The International Monetary Fund on Tuesday said Sri Lanka has secured financing assurances from all major bilateral creditors, paving the way for the IMF board to consider approval of a long-awaited $2.9 billion four-year bailout agreed last year.
The IMF said its board will meet on March 20 to review a preliminary staff-level agreement first signed in September, offering a lifeline to the South Asian country which faces its worst financial crisis since independence from Britain in 1948.
Approval is expected since the board generally will not add items to its agenda unless its members are ready to act.
Sri Lanka has now received financing assurances from all major bilateral creditors,” Krishna Srinivasan, director of the IMF’s Asia and Pacific Department (APD) said in a statement.
This paves the way for consideration by the IMF’s Board on March 20 the approval of the Staff Level Agreement reached on September 1, 2022 for financing under an Extended Fund Facility,” Srinivasan added.
A source familiar with the matter said China had agreed on Monday to back Sri Lanka’s debt restructuring with stronger financial assurances, allowing the IMF to move forward.
The announcement comes days after the IMF praised Sri Lanka’s surprise decision on March 3 to raise interest rates and move toward a market-determined exchange rate as evidence of a commitment to reducing inflation and enacting reforms.
Sri Lanka, which has been facing shortages of food, fuel and medicines, has been waiting for more than 180 days for approval of the IMF loan, mostly due to IMF concerns over the quality of the initial financing assurances offered by China and other bilateral creditors, and its insistence on painful reforms.
Central bank Governor P. Nandalal Weerasinghe said last week that Sri Lanka had fulfilled its conditions with the rate hike and he was hopeful the IMF bailout would be approved this month.
The IMF said the board’s approval of a new loan for Sri Lanka would help catalyze financing from other creditors, including the World Bank and the Asian Development Bank.
The arrangement will support the authorities’ program of ambitious reforms, that they have already embarked upon, which will help Sri Lanka emerge from its current crisis and set it on a trajectory of strong and inclusive growth,” he said.
The Election Commission has deemed April 25 as the ‘most suitable’ date to hold the 2023 Local Government polls.
The election body informed the Returning Officers that the local government election cannot be conducted on March 09 as scheduled due to unexpected and unavoidable reasons” pertaining to the printing of ballot papers.
In a special gazette notification, dated January 30, 2023, issued by the respective District Returning Officers for the LG bodies of each district, under Sub-section 38(1)(c) of the Local Authorities Elections Ordinance, it was announced that the LG election would be held on March 09.
However, the LG election was later deferred as the government insisted that polls cannot be funded amidst the prevailing economic crisis.
Later, the election commission convened several meetings to decide on the LG polls and a conclusive decision on the election date was scheduled to be taken on March 03. Nevertheless, announcing the new election dates was put off following a meeting held by the members of the Commission that day.
The postponement of the decision came in the background of an order issued by the Supreme Court in this regard, instructing that a date for the 2023 polls be announced before 09 March.
Meanwhile, a group of parliamentarians of Samagi Jana Balawegaya (SJB), National People’s Power (NPP), Freedom People’s Alliance, Tamil National Alliance (TNA) and other parties representing the opposition convened a meeting at the Election Commission this morning to discuss the matter.
The Sri Lankan Rupee (LKR) has appreciated further against the US dollar (USD) today (07 March) as the buying rate reached Rs. 318.30 and the selling rate recorded Rs. 335.75.
At the same time, the Middle Rate of the USD/ LKR SPOT Exchange Rate was recorded at Rs. 337.66.
The Sri Lankan Rupee has also appreciated against the Euro, the Pound Sterling, the Australian Dollar, the Indian Rupee, the Canadian Dollar and the Japanese Yen, the Central Bank of Sri Lanka (CBSL) reported.
Sufian Siddique Independent researcher and freelance columnist, Dhaka
Pakistan’s economy is on the brink of bankruptcy like Sri Lanka’s. Pakistan’s foreign exchange reserves have fallen below $3 billion. They have asked the IMF for a ‘bailout loan’ a long time ago, but the IMF is trying to impose strict conditions that Pakistan’s current ruling coalition has no capacity to meet. Even China and Saudi Arabia, Pakistan’s long-standing loyal friends, are now reluctant to shoulder Pakistan’s burden. China has stopped power supply from the power plants built by Pakistan on China’s loan after Pakistan failed to pay the long-delayed installments. Due to this terrible load shedding is going on all over Pakistan. Frequent grid failure. The value of the dollar in Pakistani rupees has increased dramatically, currently Pakistan has to pay 277 rupees to get 1 dollar.
Inflation in Pakistan’s economy has reached such an alarming level that the price of a kg of flour now exceeds Rs 160 and a kg of sugar is over Rs 300. The main reason for this crisis is the burden of a huge armed force of seven lakhs including five and a half lakh army. It is not economically feasible for Pakistan to raise such a large army just for war with India. Hostilities between the two countries began with the Kashmir War of 1947-49, which ended with a UN-imposed ceasefire. Although the 1965 war was not decided by either side, the diplomatic victory in the war that was settled by the Tashkent accord went to India. In the 1971 war, the Pakistani armed forces surrendered in Dhaka after being defeated by the Bangladesh-India joint forces, through which Bangladesh declared independence on 26 March 1971 and marched in victory on 16 December. In the last Kargil war of 1999, Pakistan was forced to accept a ceasefire that failed to achieve its objective. But as an inevitable consequence of this war game, the actual governance of the Pakistani state came from behind the scenes in 1948-58 and directly in the hands of the military establishment in 1958-71. After losing Bangladesh, it is not possible to keep the military away from the role of the ruler of Pakistan for a long time even in the period of 1971-2023, military dictators are occupying the power of Pakistan for a few days. And when the military is forced to give up power to the civilian rulers for some time, they still keep the real reins of governance under their control. In the current phase, Imran Khan came to power through the election as a favorite of the military, but within a few years, due to power struggle with the army chief Qamar Bajwa, no one had any difficulty in understanding that the military establishment was also behind the installation of Shahbaz Sharif after ousting him a few days ago. ISI, the intelligence agency of the armed forces of Pakistan, is playing a role as a powerful tool of the military establishment in this power grab game.
In 2007 Dr. The book Military Incorporation: Inside Pakistan’s Military Economy by Ayesha Siddiqui caused a stir around the world after its publication. Dr. in this book. After presenting the history of how Pakistan’s military took control of Pakistan after 1947, Ayesha Siddiqa describes and analyzes in detail how army officers, led by generals, came to dominate Pakistan’s economy.
In 2005, the military economy became a major force in Pakistan’s economy, with four armed forces-created organizations, the Fauji Foundation, the Army Welfare Trust, the Shaheen Foundation and the Baharia Foundation, becoming the country’s four largest business and industrial enterprises. Fauji Foundation has 25 projects, Army Welfare Trust has 41 projects, Shaheen Foundation has 14 projects and Baharia Foundation has 19 projects—99 projects are mentioned in the book as of 2005. Military officers trump all others in Pakistan as the neo-landlord class all over Pakistan now due to the absolute preference of armed forces personnel to lease government-owned or encroached rural or urban land. Around 1.1 million acres of land across Pakistan has gone to the ownership of serving or retired officers and employees of the military. Several Defense Officers Housing Societies have now become the largest residential area in any large or medium city in Pakistan. The state of Pakistan will not be freed from the occupation of military forces in the near future. Conclusion of Siddika’s Pain.
Since 1948, the defense sector has been the main sector of the budget of the government of Pakistan, from which the sector could not be removed even in the last 75 years. Defense sector in such a state
There is no doubt that any government in Pakistan has the audacity to put its hands on the budget.
But the fact that this unbearable burden is driving Pakistan’s economy into the ‘valley of meltdown’ is going to be exposed nakedly in front of the world. The world’s sixth largest populous country, Pakistan’s population has grown rapidly to over 250 million, whose food, clothing, shelter, education and medical care are beyond the reach of any ruling party or coalition in Pakistan after bridging the gap of such a large armed force. The country’s annual export earnings still remain below $25 billion, while import spending is reaching $80-90 billion per year. Every year, after meeting the huge expenditure allocation for the defense sector, it is beyond the government’s ability to carry out the minimum necessary expenditure on public education and health. Pakistan’s position in the world ranking of the United Nations Human Development Index is going down every year. In 2022, where Bangladesh has risen to the 129th position in this regard, Pakistan’s position has dropped to 147th. During the 1947-71 period, East Bengal/East Pakistan as an internal colony was made a helpless victim of exploitation, deprivation, unlimited discrimination and plunder by the rulers of Pakistan, as a result of which the per capita GDP of the people of Bangladesh in 1971 was 60 percent less than that of West Pakistan. But in 2015, Bangladesh surpassed Pakistan in terms of per capita GDP. In 2023 Bangladesh and Pakistan may see a comparable picture.
1) In terms of per capita GDP, Bangladesh has surpassed Pakistan by 80 percent. Bangladesh’s per capita GDP in 2021-22 is $2793 and Pakistan’s is $1547. 2) Bangladesh’s export earnings are more than double that of Pakistan’s, exceeding $52 billion in FY 2021-22. 3) Bangladesh’s foreign exchange reserves reached $48 billion in August 2021, declining over the past 17 months to $24 billion in January 2023 as per IMF calculations, more than eight times Pakistan’s. (According to the Bangladesh government’s account, the reserve of Bangladesh is 32 billion dollars). 4) The average life expectancy of the people of Bangladesh is 73 years, 66 years in Pakistan. 5) The literacy rate of the people of Bangladesh is 76 percent, while that of Pakistan is 59 percent. 6) The total GDP of Bangladesh is 465 billion dollars, and that of Pakistan is 346 billion dollars. 7) Population growth rate of Bangladesh is 1.2 percent and Pakistan is 2.1 percent. As a result, the population of Pakistan has increased to 22.5 million, and the population of Bangladesh is 16.98 million. 8) 1 dollar is available for maximum 107 taka in Bangladesh, 277 rupees to buy 1 dollar in Pakistan. But till 2007 the foreign exchange value of rupee was 8 percent higher than taka. 9) Bangladesh’s total foreign debt is 20.48 percent of GDP, while in Pakistan it is
46 percent of GDP. 10) 36 percent of women in Bangladesh work outside the home yard, compared to only 14 percent in Pakistan. 11) In Bangladesh the infant mortality rate is 21 per thousand, and in Pakistan it is 59. 12) 100% population of Bangladesh is covered by electricity facility, while 73% population of Pakistan is getting electricity.
