A pump named Wayne. Wayne Octain.
I was on MTV’s Good Morning Sri Lanka with Prashan De Visser this morning. It was about rising petrol prices and the dropping Rupee. I must admit that I am also confused by this, for more details I’d recommend Jack Point. I think the general narrative, however, breaks down like this.
The government needed to borrow money (from the IMF). To borrow, it has to show that it can balance the books. That means raising revenue AND cutting spending (ideally). The government just raised revenue by increasing petrol prices but they haven’t really cut spending (ie, on Mihin Lanka, which wastes insane amounts of fuel). By allowing the Rupee to float naturally they don’t have to spend billions artificially buying it and changing the price. This means that Sri Lankan goods are cheaper (boosting exports) but imports are more expensive now, and we import a lot. Everything from tinned fish to iPads to cars will cost more.
To some degree this stuff had to happen, especially the Rupee depreciation. However, the problem I’m seeing is that average people are tightening their belts and the government isn’t. Obvious wastes of money like Mihin continue, and less obvious ones also (presumably). We still have a jumbo cabinet, Ministers with retinues of cars and accompanying petrol allowances, and I don’t see them cutting back on that.
Ideally, balancing the books should involve increasing revenue and cutting spending. Alternately, increasing revenue and investing in transparent projects with predictable returns. Right now they’re raising revenue on the backs of the people, and expecting us to carry their corruption and waste as well. Something’s got to give.