Thread by @ChayuDamsinghe

For good intentions and bad, a question coming up now is "What happens if #GoHomeGota succeeds?"

A lot of false info and lies floating around about this, so let me try and clarify to best of my ability

#අරගලයටජය #EconomicCrisisLK #GoHomeRanil for reach

(1/20)

Disclaimer first, especially since political content. Politics is not my expertise, so take THAT aspect with a grain of salt. Will do my best to keep this analysis economic. But still personal opinion

(2/20)

There are three elements in which a change in governance can be affected and comments are made on.

1. Economic reforms
2. IMF negotiations
3. Debt negotiations

I feel all of these work worse under a GR led government

(3/20)

For 1, lets first focus on short term reforms, not the full package.

These are going to be hard reforms and require people to trust that despite government putting pain onto people, it'll be worth it.

Who trusts GR?

Very few in my view.

(4/20)

That's a key issue - that the current government doesn't have public buy in to its policies, because time and time again, they keep proving themselves unworthy of this trust and confidence.

Therefore, expecting the GR government to push reforms is impractical IMO.

(5/20)

Literally any change in government that gets rid of the leadership at the top does a lot to fix this. Even if any new players aren't perfect, the very fact that they aren't GR's government changes a LOT in my view.

Might even see returning remittances, who knows?

(6/20)

Then 2, IMF negotiations. This is where there's a lot of uninformed opinion being passed off as fact.

Let me try and explain this side as much as possible.

IMF negotiations are not about WHAT policies anymore, but about implementation. There's no "restarting"

(7/20)

The issues are clear and thereby, the solutions - a reversal of the bad policies is clear. The question is the actual implementation of this. You start implementing, then your negotiations are good to go.

(8/20)

But the current government ISN'T implementing much, outside of what the CBSL has done. Even the tax changes haven't been legislated yet. Why not? It's the most crucial immediate legislation needed, but it's not being passed.

(9/20)

So then, I feel it's inaccurate to say change in governance "delays" IMF negotiations, when the current delay in implementation itself is the issue.

Think its also fair to say that SLPP that voted in these changes would delay in reversing them!

(10/20)

Third, debt negotiations. These are going to be delayed whoever is in power. These negotiations are going to drag on for months at least in my view.

What causes this delay? A combination of lack of policy and worries over bilateral lenders.

(11/20)

Even in the best case, this is probably going to take MONTHS to resolve in my view. A change in government that happens well before that has absolutely nothing to do with this.

(12/20)

So then, the current government very much is already causing delays in economic policy and IMF negotiations by not implementing economic policy in time, because it doesn't have the public backing to put in policy.

So then lets look at the alternatives.

(13/20)

The biggest benefit a shift in government brings, is a surge in confidence. Whoever it is, let it be the main opposition, a secondary opposition, a coalition - is a huge change to the people.

It has a GREATER CHANCE of implementing reform than now in my view.

(14/20)

This means the IMF pathway can easily be FASTER - since there's now actual ability to legislate rather than dilly dally compared to now. In my view, the numbers will be there after a shift, especially with those who jump ship and vote.

(15/20)

Debt restructuring, as mentioned earlier, has no real impact - though a government that has the confidence of its people might be easier to deal with for others!

(16/20)

This doesn't mean this is not a risky possibility. It is very possible that things go south and the results are worse than before.

But crucially, absolutely crucially, that risk is HIGHER with GR in power.

(17/20)

My personal view is that a change in government has maybe a 30% change of going wrong. But remaining with GR has at least a 60% chance of the same.

It makes more sense to take the path of greater probability of success.

(18/20)

What this change in government is is upto actual experts in that field. What I can say is that there is unlikely to be a greater delay in economic variables than continuing on the current path of delay and inaction.

(19/20)

So in a way, my answer to the question "what next?" is simple. Anything other than this. Not because I think it is perfect. Not even because it's definitely better. But it's far more likely to be better. And far less likely to lead to destruction.

(20/20)