The above data shows that Pakistan will never catch up with Bangladesh in the race of economic development. The GDP growth rate of Bangladesh increased gradually to 8.13 percent in the fiscal year 2018-19. In 2020-22, the impact of the novel coronavirus pandemic and the Russia-Ukraine war slowed down the growth rate of Bangladesh, but it was much higher than that of Pakistan and the growth rate is estimated to exceed 6.5 percent again in the fiscal year 2022-23. Development thinkers are optimistic that the economy of Bangladesh, a low-middle-income country, will rise to the upper-middle-income category very quickly if harmful activities like corruption, looting and money laundering are strictly controlled. But for this, the root problems like corruption, looting and money laundering need to be tackled properly.
By Engr. Kanthar Balanathan DipEE (UK), GradCert (RelEng-Monash), DipBus&Adm (Finance-Massey), C.Eng., MIEE, Former Director of Power Engineering Solutions Pty Ltd, Consulting Electrical Engineers
Political System
The political system in Sri Lanka (SL) is in chaos. The prime factors, for this, are the fundamental, innate mindset of Buddhism, racism, jealousy, avidity, the shortfall in perception, non-flexibility, incapability to accomplish what they entail, and zero knowledge of political science.
The general theory is the fact that both the Sinhala and Tamil races are immature and have limited scientific knowledge of political, social, and economic topics. The rowdy-characterised politicians were able to fool and terrorise the citizens with religion, race, culture, and language to achieve their objectives. The process gave birth due to some politicians’ greed and voracity, target for power and wealth. Maybe that’s third-world human culture.
Terrorist Act 1
In 1972 Sri Lanka announced a republic and was free from the British throne. In 1971 a group headed by Rohana Wijeweera initiated an act of terrorism on insurrection on the 5th of June 1971. Rohana Wijeweera was a student at Lumumba University. The police and the army were called in and Srimavo declared a state of emergency and suppressed the resurrected terrorism. They were addressed as the JVP, also known as Che Guevara”, a communist revolt organisation. Somehow later during the JR Jayawardene’s period the JVP was pardoned and gave birth as a political party. However, the JVP was never ever able to get more than adequate seats to represent in parliament. This unit of JVP was from the South. Maybe the Yakka people and the assimilated crowd were members of this unit.
Terrorism: Quote Ref: FBI: Violent, criminal acts committed by individuals and/or groups to further ideological goals stemming from domestic influences, such as those of a political, religious, social, racial, or environmental nature.
Who were the international drivers of this JVP? It could be assumed that they were either Russia or North Korea. With SL having not enough foreign resources and people becoming lazy as is the culture of the Sri Lankan people, the JVP wanted power so that they can accumulate wealth. JVP’s policy is to capture positions in government organisations and thereby claim superiority and claim power in the government. However, they failed in all elections.
The main issue and differences here are the regional differences between the Low Country Sinhalese” and the Upcountry Sinhalese”.
Terrorism has a negative impact on the economy of a country, thus debarring development and making people poorer. The focus of the JVP terrorists in SL is to capture power and convert into a communist republic and be an ally of a communist nation. The JVP fools did not do any research and analysis on the economy and growth.
Terrorist Act 2
In 1971 along with the JVP insurrection, another group gave birth among the Tamils. Later in 1972, they merged as the LTTE from the Tamil sector. The destruction caused by the LTTE was immense and they killed politicians, ministers, civilians etc. India gave motherhood as a mother giving compassionate, endearing, kind protective, extraordinary intuitive caring and mindful to the LTTE and other terrorist organisations that gave birth among the Tamils in SL. There are reasons for Late Indra Gandhi and MGR giving support and caring to the terrorist groups. This is the main cause for the LTTE to become quite strong and destroy assets in the North and SL in general.
Tamils in SL are quite a small minority, and they can’t prolong the terrorist act for a long time as other international liberation groups. This condensed the enthusiasm of the other groups, and they became political groups supporting the government in the political path. LTTE, however, somehow was able to collect funds and become a strong terrorist group claiming that they were a liberation group.
Economic Downfall
Overall, the economy of SL declined and perished, and people started to move out of SL, both legally and illegally by boat.
Since 2005 the politicians who governed SL were corrupt and commenced to practice bribery and corruption, especially during the Mahinda Rajapaksa period.
The country faced a new dictatorial autocrat, Gotabaya Rajapaksa as the President and he had no clue of who he is and what his obligation to the society was. The economy drastically moved down to zero FOREX resources.
The political differences between the politicians, JVP and Sajith Premadasa gave birth to the people coming to the road and chasing the Rajapaksas out of the government. The main people here are the JVP and the Sajith party.
With zero-dollar FOREX Ranil Wickremasinghe took the office of the President and appointed the cabinet. The shortfall here in SL is that the people behaved like animals, and everyone wants a portfolio. While preaching austerity measures the people have no knowledge and how to handle the austerity measures.
JVP uses this opportunity to campaign against the government and the JVP wants the government to collapse. It is the writer’s view that the members of the JVP are not patriots and are intelligent to practice austerity and support the government to recuperate the economy. The result is people suffer and JVP wants the country to face a calamity and breakdown.
Quote: Ref: English meaning of modus operandi? A distinct pattern or method of operation especially one that indicates or suggests the work of a single criminal in more than one crime.
JVP’s tactics were:
JVP took up arms at one time and failed to fight against the government forces.
They planned next to cripple the economy of the country so that the people will rise against the government and make a suitable time for the JVP to capture power. They used the people and some politicians with their cunning acts and drove the country to poverty.
JVP also infiltrated into government organisations, and it is believed that the Institution of Engineers-Sri Lanka also has members of JVP infiltrated into the org. It is an insult to the engineering arena to have such an Institution with members of the JVP and involve in politics.
Today the JVP and Sajith’s members are on the road protesting against the government for the increase in taxes, non-availability of fuel, power etc. Whose fault is that? It is the fault of the people and the JVP for not making the country self-sufficient in food etc. Well, they know that SL has no petroleum, Coal, and technological products. People did not pay taxes for donkey’s years and did not pay the dues for what they received in terms of electricity and water. The government provides free health, education, subsidised travel etc. Do not people have the perception to understand the facts and truths?
Well, communism is a blunder from the ideological perspective and will lead a country to failure.
Vasantha Mudalige:
Who is this guy? What does he want? Does he want to be the President/PM or a Minister? Did not he know that the President took up the office as president with zero dollars FOREX? What is his level of education? Can he explain the obligation of a politician to society?
What is the reason for bringing Prabakaran to be alive now and that he is coming back? It is a tactic to bring Mahinda Rajapaksa back into power because people think that MR defeated the LTTE. It’s a wrong concept initiated by crooks to bring MR back to power so that they can enjoy the fruits of power. India may be playing into this wrong concept. India wants SL to be bankrupt so SL will always look to India for funds, help and loans.
Vasantha Mudalige: If you have something called Brain and perception”, please use the brain and think of the people if you are patriotic. This concept is also applicable to the leader of the JVP and Co. Get out of the road and go home and think of how you can help the government to achieve its objectives to recoup the economy and help the people.
All those who want portfolios: The secretaries and the administrative staff are the permanent staff who can add value to the country. Ministers come and go. They do not do work but add expenditure and be a burden and a liability. All the vultures who want portfolios: do they have brains and perception and understand the areas in which they want the power? Mervin Silva, a cleaner/labourer was also a minister under the Mahinda Rajapaksa government.
Just contribute your thoughts in parliament, but not as a minister.
Had the Roman Empire under Constantine embraced Buddhism rather than Christianity we would have had a more peaceful Europe and a more peaceful world.
Historically speaking despite all the rhetoric on Peace and Human Rights, Europe remains the same. The biggest battlefield in history compared to other continents. The track record of Europe is constant War, Religious Crusades, Holocaust, Colonialism, and the like.
Both the First World War (1914 – 1918) and the Second World War ( 1939 – 1945) originated in Europe.
We are now on the threshold of another World War originating in Eastern Europe.
Denials will not alter the fact.
Europe was in need of the likes of Emperor Asoka of India who renounced violence and spread Buddhism and peace throughout the then-known world rather than Constantine who remained a warrior until his death and never renounced war and violence as means of settling disputes.
The entire world has been paying a heavy price because of adopting belief systems that advocate violence and conquests to spread religion.
Buddhism is the answer. The antidote for warlike countries and civilizations.
Dr. Paul Dahlke, a German Buddhist pioneer, was one of the first Europeans like the celebrated German Philosopher, Artur Schopenhauer, who saw the value of spreading Buddhism in European countries, to overcome the spread of religious wars in Europe.
While stressing that the date for the Local Government (LG) polls remain in the hands of the Treasury, the Election Commission (EC) ruled out yesterday the possibility of holding the election before the Sinhala and Hindu New Year which falls in mid-April.
EC Chairman, Nimal G Punchihewa told Daily Mirror that even if the treasury releases funds for the election immediately based on Friday’s Supreme Court ruling the election has to be held between 5 – 7 weeks from the day of declaration of the polls. Hence, the LG polls have to be held in the second half of April, 2023.
Punchihewa told Daily Mirror last morning that the EC was ready to announce a short date for the LG polls if the Treasury Secretary Mahinda Siriwardene promises to release adequate funds to the EC to conduct polls at the meeting scheduled to be held tomorrow morning at the EC also attended by the IGP, Chandana Wickramaratne and Government Printer Gangani Liyanage.
