No Sign Of Normalcy

Policy uncertainty and lack of consensus Delay recovery and greatly cost us.

BBS published January inflation data. January inflation lowered to 9.94%,riding on 2.2% reduction in food inflation. However, inflation still remains at double digit and the interim govt is determined to bring it down to 8% by June.

Six months after the violent regime change in August last year, normalcy has not returned yet. Greater political consensus for restoration of democracy and sustaining the economic recovery is not over there on the horizon. In Sri Lanka, people descended on the street just once and changed the regime. Normalcy quickly returned there,including the rule of law. Most importantly, political parties have reached consensus and organized a fair election. Economic indicators responded accordingly, accelerating economic recovery.

Unfortunately, political adventurism is showing no sign to end, further casting shadow over greater political consensus. Six months after the regime change, we are supposed to have a calm and disciplined public life. Yet anarchy reigns supreme. And it is not a good sign for the economy.

Preparation for the next election appears to be very little. As if no party is ready for it. Even sketchy economic policy, foreign policy, food policy, education policy, etc have not yet been unrolled before the public. Shadow cabinet at this moment sounds like a far cry. Sketchy policies will give people something to compare between visions offered by parties. It will give us some idea where we are heading in the future. Right now we have some kind of policy uncertainty. If policy uncertainty on economy remains and likelihood of policy change remains high , economic reforms may not sustain in the long run. Govt claimed that this year's Aman yield was good. But many doubted it and insisted that production was widely hampered because of twin floods. According to a news report, food shortage in conflict-prone Myanmar may affect the food security of Bangladesh as there may be an uptick of black marketing incident in the frontier area. Though govt has a plan to procure 800000 tonnes of rice this year, it needs to review its food security policy by focusing more on increasing internal production and importing more food grain from abroad.

Govt requires stability to steer the economic recovery. Falling prey to Psy war provocation from home and abroad, govt is dragging itself into political debate that is neither good for the economy ,nor for greater political consensus. While facing a widening budget deficit and a bleak prospect of rice production, reactionary stance will only derail it from reaching the desired destination.