Suggestions to Resolve Present Economic and Political Crisis in the Short -term, Within a Long-Term Perspective

Political Crisis

The economy of Sri Lanka is in a highly vulnerable situation due to the cumulative effects of
economic mismanagement for an extended period, coupled with a global pandemic. Inadequate
foreign exchange earnings have created a scarcity of every basic need, including food, medicine, and
fuel. We have become a nation that consumes more than we earned for many years. Now it isn’t
easy to reverse the lifestyle and the consumption pattern. More than 25% 0f the national
expenditure is met with imported goods and services. Due to this economic crisis, an anti-
government campaign has been launched by several groups.
According to the slogans of protestors at Galle Face Green, they expect to sack the
government, including the president, prime minister, cabinet, and all members of the
parliament, immediately enabling them to establish a government according to their
aspirations. They are not happy with how the country has been governed by the present and
previous generation of rulers and expect radical governance changes. Also, they are
demanding that older adults retire from politics and allow the young generation to rule the
country. In addition to self-motivated or independent protesters, different interest groups
participate in this process with diverse objectives. Also, other groups may be eying to hijack
the campaign and come into power from the back door or unconstitutionally. Deferent groups
of the ruling party propose various throat-cutting solutions against each other to safeguard
their positions and climb up the ladder. These groups expect someone else should scarify to
ensure their survival. The above scenario keeps changing every day, and no one can predict
what will happen tomorrow or next hour. Under these circumstances, the country is
entangled with many impossible demands and tasks. If this situation continues for several
months, it will do more extensive damage than the past economic mismanagement and
pandemic. Further, the president has no moral right to resign and run away without creating a
platform to resolve current political and economic problems. Therefore, we propose to use
the present parliament and the president to arrest the current situation amicably and pave
the way for a new democratic government without anarchy.

Proposals for Immediate Actions to Resolve Political Crisis
1. The president to appoint an “Executive Council” to advise him in all governance matters,
comprising Professionals with practical experience in different fields (Administrators,
Economists, Planners, Accountants, Engineers, Agriculturalists, constitutional experts, a
few protestors, etc.).
2. For the time being, HE must not use his executive power and agree to share his executive
powers with the Executive Council and the Cabinet of Ministers.
3. Appoint an interim cabinet of not more than 20 ministers and cluster all institutions and
functions to those limited number of ministries. MPs with various allegations should not
be appointed to the cabinet. It is advisable not to have many Rajapaksas in the new
cabinet. If the opposition is willing to join, they must be allowed.

4. All state ministries with cynical names shall be abolished. A Deputy Minister could be
appointed for each ministry, with a clear demarcation of duties under the supervision of
the cabinet minister. Two deputy ministers may be considered for large ministries.
5. Cabinet should consider only the proposals endorsed by the Executive Council.
6. The Executive Council, in consultation with the CB and the Treasury, shall prepare an
action plan immediately to resolve the present crisis, with priorities and time frame. (Gas,
Fuel, Medicine, Food, fertilizer, Industrial raw material, exchange, etc.). Also, the council
must draft the necessary amendments to re-activate the 19 th amendment,
7. There must be an Executive Board for each ministry. All members of parliament, including
the opposition MPs, shall be grouped according to the ministries and appointed as
members of the executive board. The Board shall meet at least once a month under the
chairmanship of the cabinet minister. They must spend the whole day reviewing the work
done by the institutions under the ministry and endorse the work to be done next month.
This should operate as a Board of Directors of a Company. This will enable a check and
balance of the ministers and officials. It could be done immediately as an extra-
constitutional arrangement and later be included in the new constitution.
8. A fertilizer subsidy scheme shall be introduced for all crops initially for two years until the
world market prices reach a reasonable level.
9. In addition to the problem of the non-availability of essentials, there is a severe
breakdown of the distribution system. To this end, district secretaries and divisional
secretaries, who have hands-on experience, shall be utilized to the maximum. In addition
to their substantive posts, all the district secretaries must be appointed as Competent
Authority for Essential Services.
10. The military personnel appointed for district coordination shall be removed immediately,
and the District Secretary shall be the focal point for the administration coordination.
11. Re-introduce the 19 th amendments to the constitution with necessary amendments
12. If AG can’t take legal action within a month, release all Tamil detainees to ensure ethnic
13. Pass a new constitution during the interim period, considering all constitutional issues
that have surfaced since 1978, including the demands of protesters, youths, women, and
minorities, and curtailing the president’s executive powers.
14. A code of conduct shall be introduced to ministers and MPs covering essential aspects
such as attending the parliament sessions, committees, electorate works, expected
behavior in public, regular declaration of assets, etc. A code of penal for violations of the
code of conduct shall introduce to be enforced by the Speaker.
15. Neither family members nor close relatives be appointed to the minister’s staff and as
heads of institutions under his purview. The number of Personal staff of the minister will
be reduced to three. Minister will be allocated only one vehicle.
16. HE, the president, to give a firm undertaking to the protestors and the nation that above
1 to 15 will be fulfilled during the interim period with a clear road map for each activity.
President shall promise to hold the general election immediately after completing 1 to
15 above.