I can’t give you an assurance whether the EC could hold the LG polls or if that is the case when. All depends on the availability of enough funds to the EC. If the Treasury takes the responsibility to release sufficient funds at tomorrow’s discussion, we are ready to hold the LG polls on a nearest possible day. The ball is in Treasury’s hands” Punchihewa emphasized.
However, the Treasury can also tell us that it is more than happy to release funds to the EC but they don’t have enough cash to do so at the moment. They can release funds only in a few months only. But I don’t think this kind of scenario would arise tomorrow at the discussion,” he added.
If the EC failed to obtain a firm pledge from the Treasury immediately for sufficient funding to conduct much delayed LG polls, there will be another legal issue. The highest court in the country has given ruling to the Secretary to the Treasury not to retain funds allocated to the EC from the budget 2023. Therefore, the Treasury is officially and legally bound to release funds to the EC. If not, it will amount to contempt of court. The EC does not want to involve in another legal battle. The petitioners either who obtained this court ruling will need this, Punchihewa stressed.
If the Treasury promises to release funds immediately, the EC will try its best to release the gazette notification indicating the day of the polls through 25 District Returning Officers (DROs) on Wednesday (8) and unless on Thursday.
Commenting on the remarks coming from certain quarters that he did not call the all-important meeting at the week-end, Punchihewa said it was a long week-end and many public servants go out of the city and also they are officially not bound to attend officials meetings. (Sandun A Jayasekera)
Sri Lanka’s northern fishermen on Sunday said they fiercely oppose” the government’s plan to issue licenses to Indian fishermen to enter Sri Lankan waters, terming the move a serious setback” to their nearly 15-year-long struggle.
On February 22, Foreign Minister Ali Sabry told Parliament that authorities were looking into possibly issuing licences to Indian fishermen, as part of Sri Lanka’s efforts to find a solution to the long-persisting fisheries conflict, through cordial” bilateral talks. This was discussed this with Indian Foreign Minister Jaishankar…Sri Lanka’s priority is to safeguard fishermen’s livelihoods, the country’s marine resources, and find a long-term solution…India has proposed this licensing system as a solution, and we are holding discussions on it,” he said, adding that such a system would help Indian authorities better regulate their fishermen, and will also bring in money that could be used for Sri Lankan fishermen’s betterment. About 2,000 to 3,000 [Indian trawlers] come to our seas every day and our Navy is unable to control that,” Mr. Sabry further noted.
The Minister’s remarks have sparked serious concern among northern fishermen, said Annalingam Annarasa, who leads a Jaffna-based fishermen’s association. We are very worried, this will be a serious setback to our struggle for the last 15 years to stop Indian trawlers from entering our seas,” he told The Hindu. Moreover, some political actors are trying to turn fishermen of our two countries against each other, using this problem. We need an urgent solution to this.”
Fisher leaders including him on Sunday put forward this view to Tamil MPs representing northern districts and sought their support to resist the Sri Lankan government’s proposal, and to urge Colombo to fully implement Sri Lankan laws that ban bottom trawling and illegal fishing.
Following the meeting, Jaffna MP M.A. Sumanthiran — whose Bill against bottom trawling was passed by the Sri Lankan parliament in 2017 — said the legislators across parties agreed that no permits should be issued to Indian trawlers. Even without permits, Indian trawlers are already entering Sri Lankan waters and destroying marine resources. Issuing licenses will only aggravate the problem,” he said, adding that the MPs and fisher leaders would make a joint call to the government.
The fisheries conflict affecting fishermen of Sri Lanka and India has remained a thorny issue in Indo-Lanka bilateral ties. From the time Sri Lanka’s civil war ended in 2009, Tamil fishermen living in Sri Lanka’s northern districts have consistently protested Indian trawlers — originating from Tamil Nadu — fishing along their coastline, citing the destruction they cause to marine biodiversity and their livelihoods that are closely tied to it. Sri Lankan fishermen also frequently report serious damage to their fishing nets and gear, and huge losses, owing to the bottom trawlers.
Despite several rounds of bilateral talks and discussions among fishermen’s representatives from either side of the Palk Strait, the problem is yet to be resolved, leaving the northern Sri Lankan fisher folk, who are struggling to resurrect their war-battered livelihoods, in a precarious situation. In 2016, the two governments agreed to expedite the transition towards ending the practice of bottom trawling at the earliest”, acknowledging the Sri Lankan fishermen’s demand as genuine”.
However, with no solution in sight, northern fishermen have continued to agitate. Last year, they wrote to Tamil Nadu Chief Minister M.K. Stalin, seeking his intervention to decisively address the issue. They submitted multiple petitions to the Indian missions in Sri Lanka as well.
The proposed licensing system will undermine fishing as a way of life” for the next generations of Sri Lankan fishermen, according to Ahilan Kadirgamar, a senior lecturer at the University of Jaffna, who researches northern livelihoods. The fishermen’s struggle since the end of the war has been to find a diplomatically negotiated solution to this serious problem caused by Indian trawlers. They feel both the Sri Lankan and Indian governments have betrayed them,” he said.
Mattala Rajapaksa International Airport (MRIA) has facilitated 11,926 international tourists in February 2023, says the Airport and Aviation Services Pvt. Ltd. of Sri Lanka (AASL).
While Sri Lanka’s tourism industry has recorded 107,639 international tourist arrivals in the month of February 2023 with a growth of 11.5% compared to the month of February 2022, the MRIA has facilitated 11,926 international tourists in February.
This includes 6259 arrivals and 5667 departures with over 72 international aircraft movements.
Further, after 2021, the MRIA has facilitated the first flight of SCAT Airlines of Kazakhstan today (March 06) with 188 international tourists arriving in the country.
Altogether, 602 international tourists arrived in Sri Lanka through the exotic gateway on Monday, including Red Wings Airlines, a Russian regional leisure airline based in Moscow, which carried 414 international tourists onboard to the country, while 407 tourists departed on the same flight.
Meanwhile, the AASL had made all necessary arrangements to welcome the guests and facilitate smooth operations to process 1009 tourists.
If the trend continues, the year 2023 would be one of the best recovery years for Sri Lanka and tourism will support rebuilding the economy, the AASL added.
The opposition party is not showing any sign of commitment to resolving the current economic crisis, opposition MP Patali Champika Ranawaka said.
“One political leader who represents a certain political party said he will be able to convince the international community through his English language skills. Another says that they will convince the international community by doing away with perks given to ministers and MPs. These are just low remarks made in response to complicated issues” the MP said during a public function.
“One is mistaken if he thinks it will be possible to run the nation if they grab power from the incumbent President Ranil Wickremesinghe, ” he added. (Yohan Perera)
In June, 2016 (IMF) approved a 36-month extended arrangement under the Extended Fund Facility (EFF) with Sri Lanka for an amount equivalent to US$1.5 billion,
The program aimed to provide a policy anchor for macroeconomic stability and structural reforms, while strengthening external resiliency in a challenging global environment” To achieve these objectives, the program envisaged the implementation of a set of reforms under six pillars:
(i) Fiscal consolidation;
(ii) Revenue mobilization;
(iii) Public financial management reform;
(iv) State enterprise reform;
(v) Transition to flexible inflation targeting under a flexible exchange rate regime; and
(vi) Reforms in the trade and investment regime.
In an article titled ‘The IMF In Sri Lanka: Bull in a China Shop’ in the Island News Paper of October 6, 2016, C. R. de Silva an ex-World Bank staffer wrote a scathing account pointing out the irrelevancy of IMF reforms in the context of the critical problems faced by the country. He mentioned the difference of opinion between Sri Lanka and IMF of an enhanced VAT level to 15% and to revise the income tax structure to bring direct and indirect taxes in a 20%/80% ratio, respectively.
CR was appalled that IMF ignored the foreign debt issue which stood at near $ 50 Billion and annual debt service payments at about $ 5 Billion. Several prominent economists had commented that this high level of foreign debt is not sustainable, and concluded that the country is already in a debt trap. According to the U.K.-based Jubilee Debt Campaign (JDC), a global movement demanding relief from the slavery of unjust debts”, countries like Sri Lanka with a foreign debt over 30% of GDP and debt service payments exceeding 15% of external revenue, have unsustainable foreign debt. JDC classifies Sri Lanka in a group of 22 countries already in a debt crisis, which include the Eurozone countries of GREECE, Portugal, Ireland, Spain and Cyprus, which have all at some point received the tender, loving care of IMF economic and financial panacea. Vide ‘ Sri Lanka – Avoiding the ‘Road to Greece’ in The Island of 13 June 2016.’ Sri Lanka should raise at the highest level of the IMF/World Bank Annual Meetings the question of restructuring its massive foreign debt, and stretching out periodic repayments to make them affordable, without waiting for last minute IMF intervention.
CR commented that the IMF’s very controversial judgement that the 3-year reform program under the EFF which it outlined for the Government, narrowly focused mainly on fiscal issues, will help the Government to achieve ‘lift off’ of the economy…”. For a middle income developing country at the lower ranges to achieve that kind of giant economic leap forward or ‘lift off’ to the next level of development, will require very much more planning, innovation, investment and structural change, than satisfaction of a few identified, mostly unpopular, policy reform measures, supported by a very modest $ 1.5 Billion EFF, doled out in $ 168 million tranche payments over a three-year period. He pointed out that revolutionary structural changes are called for in education curricula, vocational training and technical education to prepare the work force to be able to cope with coming information and communication technology (ICT) developments.”
IMF was looking at trees and missing the forest. The question is are they doing the same thing today in Sri Lanka?
A caustic comment made by insider Stiglitz, on the World Bank’s ‘investigations was that it involves little more than close inspection of five-star hotels. It concludes with a meeting with a begging finance minister, who is handed a ‘restructuring agreement’ pre-drafted for ‘voluntary’ signature”. This may be relevant to IMF as well which is there to look after the interest of the creditors.
Government should follow the dictum Caveat emptor.
