Economic hit-men are as dangerous as suicide bombers

Over the past four years, the world has witnessed one of its most turbulent periods in its entire economic history. Crisis after crisis has struck the world at regular intervals, and economic players and policy-makers have been confronted with fresh challenges, on an almost real-time basis. They also had to grapple with multi-dimensional problems which do not have straight-forward solutions, particularly because many of those issues have originated or have been sustained, outside their own national boundaries. On many occasions, the intended solutions have led to even more complicated problems, with the "law of unintended consequences" being played out many times. Unfortunately, there also does not seem to be any respite from this situation, and this unfavourable trend seems to be continuing, unabated.

Throughout this mayhem, the fundamental outcome that policy-makers world over are struggling to achieve,is the maintenance of confidence in their respective economies.

As taught in elementary economics text books, confidence is the underlying thread that binds the fabric of an economy. It supports enhanced economic activity, and economic stakeholders are guided by this intangible and invisible factor,which is difficult to define and describe. Yet, confidence drives markets, voters, governments, and of course,economies. That is probably why political and economic stakeholders give high priority to the maintenance and enhancement of confidence,in its decision-making process.

In the recent past, Sri Lanka seems to have done well in this front. In the midst of intense global turmoil, Sri Lanka has out-performed many countries in economic terms. The Head of Emerging Market Securities of Morgan Stanley Investment Management, Ruchir Sharma who manages around $ 25 billion in emerging market assets, in his well-researched book published recently, titled "Breakout Nations" said, "Today, it seems that Sri Lanka's time has come." He said "With the nation whole again, achieving a 7 to 8 per cent growth over the next decade should be well within reach". Many other emerging market analysts have also identified Sri Lanka as one of those nations that has a bright future.

The IMF, World Bank and other multi-lateral agencies, have complimented the economic successes of the country on many occasions. All rating agencies, including the controversial Standard & Poor have either re-affirmed or upgraded their sovereign ratings and outlooks of Sri Lanka recently. Those widespread tributes have not been without good reason. The recent economic results have been well above average and have justified such compliments. Economic growth has been high; inflation has been low; corporate earnings have been good; productivity levels have improved; poverty has decreased; unemployment has reduced to its lowest levels; infrastructure and doing business indices have been improving rapidly; while former conflict-affected areas have experienced real economic transformation. In the meantime, a process of national "re-branding" has also slowly but surely, taken place. In fact, Sri Lanka, being a country that was hitting the world headlines for conflict, terrorism and suicide bombers a few years ago,is today, described as the best place to visit by the New York Times, while investors have identified the country as a strategic naval and commercial hub,and an economically competent nation.

But, as is usual, with that type of success, new challenges emerge. Although the aforesaid successmay sound like good news for the majority of the people of the country, it is obviously not going to be welcome news for the opposition and others who are keen to drag the economy and the nation down. In fact, from their recent actions, it is clear that the opposition seem to have realised that as long as there is 8 percent growth, under 4 percent unemployment, 6 percent fiscal deficit, single digit inflation, less than 8 percent poverty, and rapidly growing infrastructure, their chances of ever coming into power are very slim. So, naturally, they now seem to be determined to stop this progress.

The strategy they have begun to implement to achieve such end, is to attack and damage the reputations of key economic players and demoralise major public institutions. Those ferocious attacks on the economy and key economic players have been led by the economically savvy former Prime Minister himself and his segment of the party. Many of the venomous attacks are spearheaded by his hand-picked, US connected anti-China MP, in an organised manner.

They have labelled the Governor of the Central Bank a "missile" and the Treasury Secretary has been referred to as a "landmine", and are obviously targeting them on a daily basis. For once, from the opposition's point of view, they seem to have chosen the right political strategy for themselves, although their efforts are highly damaging to the country and the economy.

In that background, the danger that this vicious campaign poses to the country and the economy must therefore, be understood by the Government who would do well to deal with this nationally subversive effort,in a focused manner.

A recent news item suggested that the President is thinking of the formation of an Economic Council. That seems to be a good move. If the President gives leadership to such a Council, in much the same way he led the Security Council during the humanitarian operation, the decisions taken will be acceptable to the people, and the opposition attempts to de-stabilise the economy would be marginalised.

It must be said that whenever President Rajapaksa ventured into any battle, he has had the ability, courage, commitment and the skill to win. So far, he has done remarkably well on all fronts, including the economic front.

However, unlike terrorism, the economic battle is an on-going one. Therefore, the Rajapaksa administration will have to stay alert all the time, and deal with economic hit-men and saboteurs, who, in the economic war, are as dangerous and despicable as the suicide bombers in the terrorist war.