Saturday, May 15, 2021

They say the sky is falling again

Local Cassandras and Fitch Rating Cassandras may be two sides of the same coin but they seem to be also on the same page. To put it mildly their downgrades and — as far as the local Cassandras are concerned — their denigrations, are not going to take the bottom out of Sri Lanka’s efforts to recover and thrive.

As far as Fitch is concerned, the Ministry of Finance has already issued a statement rejecting its unseemly hurry to subject the country to a ratings downgrade. But Money, Capital Market and State Enterprise Reforms State Minister Ajith Nivard Cabraal said that the heavy external borrowing was done by the previous government particularly during its latter stages, at which time curiously Fitch didn’t kick in its downgrade habit, for reasons best known to them. Now, said Cabraal, when the new government has desisted from external borrowings in its recent budget, the folks at Fitch are all too eager to slam their so called downgrade on us.

Cabraal muses that it’s somewhat like some UNHRC sessions – where curiously, certain countries are held answerable for eradicating terrorism and no questions are asked of certain others that ran amok.

Markets

But the Fitch ratings and sometimes other comparable ratings are taken with a pinch of salt even in the industrialised nations of Europe and the Americas and that’s not meant for consolation, because it is fact.

“Policymakers should be more preoccupied with the market than with the ratings companies, because that’s where the real costs bear out,” Brett Wander, the chief investment officer in San Francisco at Charles Schwab Investment Management Inc., said in a telephone interview. “Credit-rating agencies historically lag the real economic fundamentals, whereas markets are ahead.”

That’s a quote from Investment News, U.S.A. So there, credit ratings lag the real economic fundamentals, and you can take that to the bank. A Fitch downgrade is not something to fret about, because it says nothing about the big picture.

Those other local Cassandras meanwhile that are trying to paint a picture of unrest should be wondering how things are moving much faster than during the time of the UNP even on issues such as constitutional governance. How could the UNP — and now SJB — move on matters such as a Constitution when the UNP at least according to its own (ex)membership, does not have a proper Constitution of its own in the first place.

Don’t take it from us, take it from any number of members of the SJB. They can’t have enough of saying that the UNP’s constitution was a disaster, and that it created a fiefdom in perpetuity for the leader Ranil Wickremesinghe, as a result of which it ceased to be a viable political entity.

So you see, it’s this party that couldn’t get a passing grade document for its own Constitution that wanted to deliberate for a new one for the country, even though they had nothing like a mandate to change the Constitution.

However, in separate developments, as if the SJB wants to send a good signal out from this chaos, the party high-command made a recent announcement that it had made some constitutional changes based on the UNP constitutional document!

The people stole the clothes from the UNP’s Constitution makers and gave them to the current administration in the form of a two-thirds majority, to enact a real, legitimate constitution — as opposed to a Rip Van Winkle document that was an exercise in tilting at windmills.

The UNP was tackling not just imaginary enemies with its constitutional draft in fantasy land, the document was by itself an excuse to exist. Various bodies that were put in charge of deliberations to compile this new draft, took themselves so seriously that they never wanted to finish the job, especially because the UNP thought it will be in power in perpetuity and a return to power of the Rajapaksas in their new SLPP skin, was unthinkable in their minds.

Project

All extremely Rip Van Winklish, if you ask me. They pooh-pooh the policy instincts of this government but there are genuine positives in those policy initiatives that offer a striking contrast to the tilting at windmills they offered when they were in power.

Take the video of the senior engineer who was a septuagenarian quoting chapter and verse before President Gotabaya Rajapaksa about how local talent can be used to build vital infrastructure in the country at a fraction of the cost that’s estimated by foreign project managers.

You’d have had to see that video to believe it. Here was a gray-haired fatherly figure teaching the young engineers and the administrators gathered before the President a thing or two in very polite but unflinching terms. He said we used to have local ingenuity, and could build at half the costs the foreign experts estimate, and gave all the examples — but also observed that the engineering streams in universities had atrophied because of certain ingrained attitudes that no longer fostered this spirit of local innovation.

We don’t know what will come out of that session, but what can be said is that after such a long time, there is tangible hope for a new third way.

There is an effort to marshal our own resources, such as the knowledge of the said gentleman, and of course the situation the government is facing is far from perfect — who doesn’t know it?

The Cassandras are not factoring in the ravages to the economy from Covid-19, when they say that the government has been a harbinger of doom and gloom. At least one of the Cassandras, Victor Ivan said that the government got a cake that was baked so bad that its leadership might wish they hadn’t touched it.

At the least, he was acknowledging that the government had a tough call on its hands due to the circumstances created by Covid-19. What he didn’t bargain for was the fact that there are people who don’t run away from a challenge, even in the form of a ‘bad cake’ or worse. Some, if you’d forgive the overuse of metaphor, make lemonade if they are handed lemons.

Challenges

This regime is not the UNP dispensation which would have cried over the fact that it had a ‘bad cake’ and blamed everything and everybody around, while the country fell in shambles.

Take ordinary life. Some wither and die in the chaos of daily urban living with its cut-throat competition and its challenges, but some thrive in the chaos.

Some governments similarly thrive in bad situations, meaning of course that they rise up to the challenges and make the general desperation of circumstances an opportunity for recovery and growth.

The Rajapaksas have been there before. The general outlook was abysmal in the end phase of the battle against terrorism in 2009, certainly much worse than it is now with Covid-19.

If Ivan calls this a bad cake, that cake by comparison was unpalatable, smelly and burnt too in the bargain.

But that cake was taken gladly by the MR GR duo, and the leadership was given to end the long running calamity of the armed conflict.

There were Fitch type and various other types of Cassandras that said things are not going to end up well at that time, and did they bleat about! How did that turn out for them? The Cassandras of today should take a look in that rear-view mirror. They may get a clearer picture of themselves, if nothing else. 

RAJPAL ABEYNAYAKE
Source: gammiris.lk

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