Arun Siddharth has an opinion & he has a right to his opinion. How many have listened to him or believe him? Why is his narrative different from the rest? What makes his narrative different from the rest? The UN/UNHRC/Western diplomats have for years felt comfortable in believing the lies of a bunch of ailing oldies. Would they ever take Arun & other Tamils who were victims of LTTE & give them a voice in Geneva?
The People’s Convention for Good Governance was held at the BMICH on 25 February 2023 with Dr & Mrs. Walter Jayasinghe invited as Guest of Honor. Richard de Zoysa was the convener. The Speakers included Maithri Gunaratne, Omar Khan, Prof Arjuna Parakrama moderated a panel on education that included Dr. Tara de Mel, Prof Harendra de Silva & Nile Anandappa. Shehara Parakrama, Sharhan Muhseen & Murtaza Jafferjee of Advocata spoke on economic reforms. Dr. Pakiasothy Saravanamuttu moderated panel on ethnicity which included Selvi Sachithanandan, Ishan Jalil, Jeremy Liyanage & Arun Siddharth. A poverty alleviation program across districts in Sri Lanka as envisioned by Dr. Sarath Seneviratne some 15 years ago is to commence by raising funds from local & international donors.
Arun Siddharth introduced himself as hailing from Jaffna, born in Jaffna, educated in Jaffna & still living in Jaffna. He apologizes for any grammatically incorrect English and attributes it to not studying in English.
Arun raised some significant points that thus far so-called Tamil politicians & Tamil NGOs as well as Tamil society leaders have failed to admit or conveniently brushed under the carpet for their own benefit, as funding would not have come their way, if they presented a notion that there was no ethnic conflict in Sri Lanka.
Thus, when Arun confidently declared there was no ethnic conflict in Sri Lanka, there was naturally pin-drop silence. He echoed what majority of people have been trying to tell the world ‘there is no ethnic conflict between Sinhalese, Tamils, Muslims, Burghers or Malays, though there may be issues” & Arun attributes this to politicians which is absolutely correct. All politicians are guilty of fanning ethnic politics for their own political & personal gains. In addition to politicians another bunch of people wish to present notion of conflict as it is only when such happens a bunch of people calling themselves ‘conflict-resolutionists’ can enter & meddle in internal affairs of countries & advance their agendas.
Arun refers to Maithri Gunaratne’s claim that the 1956 Official Language Act is the root cause of the conflict. This is the conveniently flagged hyped reason promoted by the educated & their followers, primarily because its real objective is an anti-Sinhala Buddhist campaign.
Arun presents why he disagrees & it aligns with many others who question how 1956 Official Language Act can be the root cause of the conflict. Arun cites the formation of the All Ceylon Tamil Congress based on ethnicity in 1944 by G G Ponnambalam, an elite politician from Colombo. This was 12 years before the Official Language Act of 1956 & 4 years before independence. ACTC was formed during colonial British rule.
Arun then shows how S J V Chelvanayakam separated from the ACTC to form the ITAK – Illankai Tamil Arasu Katchchi in 1949, just a few months after independence in 1948. Both ACTC & ITAK were based on ethnicity & not based on unity, Arun quite rightly points out.
Arun goes on to say that there are some elite politicians living in Colombo, who cannot speak even in Tamil nor do they live in Jaffna. Interestingly it was alleged even Chelvanayagam could not read or write in Tamil! Even C V Wigneswaran (born 1938) was living all his life in Colombo & wen to live in Jaffna only after become the first Northern Chief Minister in 2013. For 74 years he was living in Colombo.
This is the point that many should take serious note of. Arun says that it was these elite non-Tamil speaking, Colombo living Tamil politicians who spoke on behalf of all Tamils & claimed the Sinhalese were discriminating Tamils, marginalizing Tamils, not giving Tamils rights & because of these elite non-Tamil speaking Colombo living Tamil politicians, majority of Tamils are today suffering. This is a key factor that the international community & the researchers in the UN should take note of, in case they too have ignored this ground reality & facts.
Arun humbly declares that his grandparents are toddy tappers & that he has gone through terrible caste-based discriminations by fellow high-caste Tamils. He says that while some may say the conflict in Sri Lanka is 30 or 40 years old, the caste-based conflict between Tamils is over 700 years old.
Arun shows a copy of the 1957 Prevention of Social Disabilities Act – he says that for 66 years the Act was not applied in the North & East & the some animals who are more equal than others” are together discrimination their own for over 700 years. Arun says that to avoid another armed conflict emerging the caste discrimination must be resolved first. It brought to light how Tamil militants were all low caste who took up arms as that was the only means to show their might over the high caste Tamils.
Arun says that they do not want power sharing based on ethnicity. Power sharing should be as Sri Lankans not for individual wishes of people.
Arun refers to the June 1987 Eagle Mission 4 by India, dropping parippu over Jaffna violating Sri Lanka’s airspace to show off their might. Arun says that the IPKF committed many war crimes including killing his uncle in the Jaffna university. He asks why nobody is asking justice for the killings by Indian soldiers. Arun asks the UN Representatives at the conference why they are not questioning the Indian crimes in Sri Lanka? If they do not wish to talk about all the crimes – then all crimes should be forgotten. In short Arun says, no one should hand pick crimes.
Arun takes up 13th amendment & Tamil political demands for land & police powers. Arun says that these elite Tamil politicians denied land rights to low-caste Tamils through a foreign land law known as Thesavalamai that was applicable to Malabars (who came from India) which was codified during Dutch rule in 16th century. Arun says that he cannot buy land in Jaffna because of this law. Arun rightly says that what people seek is an independent police not a politicized police. Police powers under 13th amendment will only lead to a politicized police per every province, as police has to report to a political party leader who is the chief minister of a province.
Arun says that there are over 30 women members who have arrived from Jaffna who are from the Jaffna Womens Front. He says amongst the audience, there are also many who have had their parents abducted by the LTTE and other Tamil militant groups. Arun says that his wife lost her father when she was 5 years old. Her father had been abducted & remains disappeared” as they have not found the body only rumor that his dead body was burnt on tyres. Arun says there are many who have had their sons, daughters, brothers, fathers abducted by LTTE & other Tamil militant groups, but no one is talking about these abductions. Perhaps the UN, international bodies & even the HR & civil society organizations may like to respond.
Arun says he is denied entry to the Jaffna Press Club as it is an elitist club of only high castes/class Tamils. Arun is banned because his truth is inconvenient for them. Arun says that because people hide the truth, the truth does not come out & those that speak the truth are sidelined (like him). Arun quite rightly says that if people start to speak the truth, problems can be solved.
Arun says he attended workshops related reconciliation & peacebuilding and adds that the Tamil NGOs do not invite him but some South NGOs had invited him. Peacebuilding was to be discussions & dialogue. He says that the participants from Jaffna at the conference could not speak Sinhala. Arun says the problem was communication not ethnic. He says the communication connection is what is dividing the people not the ethnicity. Arun quotes Mandela if you speak to a man in a language he understands, it goes to his head, if you talk to a man in his mother tongue, it goes to his heart”. Arun says that until a solution to the communication gap is found, there is no reconciliation.
Arun was asked to wind up his speech by Pakiasothy Saravanamuthu who should himself provide answers to most of Arun’s questions. Pakiasothy asked Arun to elaborate on the communication aspect. Arun asks why Tamils do not want to study Sinhala though they willingly study languages of other countries to migrate. Arun says his 3 sons do not have any opportunity to study in Sinhala because the administrators have not provided Sinhala teachers. He gives example of Malaysia & says Sri Lanka should follow a similar solution.
Arun says he & likeminded people would like to contribute to the country’s economy and get close to the South & rebuild the country.
During the presidential election of 2019, many candidates and people publicly talked about education reforms. Except for Mr Gotabaya Rajapaksa, other candidates and the public have not expressed clear views on this subject and are reluctant to talk about what kind of reforms are needed for Sri Lanka. Education is a broader subject area that involves an ocean of topics, views, and ideas. Although education is working as a right of the people political platforms in the presidential election presented the idea that education should be inserted into the constitution as a human right. There is no doubt that education has been working as a right and an essential role in human life since the beginning of the first human to this world. It is quite difficult to identify what are essential reforms to the country as the dynamism and changes in society force it to focus on the requirements of education and training in distinct areas. I have broadly written about this subject area based on my experience in developed and developing countries. Education is a policy matter as well as practical application and, the ability to successfully implement reforms countrywide would be buttressed the success.
Since the beginning of the education policy of Mr.C.W.W. Kannangara during the era of the State Council, education reforms have been a subject of talking and some attractive policy actions have been successfully implemented in the country while talking was going on among limited interested people, the main reason for current urgency may have been contributed by politics and economic predicaments faced by the majority of the country. Without understanding the purposes or the way reforms should be implemented in the country, education reforms might not be successfully achieved. On the other hand, educational reforms would not be successful if policymakers don’t clearly understand the quantum and the approach they needed to make as well as the limits in the country to launch reforms successfully. Many people in the country talk about education reforms with individual interest or with self-centred attitudes such as a finding job or gaining the opportunity to go overseas or providing opportunities for their group community. These are the completely self-centred focus.
Education reforms should be beyond self-centred attitudes and they must be firm actions with a national focus providing broader benefits to different people in the social structure the reforms shall involve capacious objectives consistent with international experience, which align on different focus based on technological innovations and timely human needs. The other important point is that education reforms are continuing process beyond the election promises. Election promises are concerned with short-term interest and education reforms go beyond the short-term requirements.
