The sudden massive rise in popularity (provided the survey can stand scrutiny) of the JVP that could muster just 500,000 votes for decades and get 3 members into parliament, is not by accident.
It is largely due to the action of the government led by the Central Bank of Sri Lanka. Also the Ministry of Finance the Revenue administrator. Unfortunately we have a government that is unwilling to push back on the IMFs crazy austerity measures.
The country lacks the skills or the network to push back with the IMF or look for alternative financing options. There were billions of dollars of cheap money floating around in 2015-2021. Instead CBSL bought expensive debt.
The Sri Lankan Central Bank or the so called Treasury has not been able to raise 1 single USD to support large scale green projects . The debt restructuring should have looked at models used in Belize.
There are several example of debt-for-adaptation swap, There are countries who borrowed money from other nations or multilateral development banks and large Banks where debt has been forgiven, if the money that was to be spent on repayment was instead diverted to climate adaptation and resilience projects.
Have we worked on any of these opportunities? The government instead issued expensive local debt in 2022. Made no attempt to impose a hair cut on it other than burdening the EPF.
Thus creating an opportunity for the JVP to have a home run. Sadly the Ministry of Finance has been looking at everything in its traditional bureaucratic lens. They have taken the easy and traditional way – heap more taxes and levies on the public . But made sure the salaries of the public sector was increased.
What about the rest of?
Burden on Poor
According to the World Bank Poverty has risen since 2019, from 11.3 to 12.7 in 2020, adding over 300,000 new poor in that period. It continued to increase in 2021, and it then doubled between 2021 and 2022, from 13.1 to 25.0 percent .
This increase has added an additional 2.5 million people into poverty in 2022. Households have been impacted from different fronts as prices rose by 46 percent in 2022. The CBSL is crowing all over the place that they have made inflation negative. Perhaps they need a ride into the vegetable market.
Electricity prices have increased more than three fold. An average family consumes 40-60 units a month. They can’t even now afford 20 units. The government has effectively pushed the lower middle class to the JVP.
The struggling classes have confidence, the JVP will cut back on the bloated bureaucracy. Cut back on the perks of the politicians. Throw out the IMF austerity program. Tax the super rich. Give all that back by way of benefits to the public. Also replace the non productive bureaucrats with more current and dynamic young leaders.
Unless the government does something constructive for the middle class, the lower middle class and the poor and is firm with the bureaucracy in the CBSL and the Treasury. Deal with corruption. Protect the EPF. The country should not be surprised if the JVP finally comes to power democratically in 2024.
Because the public is so frustrated, and finding difficult to live. They are willing to take a gamble like they did with Gotabaya, which turned out to be a disaster. The economic pundits in the CBSL and Treasury and the Cabinet will be credited for this historic occurrence.