SL Government denounces IMF option to salvage insolvent economy
Economy in turmoil
Today, Sri Lanka’s modest economy is in a grave crisis as never before in its 73 years of independence. This is a fact even the Government admits nowadays. People feel the brunt of this economic predicament as the Government is losing its popularity day by day. It has come to a situation where people openly disparage the regime as of now. The classic example is that none other than His Excellency, the President was booed at by an unsuspected gathering who were in a long queue to fetch short supplied and now rationed milk powder, only a stone throw from his private residence at Mirihana, Nugegoda recently. Obviously, the country’s forex market is almost down to zero with importers of even essential commodities struggling to secure much needed US dollars to suffice for their regular imports. It is an open secret that the Government resorts to printing money to meet its routine expenses which in economic terms, would lead to inflation. So, this norm is already felt by the masses as the prices of essential food items are skyrocketing beyond the reach of local consumers. Meanwhile, poor parents are dealt with another burning issue with no alternative to send money overseas for loved ones who are pursuing studies in foreign universities. The haphazard or recurrent queues for gas, petrol, milk powder and other essential goods are commonplace in the country which epitomises rule of a communist country with an iron curtain. There is no trade which is not affected by the economic crisis of the country at present. Everybody is virtually struggling to make their ends meet on a daily basis. So, as far as the Government is concerned, it has very little options either to go for IMF assistance or turn to friendly countries to raise much needed USD reserves.
Economic prudency at stake
The Sri Lankan Government still shows a little interest in going for the IMF option for the best reasons known to the rulers. Sri Lanka’s debt portfolio and its financial commitments in debt servicing is enormous and beyond immediate recovery. It runs into billions and billions of US Dollars. Recently, it was reported that Sri Lanka has obtained almost USD 12 Trillion as loans for various development projects. The estimates say that the liquidity of the projects thus undertaken was only worth USD 2 Trillion in terms of infrastructural assets. Where has the balance of almost USD 10 Trillion gone? Nobody seems to have an answer. This shows how the country was plundered of state funds in contemporary history. This is nothing but gross corruption in the state mechanism which the country has been plagued with, for the last three or four decades. Shamefully, some political analysts of Bangladesh asserted recently that Sri Lankan politicians are clueless as to how to handle the economy of the country as widely reported in the international media. Irony is that this statement came from a country which was one of the poorest countries in the world in the last century. It has surpassed Sri Lanka in all vital economic indexes. Most recently, Sri Lanka has sought USD 3.5 Billion loan from Japan to bolster its ailing economy and also to flay the IMF option. Nevertheless, Japan has so far not made a commitment in this respect. Apparently, Japan was not happy with the abrupt cancellation of the last regime’s negotiated LRT project by the present Government at the outset of coming to power which was to be funded by JICA, Japan. Meanwhile, after intense negotiations, India has agreed to grant a loan of USD 900 million as a currency swap to stabilise the rupee. On the top of it, Sri Lanka seeks a further 01 Billion as a loan from India. It is likely to materialise with a lot of strings being attached. This loan, which would actually come as a credit line, would be available to make purchases of essential items exclusively from India.
Volcano waiting to erupt
While the Sri Lankan Government is attempting to raise funds from a handful of friendly countries to spur the economy, the independent economists and opposition politicians question the prudence of such a policy. They blame that the government is acting rather blindly on the issue which is more serious than what the government thinks of it. According to their opinion, the government will never be able to raise necessary funds to get out of this critical situation. They also allege that the government shuns IMF financial assistance due to the reason that the government will be dictated by its stern terms and conditions to fashion the economy if the government opts for the IMF option. It is true in a way. There will be no allowance for corruption in such cases. The government indirectly made it known that it wants a freehand to manage the economy. In other words, the government seems to be relying on home grown therapy to salvage the ailing economy. Meanwhile, the opposition politicians’ level allegations stating that the government’s sinister motive is to indulge in corruption further. However, the government’s bona fides are suspicious too, given its track record. This is notwithstanding the fact that 64 % of the national budget is controlled by one family with Rajapakse lineage. It was reported in the media that former Prime Minister Ranil Wickramasinghe openly cautioned the government to consider the IMF option seriously. The IMF, which was formed in 1944, was formally established in 1945 with the objective of promoting international monetary regulations, international trade and assisting countries in tackling balance of payments in 190 member countries. Despite Sri Lanka being a prominent member, the island nation tries to alienate themselves from the IMF. The reason is obvious because the present regime wants nothing but economic immunity. So, it is highly unlikely that any western country will come forward to help Sri Lanka at this critical hour if not opted for IMF assistance. What the government should be mindful of is that whatever economic decision being taken by them will have a corresponding effect on the people of Sri Lanka in time to come. Therefore, it is high time that Sri Lanka opted for IMF assistance at this stage. According to the statistics of world financial watchdogs, Sri Lanka is on the verge of going bankrupt at any moment. The country’s economy is so fragile at present which was accepted by even some powerful ministers of the incumbent government. Some ministers have even gone a step ahead to give warning signals to the government but to no avail. The top brass of the government still seem to believe that they could get the country out of this economic muddle unscathed. It is a huge gable the Government is taking which would decide the destiny of the 2500 old proud nation.