Before initiating education reforms, policymakers, as well as the public who are supposed to gain benefits from reforms need to understand fundamental economic issues and limits of the country. The status of the economy at present indicates that upliftment and the forward movement of the economy would be depended on timely educational reforms. Economic issues in Sri Lanka are associated with macroeconomic factors and the management of public and private enterprises and service firms concern with microeconomic considerations. Education reforms in Sri Lanka should go along with economic reforms, which essentially need to reform the existing education system. In addition to economic issues and status, education reforms need to consider other important areas such as value education, which included anti-discrimination and equality of citizens, and elimination of mythical attitudes of people, which are hindrances to development and growth. They are factors involved in the development of the human quality of the country. Although religions are operating in the country for centuries human quality has not been improved in the process and the result of this situation is less quality and demand for the human capital of the country. The other vital area is key knowledge and skills development about environment, health and communication in students in all contexts of education. This is a significant issue that should be specially considered by the reforming policy process.
Essential economic reforms might be a considerable temperament to the public in the short-run and it appeared in Western countries after the cold war, and Western countries and Communist countries understood the essence of reforms and they successfully dealt with human temperaments and implemented reforms tackling many problems such as unemployment, workplace reforms and multi-skills requirement against reforms to maintain the economies pushing to an upward trend. Now the most important economic reforms are policy corrections and deviation policy focus while inventing new policies for the future.
The people of Sri Lanka have many expectations, which may not be achieved quickly within the expected time framework as Sri Lanka has many limits or impediments to growth. No country can achieve social and economic expectations overnight through a reform process. Positive results from education reforms could be achieved only in the medium term.
The limits of education reforms are associated with many factors, which are beyond economic considerations and they are involved in social, cultural, legal, religious and international relation-related factors.
Traditional societies in history had no regulations, and impediments were limited, but modern society has many regulations and impediments which are difficult to defeat by an independent country like Sri Lanka. Sometimes Sri Lanka needs to work with other countries. Economically, countries in the modern world are in a competitive circle and Sri Lanka cannot work alone ignoring the factors limit to growth.
Generally, education reforms are concerned with contextual education, curriculum development and management, education administration, teachers’ and trainers’ development (teacher education and training), policy initiating and review of the current policy framework and remedial management of policy consistent with the dynamism of the world. These are quite difficult activities that are involved massive costs and quality human services. Therefore, the capacity of the economy to spend money on these activities is the key point for the success of education reforms. In the meantime, these reforms would generate massive employment and sometimes job losses and diverting jobs from one area to others should be a part of reforms. Finally, education reforms would be highly advantageous to the country despite the cost involved and the productivity generated from reforms will outweigh any cost.
International structure or acceptance for a million of the population (as a Model), must include one university for higher education and research in a variety of fields, at least two technical colleges for each five hundred thousand population for technical vocational education and training for current staff in workplaces and newcomers, five high schools for secondary context, ten or more schools for primary education context and twenty or more for early childhood contexts, and in addition, there may be several colleges to absorb dropouts in all contexts focusing on a different level of contextual education. The general structure of education must be organized according to this basic principle and requirements and there may be more educational institutions with private investments with greater supervision and review of the government. This basic structure is highly expensive and lots of economic, social, cultural and religious issues are involved in the situation and the nature of organizations. When education reforms consider this basic requirement, it is needed to eliminate divisions such as religion, language and any other differences, which might hinder providing equal education opportunities for people. As Sri Lanka consists of 24 million population the country needs to consider implementing the structure without any difference based on population. It is a horizontal expansion of education, which eliminate current vertical expansion to give priority to urban areas. Horizontal provision of education brings justice and opportunities for the rural community and the current competition for popular schools, colleges and schools will be exterminated by a horizontal model.
When the population changes the structure would be changed in the future and the general assumption is to implement the structure as government investment, but investments for education and training could be contributed by non-Government and private investors, especially religious organizations could participate with qualitative and strict government supervision. The provision of education should be free, but according to the affordability of parents and it needs to insist on fee-based education provision on individual cases and parents under the new model would be saved a large sum of spending in the current system as private tuition spending and many others will be eliminated by new structural reforms. The structure will give dignity to all students with any differences. In terms of structure, Sri Lanka needs many universities and technical colleges to provide good and quality education and training concerning different fields. The current available infrastructure and facilities would help to successfully build the proposed structure.
The economy of the country should be expanded to absorb more than 85% of graduates and there is no harm in 10% to 15% going overseas in terms of democratic freedom. Sri Lanka should not be a free education and training place for attracting labour from developed countries. If the economy of Sri Lanka is prosperous educated citizens and professionals will not migrate overseas to offer hard labour to developed countries. It entirely depends on the preference of the individual and the government has no responsibility for them unless they are subject to discrimination overseas. This situation can be seen in all developed countries and the government may impose various regulations considering the requirements. The government is not directly responsible for individual cases; however, the operation of international relations would force the government to intervene case by case.
Within this basic structure, the other essential reform is to change the current attitudes of people toward good schools or bad school feeling and the elimination of such feelings would be depended on the improvement of the quality of education for kids providing equal knowledge and skills from whichever school studied without a difference in rural or urban. This should be a key aspect of education reforms. The government can promote private investment through incentives for investors and eliminate various expensive competitive exams such as scholarship exams and private tuitions, which will not necessary under the reforms. The new structure allows for each student to attend university or technical education, in other words, every student can gain tertiary education.
Structural reform’s curriculum reforms, which is a broader aspect that eliminates unnecessarily aligning too many students to a certain area of education such as science, commerce, and arts. Many Western countries allow students to learn arts, science, and commerce together and sometimes to select other pathways in health, engineering, agriculture, services, sports, and many other areas. Curriculum reforms would direct to solve current major problems and needs including value education. Sri Lanka has many religions but followers are not consistent with the policies of religions. It seems that religion has become a symbol and religion is not working in homes or workplaces or society. In this situation, curriculum reforms need focusing to offer value education in all educational contexts. In Western countries, value education is key in practical knowledge and application. For example, care and compassion are vital values that mean care for self and others. In any education context, safety is a value, which broadly applies to any subject area and when value education is included, the behavioural pattern of students dramatically changed and the quality of knowledge and skills improve with a higher demand for knowledge and skills. Part two of this article focuses on reforms related to curriculum and teaching.
IMF funding is often the sole financial lifeline available to countries in a debt crunch, and key to unlocking other financing sources, with delays putting pressure on government finances, companies and populations.
For Zambia, it took 271 days between reaching a $1.3 billion staff-level agreement with the IMF — a preliminary financing deal usually agreed during a country visit — and the fund’s executive board signing off, a prerequisite for actual disbursements.
The first African country to default in the Covid-19 pandemic era in 2020, Zambia’s continuing debt relief negotiations involving China have been closely watched by other countries as a test case for the major emerging market lender.
Though staff agreements can be reached without financing assurances, the IMF board needs them to approve the programme. These are guarantees that sovereign lenders — and to some extent commercial creditors — will negotiate a restructuring in line with the IMF’s debt sustainability analysis, providing relief and financing when needed.
Sri Lanka has been waiting for 182 days to finalise a bailout after a $2.9 billion September staff level deal while Ghana, having defaulted on its overseas debt in December following a preliminary IMF deal, has yet to get board approval 80 days later.
This compares to a median of 55 days it took low and middle-income countries over the last decade to go from preliminary deal to board sign-off, public data from over 80 cases compiled by Reuters shows.
These delays have been caused by a number of reasons, but debt experts mainly point to the fact that China is still reluctant to offer debt relief in comparable terms with other external creditors.
Chinese Premier Li Keqiang said on Wednesday the country was willing to constructively” participate in solving debt problems of relevant countries under a multilateral framework. But Beijing has always emphasised all creditors should follow the principle of joint action, fair burden” in debt settlements.
An IMF representative said it was a very small number of countries” that suffered significant delays,” acknowledging this was in particular where there was a need to restructure debt owed to official bilateral lenders.
However, the time from staff level agreement to lending approval had remained broadly consistent for a vast majority of countries,” the representative added.
Besides members of the Paris Club of creditor nations such as the US, France and Japan, cash-strapped nations now have to rework loans with lenders such as India, Saudi Arabia, South Africa and Kuwait — but first and foremost China.
Beijing is the largest bilateral creditor to developing nations, extending $138 billion in new loans between 2010 and 2021, according to World Bank data.
For countries such as Sri Lanka facing shortages of food, fuel and medicines as well as painful reforms to alleviate a debt crisis after years of economic mismanagement, the delays can be devastating. The war in Ukraine added pressure as global commodity prices soared.
Sri Lanka going beyond March without an IMF programme will be challenging for us,” said the country’s State Minister of Finance Sehan Semasinghe.
We need the programme to justify the reforms that need to be made for the economic stabilisation process.”
After the Covid-19 pandemic raised pressure on highly-indebted economies, the Group of 20 economies launched in 2020 the Common Framework, a platform designed to help low-income nations restructure sovereign debt. For the first time, China joined a multilateral effort aimed at reworking sovereign debt.
Chad, Ethiopia and Zambia signed up in early 2021. Chad secured a deal in November with its creditors, including Swiss commodities trader Glencore, an outcome without debt reduction that some analysts said undermined the Common Framework efforts. Ethiopia’s progress was delayed by civil war, and Ghana joined the platform earlier this year.
Nilanthi Gunasekera, 49, holds her family’s last remaining handful of dried fish. She is one of the millions of Sri Lankans battling a sharp decline in living standards. All photos: Reuters
In a recent letter sent to Sri Lanka, a non-Common Framework country due to its middle-income status, China’s Export-Import Bank offered a two-year debt moratorium, raising concerns over how much of a hit Beijing was prepared to take.
The question remains whether China is willing to accept a real extension of maturities that locks in a concessional interest rate for a long period of time,” said Brad Setser, senior fellow for international economics at the Council on Foreign Relations, in Washington.
Gregory Smith, emerging markets fund manager at London-based M&G Investments, said China had a legacy of providing debt relief but it typically involves maturity extensions or temporary freeze in interest payments”, while face-value reductions in the principal are rare.
Unlike the Paris Club, Chinese lenders tackle restructuring or cancellation on a loan-by-loan basis rather than for the entire portfolio, according to a working paper of the China Africa Research Initiative, which found 1,000 Chinese loans commitments in 49 African countries since 2000.
