A reformist mindset is crucial

Originally appeared on The Morning.

By Dhananath Fernando

On one side of the aisle, hopes have been raised with the election of a new President. Hopes abound that necessary and sorely needed economic reforms will now move forward. On the other side, yet another round of suspicion has arisen about whether politicians are yet again deceiving the common people. 

There is suspicion that the unaddressed sufferings of the people will be swept under the rug with another political plot. As I was trying to understand which side made the more compelling argument, I recollected my memories of a story related by my school Principal, the late Rev. Father Bonnie Fernandopulle. 

He asked his students: “Do you know the difference between a good kettle and a bad kettle? Both kettles serve the same purpose – boiling water. They both give the same whistle when water is boiling.” He paused before continuing: “Then what is the difference between a good kettle and a bad kettle?” 

After letting the students mull over it for a moment, he said: “Only time will tell which one is good and which one is bad. The good kettle will be durable and can be used for a longer time, while the bad kettle cannot be used for that long. Only time will tell which is which.” 

Rev. Fr. Fernandopulle repeatedly advised students to be good kettles and make decisions that could stand the test of time. His message can also be applied to the spheres of politics and reforms. Within these spheres, too, the test of the time is the best test to administer before arriving at hasty conclusions.

Political instability 

Since 2018, back-to-back political instability has too often been present in the key decision-making positions. The 2018 constitutional coup and 2019 Easter attacks kick-started a sequence of events fraught with political instability. Then the country was sent into lockdown as Covid numbers surged. 

Since then, after the country was reopened, we have so far had five finance ministers, three prime ministers, and two presidents in the very short period of time of two-and-a-half years. Since 2019, even the Central Bank has had three governors.

To make any headway in reforms, a government should be allowed to remain in place for at least two or three years to ensure that some progress is made. The first 100 days are the main reform window. Any government can capitalise on the first 100 days if it has done its homework and if it has a competent team and reforms ready to execute at short notice. 

To stay in power for two to three years, the initial reforms have to have some impact and people should have some level of hope that things are improving. The common people should also have some level of confidence that the people in charge are moving the country in the right direction. To achieve this, we need a written action plan to give confidence to all stakeholders, including the International Monetary Fund (IMF), and even for all political parties to reach a consensus and work together. 

So it is of paramount importance that we obtain some level of consensus on a programme of reforms. Otherwise, we will just waste time going back and forth appointing more ministers and cabinets every fortnight while reforms come to a complete standstill. 

A reform programme 

Putting forth a reform programme in a document is the very first step on the path to achieving consensus. 

Surprisingly, no political party has taken the initiative or led discussions on a commonly-agreeable work plan. What political parties have put forward are long manifesto type documents which lack an actionable plan. Those documents often have drawn-out explanations of the problem and broader solutions with executions that are vague.

The National Movement for Social Justice (NMSJ) has compiled a common minimum programme evaluating reform ideas from multiple parties and organisations (the author was a part of the process). 

In a recent tweet, Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva mentioned that they have created a reform plan based on NMSJ proposals. According to his tweet, the team, which was supported by Dullas Alahapperuma and included Dr. Nalaka Godahewa and Prof. Charitha Herath, had agreed on the proposals. All that happened before the parliamentary presidential race, but nonetheless the reform plan remains valid. 

NMSJ documents have been endorsed by economists and business leaders, so a sensible starting point could be to move ahead with the plan and get the consensus of all parties, forging ahead with the reform pathway. Let me remind you that we are already very late to start reforms at all.  

Unfortunately, we do not have many options other than performing economic reforms if we are serious about overcoming this crisis. If we want to settle for not executing any reforms, we will have to settle for becoming a failed state in the coming years. 

Reform communications 

The second step of any successful reform package is the communication of reforms. 

Reform communication is less about running an expensive media campaign and airing catchy commercials, and is instead more about explaining clearly and simply the change that will be wrought on the system and ensuring transparency. Transparency and actually executing actions are the biggest tool of communication. It provides signals to both markets and individuals. 

For example, if we start the process of privatising SriLankan Airlines, the tender process has to be competitive so that it communicates to investors, the local community, and international financial institutions that the urge for change has come from within. Then when we actually go about enacting privatisation, it will clearly communicate the message that we are open for private investments, which assures private property and competitiveness. 

In the world of reforms, actions are the strongest tool of communication. The second most important tool is ensuring transparency and explaining reforms in simple language for people to understand their impacts and how they will help us emerge from the crisis.

Institutions for executing reforms

Another key piece of the puzzle is having necessary institutions and capacity to carry forward reforms. 

For instance, there is a process and an engagement strategy we need to follow to privatise a State enterprise. The strategy and the execution requires skilled manpower, networking capabilities, negotiation power, and transaction management. Only a strong institutional structure will bring transparency and seriousness to our reform programme. 

The new Government or any governments expected to be formed in future should realise that reforms are the only way out. Economic reforms are both a science and an art. A key challenge for the new Government is that it is running out of time. 

As my Principal mentioned, the sooner people realise which kettle is which, the better for the nation. If people realise the kettle is bad, it is natural that people will take to the streets and protest will gain momentum, where forceful control will have little effect than to push things completely out of control. 

Only time will tell us whether the new Government is serious about reforms. That will decide whether Sri Lanka will become a tiger economy or a failed state.

The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.