DR KALINGA SENEVIRATNE courtesy The Fiji Times

For almost two years, the western media, aided by its Indian counterparts, has flogged a false narrative of predatory Chinese lending as the cause of Sri Lanka’s debt crisis, ignoring the fact that it is reckless borrowing and lending in the International Sovereign Bond (ISB) market which is the main cause of it.

There are many skeptics in Sri Lanka who wonder if the International Monetary Fund (IMF) is really bailing out the international bond markets who have made reckless lending to successive corrupt governments and stand to make huge profits?

This has not been properly discussed in the local or the international media. The ISB market is mainly controlled by western hedge funds, and in April 2021 Sri Lanka’s Department of External Resources released a colourful chart that showed 47 per cent of Sri Lankan debts are market borrowings” (meaning ISBs) and the exposure to Chinese loans is only 10 per cent. ISBs lend at high interest rates around 5-8 per cent while Chinese and most bilateral loans are between 2-3 per cent.

In what Noam Chomsky calls the theory of manufacturing consent” in the The Port City. function of the news media, Sri Lankan media taking the cue from international news sources created an environment where the local public agenda was mainly focused on why Sri Lanka needs to go to the IMF for a bailout.

This suited the US geo-political agenda perfectly, as it gradually changed the Sri Lankan public perception of China as an all-weather friend” who can be depended upon to help the country’s development funding needs.

On March 21 when the long awaited official announcement from the IMF, that bailout” loan of $3 billion was approved by their board, some of President Ranil Wickremasinghe’s supporters lit fire crackers to welcome the news.

Using the IMF approval, Wickremasinghe is projecting himself as the saviour of the nation to dispel the widely held notion in the country that he is an unelected President who came forward to save the corrupt rule of the former President Mahinda Rajapakse’s family.

The fact is, that he is heading a government that is supported by the Rajapakse’s Sri Lanka Podujana Peramuna (SLPP) that commands a majority of seats in the parliament, and thus is still referred to as the ruling party”.

For the past three decades, Wickremasinghe has been the darling of the West, who could be depended upon to serve the West’s geo-political interests.

It is this perception in Sri Lanka that was his undoing when the SLPP won a 2/3rd majority in parliament in the August 2020 general elections campaigning against Wickremasinghe as a national security threat because as the then Prime Minister, he was accused of secretly negotiating with the Americans to hand over Sri Lankan land to US companies, and also facilitate stationing of US marines in Sri Lanka.

Wickremasinghe not only lost his own seat, his United National Party (UNP) — Sri Lanka’s oldest political party — lost all its seats in parliament. He was able to sneak into Parliament through a consolation seat the party got under the proportional representation system.

Then how is he the president today? The huge street protests that forced President Gotabaya Rajapakse to flee the country and resign could be compared to the 2014 colour revolution” in Ukraine that outsted a proRussian president.

Rajapakses is perceived to be too pro-China by the West (and India). In puzzling circumstances, Gotabaya first appointed Wickremasinghe as Prime Minister and after the resignation of the president, Wickremasinghe became the president under the constitution to serve the rest of Gotabaya’s term (until November 2024).

But, for that the parliament had to endorse his appointment, which they did with a majority of the SLPP members voting for Wickremasinghe! The Prime Minister and the Cabinet is made up of almost exclusively SLPP members.

Many Sri Lankans still debate what has the July 2022 ousting of President Gotabaya by the protest movement has achieved? The movement was against corruption of the Rajapakse family and its ruling party cronies, but today, the strings of governing are believed to be pulled by former finance minister Basil Rajapakse who is the most tainted of the Rajapakse family with corruption allegations, and he is also a duel US-Sri Lankan citizen.

Since taking over the presidency, Wickremasinghe has been repressing the democratic rights of the people cracking down on workers’ and students’ protests. As Prime Minister, he is well known for the ruthless suppression of the Marxist-JVP uprising of Sinhala youth in the late 1980s.

Speaking on Mee Massoo TV You-tube channel, Yamuni Thushara, President, Anti-Corruption and Anti-Wastage Peoples Organisation pointed out that within hours of taking over power in July 2022, Wickremasinghe has signed an order to import 5000 canisters of teargas and in January 2023 he has increased it to 10,000.