Adding another layer of complexity to these debt talks, the Common Framework doesn’t lay out precise rules on how a debt restructuring with bilateral creditors should work.
The IMF recognised that greater clarity on the different steps and timelines” is vital, as well as clear mechanisms to enforce the comparability of treatment.
For Mr Setser, time is slipping away for Zambia.
If there isn’t an agreement at least on the basic outlines of the financial terms of restructuring in Zambia by this quarter, it’ll be time to declare the Common Framework a failure,” he said.
Sri Lanka’s decision to raise interest rates shows the crisis-hit country’s commitment to reducing inflation quickly towards single-digit levels, the International Monetary Fund (IMF) said on Saturday.
In a surprise move, the South Asia nation’s central bank raised rates by 100 basis points on Friday to battle inflation, which is at 50.6 per cent. The government is awaiting approval of a $2.9 billion IMF bailout package as it endures its worst financial crisis since independence from Britain in 1948.
“Sri Lanka’s inflation is declining but remains at a very high level, which has been disproportionally hurting the poor, the IMF said in a statement. “Upside inflation risks could reverse the trend and lead to persistently high inflation which is extremely costly to the economy.”
Durable disinflation would help boost market confidence in the island nation, reduce excessive risk premia of government securities and ease the financing conditions for companies, which supports recovery, the global lender said.
The central bank raised its standing deposit facility rate to 15.50 per cent and its standing lending facility rate to 16.50 per cent, and said it would relax its currency band to move towards a market-determined exchange rate as it seeks to secure the bailout. The bank raised rates by 950 bps in the first half of last year to contain the country’s financial crisis. But Friday’s rate hike, the first since July, was largely unexpected by analysts and economists.
The IMF also backed tax hikes and power tariff increases implemented this year, which have drawn protests from public workers who have demanded a fairer taxation policy from the government.
Sri Lanka is pushing for finalisation of a four-year Extended Fund Facility and is expecting IMF board level approval this month, its central bank chief said on Friday.
By P.K. Balachandran/The Diplomat Courtesy NewsIn.Asia
Colombo, March 4: The natural endowments and strategic value of Trincomalee harbor in eastern Sri Lanka have been well known for a long time. Yet, to date, very little concrete action has been taken to develop and use the port. There has been no dearth of reports and plans, but – except for the partial development of the giant oil tanks in collaboration with India – there has been no development of the port and the hinterland.
According to an Asian Development Bank report, Trincomalee is a large natural harbor with water depths ranging from CD -20 m to CD -40 m. It is also the only entirely sheltered natural harbor in the South Asian subcontinent.
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In the Polonnaruwa era of Sri Lankan history (1055-1232 CE) it was a major commercial port. The Western powers sensed Trincomalee’s strategic value in the 18th century. British Prime Minister William Pitt the Younger (1759-1806) said that Trincomalee was the most valuable colonial possession on the globe” as it gave Britain’s Indian Empire a kind of security that it had not enjoyed since the Empire’s establishment.” When the British took over Trincomalee in 1796 from the Dutch, Napoleon remarked: He who controls Trincomalee controls the Indian Ocean.”
The first Indian to write about the strategic importance of Trincomalee for India was the historian and diplomat K.M. Panikkar. In his seminal work India and the Indian Ocean: an essay on the influence of sea power on Indian history,” published in the 1940s, he stressed the importance of Colombo and Trincomalee ports for the defense of India.
As war clouds gathered in the 1930s, the British turned Trincomalee into an energy hub and built 101 giant oil tanks. Wanting to retain their security assets on the island even after Sri Lanka’s independence, they took the precaution of entering into a Defense Pact in 1947. After these assets were taken back by the nationalist government of S.W.R.D. Bandaranaike in 1957, Trincomalee port and the oil tanks fell into disuse. Successive Sri Lankan governments concentrated on the development of the western coast and the Colombo port for political and logistical reasons.
However, in the 1980s, Trincomalee again attracted the West’s attention. According to Port to Port, a high-level U.N. committee reported that Trincomalee port has controllable space for the creation of a Free Port” and made recommendations for its use. The Overseas Coastal Area Development Institute of Japan (OCDI) submitted a similar report in 1984, entitled Master Plan and Development project of Trincomalee Port,” which suggested a container trans-shipment facility and a berth for passenger cruise liners. In 1986, Sri Lanka’s National Aquatic Resources Agency (NARA) also recommended the development of the port.
But in the 1980s, geopolitical factors came into play. A reference in a 1981 Pentagon map to the possibility of a U.S. naval base in Trincomalee raised hackles in New Delhi. India was pro-Soviet and anti-U.S. at that time. When Sri Lanka called for worldwide tenders for the development of the Trincomalee oil tanks in 1982, India suspected that the deal favored bidders with links to the U.S. Navy. The tender was canceled.
In letters exchanged between Indian Prime Minister Rajiv Gandhi and Sri Lankan President J. R. Jayewardene as part of the India-Sri Lanka Accord of 1987, it was stated that Trincomalee (or any other port in Sri Lanka) will not be made available for military use by any country in a manner prejudicial to India’s interests. It was also stipulated that the restoration of the Trincomalee oil tanks will be undertaken by an Indo-Lankan joint venture.
However, due to nationalist opposition to the Accord, it was only in 2003 that the 99 surviving oil tanks were given to the Indian company Lanka Indian Oil Corporation (LIOC) on a 35-year lease. Fifteen of the 99 tanks were refurbished and put to use. But it was not until 2015 that LIOC started its bunkering business at Trincomalee port. Questions over the legality of the 2003 deal, the issue of land rights, the 30-year war, and calls by nationalists to take over the tanks stymied further development.
In 2022, another deal was signed according to which the Ceylon Petroleum Corporation (CPC) got 24 tanks, the joint India-Lankan venture Trinco Petroleum Terminal (TPT) got 61 tanks, and the LIOC got 14. However, in the context of the ongoing financial crisis in Sri Lanka, implementation faces a fresh challenge.
As for Trincomalee port, the Ministry of Shipping and Ports had proposed the creation of ship repair and ship-building and bunkering facilities. An ADB report noted that Trincomalee’s sheltered bay is ideal for calm water vessel operations such as ship-to-ship transfer, lay-up of vessels, loading and discharging submersible structures and other shipping-related services.” There is no shipbuilding yet, but the afloat repair service” of the Colombo Dockyard Co. was extended to Trincomalee in 2021.
Facilities in the port badly need to be upgraded. Due to a lack of adequate lights, buoys, and lighthouses, vessels are only allowed to enter and exit the port during daytime,” the ADB pointed out. But night navigation has now been installed at the Trincomalee harbor, with the assistance of Japan through a 1 billion yen grant.
Rohan Samarajiva of the Colombo-based think tank LIRNEasia wrote in a paper on the Trincomalee port in 2017 that the port has been in the doldrums partly because the Bay of Bengal has not been a hotspot of maritime trade, given the state of economic development of the littoral states (such as Sri Lanka, Bangladesh, and Myanmar). But he saw bright prospects with south India and Bangladesh developing fast. Myanmar’s Sitwe and Kyaukphyu ports should also boost prospects for Bay of Bengal trade, but for this, the security situation in Myanmar’s Rakhine State would need to improve, he cautioned.
Sri Lankan President Ranil Wickremesinghe said in 2022 that it would take another 10 to 15 years for economic activity in the littoral states of the Bay of Bengal to pick up.
Wickremesinghe’s immediate plan is to develop Trincomalee as an energy hub with Indian help. To begin with, Sampur will have a 100 MW solar plant. To develop the hinterland, he has roped in Singapore’s urban development organization Surbana Jurong. He plans to integrate Trincomalee with the North Central and Northern provinces, which have agricultural export potential.
Samarajiva envisioned Trincomalee port developing as a secondary port” of Sri Lanka along with Hambantota. Colombo will continue to be Sri Lanka’s principal port given its established facilities and the more developed hinterland, which accounts for 42 percent of Sri Lanka’s GDP as against 5.8 percent contributed by Eastern Province, in which Trincomalee is located.
But even to be a secondary port, Trincomalee will have to have better connectivity with Colombo, Samarajiva wrote. In 2018, the ADB had initiated a comprehensive development plan for the Colombo-Trincomalee Economic Corridor (CTEC), but there has been no progress on the modernization of the railway. The port has no railyard of its own.
Samarajiva suggested connectivity in the form of a dry canal,” or a seamless container rail line between Colombo and Trincomalee. Samarajiva also suggested upgrading the China Bay airport in Trincomalee to serve as a civil airport.
Trincomalee is not located in an arid zone, as it gets more than 50 inches of annual rainfall, Samarajiva pointed out. But as a port and industrial zone, it will have to have a lot of water, he warned. It will also require adequate social infrastructure in terms of housing, educational and medical facilities for the large number of Sri Lankan and foreign personnel who will congregate there as development gets underway.
Even as it faces these problems, another obstacle has come to light, namely, the rumor that the United States and India are aiming to establish a naval base in Trincomalee, triggered by the sudden visit of U.S. Principal Deputy Assistant Secretary of Defense for Indo-Pacific Security Affairs Jedidiah Royal. Though baseless, the rumor has the potential to stall Trincomalee port’s development – as has happened so many times in the past.
By Bram Nicholas and Shiran Illanperuma/The Diplomat
March 02, 2023: Sri Lanka’s debt default – announced in April of last year amid foreign currency shortages that had triggered rolling blackouts, fuel queues, and street protests – has been subject to endless debate by local and international observers. The root causes of the country’s debt problem have been attributed to various factors, including corruption and nepotism, alleged predatory lending from China (the so-called Chinese debt trap”), and a structural balance of payments deficit. These debates aside, it is increasingly clear that the immediate cause for Sri Lanka’s collapse is the structure of the country’s debt itself – specifically, its deep and growing exposure to international sovereign bonds (ISBs) issued at high interest rates.
