed Minutes of the Monetary Board meetings should be made mandatory going forward, in addition to the statement issued presently. Similarly, the detailed Minutes of the Economic Council meetings and all other important meetings related to economic revival and food security should be made public soon after these meetings, if these meetings cannot be telecast live to the public. Wherever live telecast is possible, it should be done. This will make the politicians and officials more responsible and accountable, while allowing the decisions and plans to be more widely accepted and supported by the public.

2. Disclosing foreign currency inflow and outflow details to the public

Due to misinformation and black market incentives, Sri Lankan workers overseas have opted to send money through unofficial banking channels. If we can receive the full inflow of this through the banking system, that can significantly ease the dollar shortage in the market. Despite many efforts taken by the Central Bank and the Government, the situation has not improved much. During the East Asian Crisis, Malaysia provided regular updates to the public on its currency reserves to build confidence. Similarly, if Sri Lanka can provide daily updates on both inflows (amounts received from each country to which banks, etc.) and outflows (what expenses made using the remittances, how much was used daily, what imports in what quantities were ordered at what price, who are the importing entities, etc.), that might help build confidence and improve the remittance flows through the banking channels. Often, the above information is kept confidential. But it is time we question the need for such confidentiality and the purpose it serves, as in the present context the benefits might outweigh the risks.

3. Disclosing information about the food situation and the plan at Govijana Seva (Agrarian
Service Centre) level

As a former Agriculture Minister, I foresaw that there might be a food scarcity due to both local and global conditions. However, there is a risk of this becoming a self-fulfilling prophecy due to this being repeated without a proper plan being communicated to the public. Thus, people try to hoard food, leading to wastage, thereby exacerbating the problem.

Again, disclosing all information to the public to the level that they can verify for themselves is the best solution. In the Kananke Govijana Seva Division, which my fields fall under, there was an increase in the extent cultivated during 2021/22 Maha Season, but the total output was 17 per cent less than the previous Maha Season due mostly to adverse weather, which is normal to the area (information attached). My experience was also the same and I did not suffer a shortfall in the paddy crop last Maha Season despite the fertiliser shortage, except due to adverse weather. There may be other areas that have suffered worse or done better, but a 50 per cent loss at national level, as stated by some officials, warrants further investigation. As a former subject minister, I have found aggregate data to be inaccurate and have conducted field visits to selected areas to validate aggregate data. While we must encourage all to cultivate, it should be done with guidance and a plan. For us to face this crisis, there should be an accurate assessment of the present stocks available privately and the shortfall in the future. Then, to this shortfall, we need to add the consumption switching that is likely to happen from the wheat flour shortage and other imported foods and adjust it to the estimated Yala harvest. The Prime Minister and the Agriculture Minister disclosed some valuable information in this regard and plans to increase production yesterday in Parliament. This plan and all other information should be made available to the public at Govijana Seva division level, with frequent updates, so that the public can monitor the progress of the plan or any shortfalls in their own areas. This will instill confidence that the plan is progressing well and develop the expectation that there will be sufficient food available, ending the overpricing and shortages.

4. Increasing tax revenue by encouraging better enforcement and greater compliance through better communication

Due to the economic difficulties faced by the public presently, increasing taxes, although necessary, may not yield the expected revenue increase, due to high avoidance and mistrust of its use. It’s no secret that most of the revenue that could be collected even with existing taxes leak out due to weak enforcement by the officials and low compliance by the payers. If there is clear communication with periodic updates on the purpose for which the taxes are collected, what are the amounts required, how much is collected, and detailed disclosure on amounts spent on each activity, and how that will eventually lead to make things better for all, there will be greater willingness to pay by the public, greater incentive for the officials to enforce correctly, and greater responsibility on those who are using or being paid those funds to deliver the expected service.

In economics, people acting rationally are a basic assumption. At times of crisis, rationality is the key to survival. All people should be made to understand that acting on collective interest is in the best interest of all and acting in self-interest would lead to the destruction of all. Yet, we cannot expect all people to act rationally, putting collective benefit and survival before self if only a privileged few have all the information. This is what has led to mistrust, misinformation, corruption, irresponsibility, and unaccountability. Once all the information, plans, strategies, and updates are provided, each of us would know what to expect and what is expected of us.

Thus, I would urge you to consider this and make public all possible information, from Government echelons to the bottom, and provide updates on every plan at least weekly, if not daily. We need all citizens to pull in the same direction to overcome this crisis, and through this, I firmly believe that it would become possible.