He showed documents signed by the president to prove it. Government knows that there will be three to fours years of protests (over the IMF program) and teargas is needed to suppress peoples’ dissent” he argues.

Recently a security guard at the University of Colombo died after police fired teargas at protesting students. Government says they have no money for holding (local government) elections, but they can spend 144 billion rupees (about $F1 million) to import teargas” points out Thushara.

Sri Lanka is no longer a bankrupt country,” declared Wickremasinghe in presenting the IMF agreement to Parliament on March 23. Our banks will be internationally recognised. International financial institutions will honour our banks’ letters of credit.

The basis for obtaining credit from other international financial institutions at low interest rates will be created”. What he failed to tell Parliament is that under the IMF agreement, Sri Lanka could only borrow from the World Bank and the Asian Development Bank (both controlled by the West and Japan).

He also did not say how this agreement is going to help Sri Lanka to renegotiate the loans owed to the western hedge funds (ISBs).

The London-based campaign group Debt Justice that includes 182 economists and development experts from around the world, said two months ago that some of the world’s most powerful hedge funds are the cause of Sri Lanka’s debt crisis.

Such lenders charged a premium to lend to Sri Lanka to cover their risks, which accrued them massive profits and contributed to Sri Lanka’s first ever default in April 2022” they argued. In June 2022, one such bond holder, St Kitts and Nevis-based Hamilton Reserve Bank which holds more than $250 million of Sri Lanka’s ISBs, sued the Sri Lankan government in New York federal court seeking full payment of principle and interests.

The court case is still to be heard. Hamilton’s lawyers in their submission to court said that the default is causing American retirees tremendous suffering from potentially massive losses of up to 80 per cent of their original investment value”.

Well to safeguard US retirees making bumber profits from loans given to poor countries, it seems the poor have to suffer. Speaking on a popular social media site POD TALKS, Manju Nishshanka, a former Vice President of International Banking at Merill Lynch and currently the leader of the Global Sri Lankan Congress, which he founded, pointed out that IMF’s programs are designed to support market-driven economic policies and globalisation which its member countries believe in.

IMF has predicted that if the government implement some of their recommendations, there could be social and political chaos,” noted Nishshanka. It is people who will be effected when tax is raised, or when government enterprises are privatised. Government has promised (to IMF) electricity and fuel subsidies will be eliminated. That also effect peoples’ pockets. And when peoples’ savings (in Employee Provident Fund accounts) are siphoned off for (domestic) debt restructuring that will create resentments”.

IMF has acknowledged that the chance of a failure of their program is very high due to the unfavourable international environment where disposal incomes of people in developed countries are decreasing due to inflation and that will impact on Sri Lanka’s two main foreign exchange earners — tourism and apparel — and also disruption of supply chains and tense political environment in the country.

With Wickremasinghe using the IMF agreement to paint himself as the saviour of the nation, perhaps with a view to contest the 2024 presidential election, he needs to control the media narrative. On Thursday (23rd), after calling a meeting with editors and news directors of main media organisation in the country, Wickremasinghe asked them to tow the government line and support the IMF program.

He scolded the media for predicting revolution if the IMF program is implemented and for suggesting that Sri Lanka would become a pawn of the West.

The day before this meeting, opposition lawmaker and former banker Eran Wickremaratne addressing a media conference claimed that the IMF has blanked out sections of the report that was released to Parliament, which they claim were market-sensitive information.

The IMF should look into its own transparency” he remarked holding a copy of the report.

What is so secretive about your policy intentions being known,” he asked. IMF reform could succeed only if a popularly elected government could carry the people along to implement the reforms in the interest of the country and the people” argues Nishshanka.

At the moment, Wickremasinghe is refusing to release money to hold local government elections which were due this month (March) and the opposition is demanding a general elections. Under the constitution, the President can dissolve parliament any time after March 2023.

We have an extremely corrupt government in power says Nishshanka, so there’s no hope(for eradicating corruption)”.

• DR KALINGA SENEVIRATNE is a Sri Lankan born journalist, broadcaster and international communications specialist. He is a consultant for the journalism program of the University of the South Pacific in Suva. The views expressed in this article belongs to the author and does not necessarily reflect the views of this newspaper