In the immediate aftermath of Sri Lanka’s civil war in 2009, the country embarked on a mainly bilaterally-financed infrastructure investment program. However, alongside these borrowings for investments in ports, energy, and transport, the Sri Lankan government also binged on international sovereign bonds, issuing $17 billion worth of ISBs from 2007 to 2019, in face value terms. According to a 2021 report by the Advocata Institute, Sri Lanka’s ISBs were issued at high coupon rates (often between 5-8 percent), with some 36 percent of these ISBs being subject to classic collective action clauses, which make restructuring much harder for debtor governments. As a result of this debt-fueled growth strategy (or lack thereof), the country’s ratio of public external debt stock to GDP grew from 29 percent in 2010 to 44 percent in 2021.
The ISB Debt Trap
In historic terms, Sri Lanka’s current external debt ratio is hardly a precedent. The country endured higher external debt burdens, crossing 60 percent of GDP, in the 1990s, but managed to avoid a total default. The difference between now and then is that a greater share of the country’s external debt is borrowed from international capital markets at high interest rates.
From 2010 to 2021, the ISB share of Sri Lanka’s external debt stock tripled, going from 12 percent to 36 percent. Yet in 2021, ISBs accounted for a monster 70 percent of the government’s annual interest payments. These figures highlight the extent to which high interest borrowing from international capital markets can eat into the foreign currency cash flows of a country, especially when it is wracked by external shocks such as the COVID-19 pandemic and conflict in Ukraine.
In underdeveloped countries like Sri Lanka, borrowing from international capital markets is exceptionally risky. Typically, ISBs are not linked to projects and therefore do not produce a corresponding asset or economic growth, nor is there much transparency on how governments budget and spend funds accrued from these bonds. The bondholders themselves comprise a diverse set of interests who are difficult to coordinate with to negotiate a restructure. For example, bondholders like Hamilton Reserve have held out and sued the Sri Lankan government.
Additionally, the bonds themselves are tradable and their prices subject to the decisions of credit ratings agencies. When credit ratings agencies downgrade a country, the price of that country’s bonds decreases and its yield rises. Since the yield acts as the benchmark for coupon rates on future bonds, this makes future borrowing more expensive, and can lead to a snowball effect where a country takes on more debt at higher interest rates to pay back outstanding obligations, which were borrowed at lower rates.
Sri Lanka’s experience is not unique among underdeveloped countries, many of which have fallen for the same ISB debt trap. The allure of low interest rates in the wake of the 2008 financial crisis was seized upon by underdeveloped countries to cover chronic balance of payments issues linked to deteriorating terms of trade from an unindustrialized production base. At the same time, low rates pushed Western institutional investors to seek profits from other sources of income, including the stock market, CDOs, and emerging market debt. The consequences of this shift in debt structure among underdeveloped countries has devastating consequences for citizens who have to bear the brunt of the ongoing debt crisis.
A glance at the composition of total debt stock and debt servicing of underdeveloped countries is telling – the higher the share of ISBs in outstanding debt, the greater the annual interest paid. We find that some of the most debt distressed countries in the world, including those that have defaulted after 2019 – such as Argentina, Lebanon, Ecuador, and Ghana – all have in common a deep exposure to bond markets.
The high level of ISB interest payments tends to exacerbate stresses from external and cyclical shocks, which underdeveloped countries are vulnerable to. For example, the COVID-19 pandemic brought global tourism to come to a virtual standstill in 2020 and 2021, causing Sri Lanka to lose around 24 percent of its annual export revenue. Shortly thereafter, global oil and other commodity prices rose sharply due to the war in Ukraine.
IMF Offers No Solutions
Sri Lanka desperately needs bridge financing to shore up its reserves and ensure a steady supply of essentials such as fuel and fertilizer so that it can resume basic economic activity and restore a sense of normalcy for workers and businesses. As it stands, the country expects to sign its 17th agreement with the IMF in March, nearly a year after negotiations first began. To call the IMF package a bailout would be a misnomer, as the $2.9 billion on offer (to be disbursed in tranches), is scarcely enough to cover Sri Lanka’s annual fuel bill, let alone the $4-5 billion it would normally require for annual debt servicing.
What an IMF agreement will do is restore international creditor confidence and improve the country’s credit ratings. Steps have already been taken to depreciate the currency, increase taxation, implement cost-recovery based pricing for utilities, and privatize state-owned enterprises. Some experts frame this as a positive and an end in itself, as it would help Sri Lanka regain access to international capital markets.
However, taking on more debt from international capital markets is the last thing Sri Lanka needs if it is to find a way out of its debt problem, as this would simply contribute to a snowballing of ISB debt. A good example of this is the case of Egypt, which secured an IMF deal in December 2022 and now plans to issue sukuk (Islamic bonds) at a yield of 11 percent to pay off an outstanding Eurobond, which carries a fixed interest rate of 5.557 percent.
This pattern of going to the IMF and then relying on ISBs for external financing was already tried by the Sri Lankan government from 2016 to 2019, during the country’s 16th IMF program. At the time, Sri Lanka had entered into a three-year extended arrangement with the IMF for a paltry $1.5 billion. Using the credibility” gained from this arrangement, Sri Lanka issued around $12 billion in sovereign bonds (around 70 percent of the face value of total bonds issued in the country’s history). This was done on the justification that these funds were needed to refinance bilateral project loans. As the data on structure of outstanding debt and interest payments bears out, this refinancing strategy has been disastrous for Sri Lanka, making its annual interest repayment bill higher than it would have been had it stuck with bilateral loans.
Sri Lanka’s long-term prospects for recovery will require a paradigm shift from what it has done up to now. One of the country’s immediate goals should be to deleverage from ISBs exposure, and be more strategic about the kinds of debts it takes on. In the medium to short term, bilateral borrowing remains the country’s safest and most reliable method for financing its external commitments. Curiously, recent revelations by local media suggest that Sri Lanka’s finance minister had secured bilateral financing from China to avoid defaulting in the first place, but was blocked from pursuing this path for political (likely geopolitical) reasons.
This is not to say that Sri Lanka should go to bilateral partners with a begging bowl or accept unsolicited project proposals without due diligence. Rather, the country must take its fate in its own hands and formulate its own industrial development strategy, in which bilateral partners can play a constructive and supportive role. In a sense, this would mean tackling the root cause of Sri Lanka’s debt itself – the massive and protracted trade deficit.
END
Bram Nicholas is COO of economic training and services company, ETIS Lanka.Shiran Illanperuma is an independent journalist and researcher based in Colombo, Sri Lanka.
The International Monetary Fund today praised the Central Bank of Sri Lanka’s decision to raise the policy rate and said it shows its commitment to reduce inflation more quickly and firmly towards the single-digit target.”
CBSL’s decision to raise the policy rate is appropriate and in line with its objectives set under the inflation targeting framework,” Peter Breuer, Senior Mission Chief for Sri Lanka, and Masahiro Nozaki, Mission Chief for Sri Lanka said in a statement.
The CBSL yesterday raised policy interest rates by 100 basis points, though many predicted the monetary authority to either maintain the status quo or signal a dovish tilt by cutting rates.
It reflects CBSL’s commitment to the inflation target and is an important part of the disinflation strategy in the EFF program, which is fully committed by the Sri Lankan authorities and supported by the IMF,” the IMF statement said.
Sri Lanka’s inflation is declining but remains at a very high level, which has been disproportionally hurting the poor,” the IMF said.
Upside inflation risks could reverse the trend and lead to persistently high inflation which is extremely costly to the economy.
Therefore, CBSL’s decision to raise the policy rate shows its commitment to reduce inflation more quickly and firmly towards the single-digit target.
Durable disinflation would help boost market confidence, reduce excessive risk premia and ease the financing conditions for the corporates, especially the small and medium enterprises, which supports recovery.”
The government will honour the Supreme Court’s decision preventing withholding any funds allocated to conduct Local Government Polls 2023 and will proceed accordingly, State Minister of Finance Ranjith Siyambalapitiya said.
He said everyone should respect the court’s decision.
“It can be the Ministry of Finance, the government or an institution, It is everyone’s responsibility to act on the court’s decision. According to the court decision, we have to align expenses,” he said.
Supreme Court three-judge-bench comprising Justices Preethi Padman Surasena, Janak De Silva and Priyantha Fernando yesterday issued an interim order preventing the Treasury Secretary, the Attorney General who is representing the President and any other state official from withholding any funds allocated for the polls.(DSB)
Renowned British supermodel Naomi Campbell features a pack of Sri Lankan made “Samahan,” as an essential product she keeps with her for a strong immune system.
In a recent interview with Vogue India titled What does Naomi Campbell carry in her bag?,” she says ‘Samahan’ is a good tea for the immune system.
Samahan, is a trusted herbal drink by Link Natural Products Ltd., which is a leading manufacturer of herbal products. They recently announced the debut of its flagship brand and iconic herbal drink Link Samahan at Costco Wholesale stores in Japan.
Samagi Jana Balawegaya (SJB) MP Harsha de Silva has stated that although the International Monetary Fund (IMF) bailout Sri Lanka currently awaits is necessary, it is not, in fact, sufficient for the growth of the nation.
Taking to Twitter, Harsha warned that Sri Lanka’s current challenge is to create growth, adding that the number of jobs lost will also likely increase amidst the deteriorating demand.
He further emphasised that in order to create the growth needed, Sri Lanka needs to ‘breakdown walls and build bridges to the world’, as ‘internally driven non-tradable growth’ will no longer suffice.
Commenting on certain remarks made by politicians at recent political rallies in this regard, the SJB MP said promises made by certain groups at political rallies of creating growth without reforms is pure conjecture that a homegrown solution exists without the IMF is only an attempt to fool the people”.
Mr Ranil Wickremasinghe, the president of Sri Lanka, is a traceable person with a preeminent heritage in Sri Lanka his patrimony is traceable to king Parakramabahu six and he has rich knowledge, skills and experience in policy development and implementation. The major weakness in Sri Lanka since independence was the lack of capable people for policy guidance, development and implementation. Rajapaksa group was dishonest and concerned with gaining financial advantages from various members of the generation and compared to Mr Wickremasinghe they were fogs seen the sun.