Proposal for Immediate Action to Resolve Economic Crisis

1. Expenditure Control
 Stop all infrastructure projects with long gestation and economically unproductive
projects. (100,000 Km Road project, 100,000 rural development projects, Ruwanpura
Expressway, Third phase of the Central Expressway, etc.).
 Even donor-funded projects should not commence if counterpart funding is required in
foreign exchange.
 Unnecessary foreign travels by politicians and officials be banned,
 Foreign training may be allowed if the sponsor incurs all expenses,
 Stop the expenditure on all kinds of ceremonies,
 Increase the working period from 8 hours to 9 hours a day, allow flexible working period,
between 8.00 am to 6.00 pm, and make Friday a holiday for the interim period,
 Allow only one vehicle per minister and reduce the number of personal staff to 3,
 No vehicle imports for the government for the next two years,
 Continue the recruitment embargo for the public sector, except for essential technical
 Identify all p0ssible ways of economizing the administration expenses
2. Import rationalization
 Keep the import restriction on cars for another two years. But the import of spare parts
and tires must be allowed without restrictions,
 If the foreign employees had transferred foreign exchange through official channels
during the last 12 months, they must be allowed to import a car, subject to the condition
that CIF value is paid abroad, and all taxes will be paid in dollars. The CIF value of the
vehicle shall not exceed the amount that they have transferred to the country through
banks. Duties are much higher than the CIF value. Therefore, the country will Except
gain foreign exchange instead of losing,
 for the identified essential imports (medicine, fuel, gas, basic food items, raw materials,
spare parts, intermediate goods for agriculture and industrial, machinery, fertilizer and
seed, etc.), enforce a high discouraging import duty or a cess instead of import banning.
This will enable generating revenue for the government while goods are available in the
market for tourists, foreigners, and well-to-do local people. Quota systems and import
bans are difficult to regulate and monitor, leading to many corrupt practices,
3. Exchange Earning
 Introduce an incentive scheme to bring earned foreign exchange by the foreign
employees and all foreign exchange-earners. Any amount transferred by them exceeding
the amount transferred in the previous month must be paid a 10% extra above the
official exchange rate as an incentive. It should be continued every month as a
motivation for achievements.
 Central Bank may investigate the possibility of issuing foreign exchange saving
certificates denominated in US$ 1000 to 10,000 without the recipient’s particulars that
can be encashed in dollars by anybody at any commercial bank on maturity in one or
two years. Many people bring money up to US$ 10,000 in cash and keep it in their hands
for a more extended period expecting a further devaluation. If the above is possible,
such money can be diverted to banks immediately,

 Foreigners must be allowed to purchase apartments in a condominium or long-term
leases by upfront payment of the lease rental in foreign currencies. Stamp duty of 4%
shall be reduced to 2% for such transactions. Also, those foreigners should be granted
multiple visas for five years, which could be renewed every five years. The government
grant to Provincial councils may be increased to compensate for the loss of income of
Provincial councils due to this (2%) concession,
 The above facility must be extended to Sri Lankan Dual Citizens also,
 Companies owned by the Tamil diaspora can lend their money to SL companies to
import raw materials without any involvement from the government. Someone
acceptable to the Tamil diaspora should take that initiative for this,
 Pending the IMF support, further SWAP arrangements must be requested from friendly
 Two- or Three-months amnesty period may be given to declare undeclared income (local
and foreign). Those may have been earned over several years but must be considered
the income for the 2021/22 tax year and tax accordingly. This may not require any new
 Monitor foreign exchange remittances by BOI Approved companies,
4. Increase Government Revenue
 Duty-free allowance limits for Sri Lankans returning to Sri Lanka from abroad are not
adequately enforced or monitored. It operates like a legalized racket. That shall be
strictly enforced and monitored,
 Collection of import duties, income tax, exercise tax, etc., shall be monitored closely
because the tax evasion is very high,
 Present income tax threshold may be maintained at the present level considering
inflation. However, the income tax base must expand to correct the historical mistake.
Under the leadership of Divisional Secretaries, the services of Grama Niladaris and
development officers shall obtain to identify new taxpayers and open files for them,
 The highly complex tax declaration form must simplify, enabling any ordinary person
could fill it,
 A competition shall be launched to select the best ten income taxpayers at divisional
District and national levels. Their contribution to the government coffer must be
appreciated in different ways (privilege cards, appointment as justice of the peace,
allowing them to sign bail applications, admission cards for examinations, etc. using the
tax file number),
 Increase the VAT percentage to 12% and reduce the VAT thresh hold to a lower limit to
register more VAT payers.