Mr Wickramasing has long experience and after becoming the president of the country attracted support in Sri Lanka from all over the world and he won the support from all countries. However, many have not understood these capabilities and the country needs to allow him to work a further two presidential periods to change the entire policy framework of the country. Media in Sri Lanka seems very partially support incapable left parties, which have not expressed policies acceptable way to citizens and their prime motive of them is to go against Mr Wickramasinghe. Mr Wickramasinghe needs to call all political parties and develop workable policies for the country.
Former Chief Economist and Senior Vice President of the World Bank, Joseph Stiglitz, slammed the IMF for callously unleashing riots on nations the IMF is dealing with; he pointed out that the riots are written into the IMF plan to force Nations to agree with the average 111 conditions laid down by the IMF, that destroys a country’s democracy and independence.
Having captured political power in Sri Lanka on the back of a CIA instigated jockstrap-insurrection that delivered the country to the jaws of the IMF, there are ominous signs that the Americans are now hatching the classic IMF-riot to consolidate their triumph and create a climate to induct Quad military forces into the island; American occupation of Sri Lanka would then be a fait accompli.
The IMF (one of the two global money lenders purposefully favoured with the monopoly and authority to lend to world governments, from Bretton Wood days) controls Sri Lanka’s Executive, the Administration, and the Legislature.
The words attributed to Amschel Rothschild are perhaps relevant here; he reportedly said, I care not who makes a country’s laws; any fool can do it. Give me control of that country’s money supply and I shall rule that country.”
To give context to these words in today’s geopolitical situation, a watershed in history, during WW2, is briefly visited.
Completely overwhelmed by Heinz Guderian’s “blitzkrieg” approach to warfare, a dispirited British Army, routed in battle, fled in disarray abandoning their armaments and deserting their French allies on the beaches of Dunkirk in 1940.
With no munition to fight with, with no money to re-equip a weaponless Army, with an army left with no stomach to do battle, Britain faced the stark reality of being overrun by an unstoppable Wehrmacht.
A desperate Allied high command sought a meeting with Roosevelt.
At that secret meeting held on the seas of the Atlantic, the Allied forces begged of the US, which had artfully kept out of the war, to join them in their fight against the Nazis.
Resorting to patent blackmail the US responded that it would do so, on condition that Britain and France agree to decolonize all their colonies and release them from their respective jurisdictions at the end of WW2.
Churchill and De Gaulle capitulated to American blackmail; this was the basis of the ‘Atlantic Charter’ of 1941 and of the New ‘World Order’ that emerged, with the US at the helm.
So much for the tommyrot of many leaders in the former colonies who boast that it was their valour which won independence for their countries.
With the colonies now unshackled from European colonialism, American imperialism had a carte blanch to prey and devour these former colonies in Africa and Asia, in a manner and time appropriate to the US; a major impediment to US hegemony and ambitions were the Soviet Union and subsequently the NAM (Non-Aligned Movement).
To lure the former European colonies into their net, Washington adopted a long-term strategy; they set-up the ingenious debt-trap that Rothschild had previously alluded to.
At the Bretton Woods conference of 1944 that followed the Atlantic Charter, two institutionalised money lenders, the IMF, and the World Bank, were granted a right to lend to World Governments.
The IMF and the World Bank are governed by member-nations whose voting rights are not based on ‘one- country-one- vote,’ but rather on monies that each country has invested in these two organisations.
The Americans have the largest share of votes in both the IMF and the World Bank; consequently, the IMF and the World Bank operate as extensions of Washington foreign policy.
Bretton Woods established America as the money-lender to the world with a virtual monopoly to lend to World governments.
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This economist, prolific writer, and Nobel Prize winner, does not mince his words when in a series of scathing and damning critiques of this American money-lender, accuses it of causing great damage to countries through the economic policies it has prescribed countries to follow, to qualify for IMF loans.
In his analyses, Stiglitz justifies the intermix in the use of terminology relating to the IMF, the World Bank, and the WTO; ‘they are interchangeable masks of a single governance system.’ (The IMF, the World Bank and the WTO are three of the five traps laid out by the Americans at Bretton Woods to re-ensnare the former European colonies, this time into the American pen. The two other snares laid by Washington were the ‘United Nations,’ in its present format, and the ‘non-governmental organisations’, a concept first propagated at Bretton Woods).
Stiglitz expressed grave concern that IMF plans, devised in secrecy and driven by an absolutist ideology, are never open for discourse or dissent. He confessed that the so-called ‘Poverty-Reduction- programs’ for the developing world, undermines democracy and the economy.
Often, IMF remedies made things worse for Nations” said a chastened Stiglitz, critically at odds with the IMF and who had the discernment only an insider could possess.
Stiglitz had the intestinal fortitude to rubbish the disinformation-lineoften parroted by Washington and their liegeman, when he said, It is not China, which has a large trade surplus, that makes “trade wars”; it is the United States, which has a large trade deficit.”
Stiglitz let the world in on a secret when he revealed that the IMF adopts a single template to destroy the sovereignty of the Nation States established after Bretton Woods; he traced out the deadly 4-phase strategy.
The IMF’s Four Steps to Damnation”
Stiglitz states that the IMF process begins with an ‘investigation’ that usually takes place in a 5-star hotel where a mendicant finance minister is handed a pre drafted ‘restructuring Agreement’ for his ‘voluntary’ signature.
The IMF hands every minister the same exact four-step program.
(In 2015, Sri Lanka’s Finance Minister at the time – Karunanayake –responding to summons from Washington, just days prior to the first bond-scam, reported to IMF’s Lagarde for a briefing. Following that briefingKarunanayake hurried back to Colombo and, on his tail, came a high-powered IMF team, led by Todd Schneider and Pacific Department Director, Changyong Rhee, charged with monitoring at first hand the goings-on atthe Central Bank; the bond- scam was done virtually under the watchful eyes of the IMF monitoring team).
Step one – In this phase, Privatisation of State assets is the aim; Stiglitz says that it is better described as ‘Briberization’ of State assets. National leaders are bought off, to facilitate the sale of State assets
When a nation sells-off its national assets there is a discontinuation of revenues flowing into State coffers from that asset. It is one sure method of depleting a country’s financial reserves as would, the exercise of slashing taxes, spurring multiple scams in the commodity market, engendering new imports by deliberately destroying entire sectors of the economy such as agriculture and peculating directly from the country’s ‘vault,’ the Central Bank and Treasury.
With the promise of monies being deposited in off-shore bank accounts, leaders happily flog the National assets of the country.
Step two – The objective in this phase is to ultimately reduce a country’s financial reserves to zero; to this end, the ‘Capital Market Liberalization’ plan (popularly referred to as the Hot Money Cycle” plan) is often executed; capital is ‘steered’ into the country as speculative investments in real estate and currency; at the first whiff of trouble, an exodus of this investment takes place.
As was the experience in Indonesia and Brazil, the reserves were drained out within days. (In Sri Lanka, described later in more detail, the modus-operandi of emptying the coffers differed a trifle).
And when the investment flees, to seduce speculators into returning a nation’s own capital funds, the IMF demands that high interest rates be set, rates ranging from 30% to 80%.
“The results are predictable; the higher interest rates demolish property values, savage industrial production and drains out national treasuries”, said Stiglitz.
Simultaneously, the temperature of social unrest is brought closer to the boil.
Step Three – IMF initiated Riots.
Stiglitz says, without a degree of ambiguity, Riots are written into the IMF plan”. The IMF drags the gasping nation to ‘Market-Based Pricing;’ this, as Stiglitz explains, is a fancy term for raising prices of food, water, cooking gas, medicines, and all essentials necessary to sustain life.
This leads to the painfully predictableIMF riots. New flights of capital, resulting from the IMF riots, lead to even more pronounced social unrest and government bankruptcies.
The food and fuel riots in Indonesia, the water riots in Bolivia and cooking gas riots in Ecuador are examples.
Step 4 – “Poverty Reduction Strategy”
When this phase is reached, the country put through the wringer is all but done. The IMF has the country eating out of its hand, be it postponing elections, rolling-up Constitutions, turning a blind eye to dictatorial tendencies, interfering in, and obstructing the judicial process or selling strategic ports or be it anything.
When IMF-riots cause capital to flee the country, it gives the money-lender a further opportunity to add more conditions.
The IMF holds the key to life and death of the people in a country reduced to this phase; it controls the ‘money’ supply that buys the ‘essentials’ needed by the people; the money for these essentials will be forthcoming, only if that country were to do the IMF’s bidding.
Stiglitz states that on an average, the IMF imposes 111 conditions on National governments, dictating to the Executive, the Judiciary, and the Legislature in those countries the courses of action they should take, grossly violating in the process the sovereignty of the people, the essence of a democracy.
In this scenario, the IMF has replaced the National government as the sovereign authority; the sovereign power of a country is now vested with Washington.
When this phase is reached, America has successfully colonised that country.
When Stiglitz was asked whether any nation facing this dilemma was able to avoid this fate, he identified Botswana which had told the IMF To go packing.”
In comparison, Sri Lanka has a decided advantage; it has a friendly nation, China, which had proffered – even at the time of the bizarre conduct of Nandasena and Sabry to declare the country bankrupt when it was not so – to underwrite all of Sri Lanka’s external debts and gave the island nation the opportunity to negotiate with self-respect the repayment terms of the underwritten value, with no attached conditions.
This information is somehow deliberately kept out of the public domain.
And Sri Lanka has another friend too, India, which could match China’s benevolence.
To go the path of the IMF is self-destructive with the 111 plus conditions that the country is required to comply with; it is diabolical that the people’s transitory representatives refuse to divulge to the very people with whose sovereignty they reside in the legislature, the 111 conditions laid down by the IMF.
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