Is there any economists in Sri Lanka who can give an alternative to IMF?

From CBSL bigwigs to the economists in the corporate world & even economic advisors to the GoSL have only one mantra – “go to the IMF”. Do they need to be called “economists” to be chirping this? Why can’t they present an alternative model for development?

Has Globalization worked for all or for only some?

How advantageous has the multiple linkages and interconnections been to smaller nation-states of the developing world?

What benefits have come from removing barriers to free trade & integration with national economies?

Can Sri Lanka’s economists provide a fair assessment on who has benefitted & who has not, whose living standards have been raised & whose have not.

Can Sri Lanka’s economists present a statistical analysis of Sri Lanka’s living standards since 1978 open economy & liberalization programs.

The IMF & WB, WTO & Multinational Companies (MNCs) are the key players in the Globalization agenda. IMF & WB are essentially US dominated & advances US foreign policy as clearly seen by actions of the 2 bodies.

How many of Sri Lanka’s economists are aware of how & why IMF/WB was set up – to take over & regulate post-World War 2 international economy as per their common objectives.

WB was formerly known as the International Bank for Reconstruction & Development. The World Trade Organization was known as General Agreement on Tariffs & Trade & International Trade Organization. These were known as the Bretton Woods Institutions.

IMF & WB come forward to assist countries with balance of payment difficulties & rebuild international reserves to pay for imports. They provide concessional loans in the form of stand-by, extended arrangements, structural adjustments & enhanced structural adjustments.

These are given on condition that governments reduce budget deficits, devalue local currency against dollar, reduce domestic credit expansion, freeing controlled prices & interest rates, removing trade barriers, lift import/export restrictions, remove price controls & remove state subsidies, privatizing state assets.

How many of Sri Lanka’s economists agree that devaluing currency while removing price controls alongside other IMF structural adjustments results in poverty because of price hikes?

To balance national budgets, governments have to raise taxes – IMF disagrees to tax hikes for rich but recommends to middle class & poor while also demanding subsidies (education, health, social care, essential goods/services) are cut – lowering social conditions of the poorer segments of society. When people drop out of school, when people are health wise vulnerable – how productive is a Nation?

Are Sri Lanka’s economists not bothered about IMF SAPs hurting the poor? How many economists agree that IMF programs have long term negative impact & result in greater & wider inequalities. While IMF encourages states to use their loan to purchase imports, the devaluing of currency, removing price controls which raise prices naturally & automatically increasing poverty.

Why are Sri Lanka’s economists ignoring ground realities of IMF conditions?

  • UNICEF claims over 500,000 children under age of 5 died annually in Africa & Latin America in late 1980s from debt crisis & IMF SAPs.
  • IMF conditions eventual outcome have deepened poverty, undermined food security & self-reliance & led to unsustainable resource exploitation & environmental hazards, population dislocation, demographic change & displacements (all non-military national security threats) these scenarios are key factors that flame internal conflicts & provide ground framework to entice fragile & vulnerable people to protests & thereafter armed violence.

What is baffling is that while studies have shown the outcomes of nation’s debt crisis & the outcome of conditions of IMF loan – there are economists in Sri Lanka even begging to take the loan! They conveniently ignore the impact not only on the ordinary poor but the small & medium enterprises too as invariably the removal of internal systems that restrict entry of foreign companies/investors result in undue advantage to them while the bigger local companies often accused of helping trigger the economic collapse are also being accused of waiting to partner these MNCs having wiped out SMEs in Sri Lanka.

Sri Lanka’s economists must provide answers

  • How vulnerable has Sri Lankan state become from globalization vis a vis globalist influence & pressures at political, social, environmental, technological, economic & legal levels?
  • What is the advantage to Sri Lanka in removing government controls claiming to promote market competition which is part of neo-liberal agenda
  • How far has globalization lined the pockets of a small group of global elites at the expense of labor across the developing world while preventing national governments from protecting these people? Are economists & local corporates part of the globalist network?

Role of Multinational Corporations / Foreign Direct Investments

FDIs is one of the key drivers of MNCs to enter developing nations & tap cheap labor, tax holidays and enjoy tax breaks & privileges that they cannot enjoy in their own countries. These MNCs have influence over national governments/political system & dictate terms for a pledge of “investment” which invariably results in their profits offshore, resulting in MNCs providing basic employment only.

Capital flows take the form of FDIs which are controlled by MNCs. They have the freedom to relocate depending on which countries give better deals.

Debt is an efficient tool – it ensures access to the raw materials & infrastructure at the cheapest terms from debt ridden nations. Do Sri Lanka’s economists not realize the situation arising out of debt? Were they not the one’s who demanded the GoSL declare debt default? Why would these learned people make such a demand.

Are the economists & Sri Lanka’s private sector agreeable to the GoSL loosening all state controls, abolishing or liberalizing foreign exchange & import controls, exchange rates and facilitating foreign private investment – are Sri Lanka’s economists & private sector promised a role in these foreign investments, is this why they are collaborating with the narrative that IMF/WB promotes?

Do Sri Lanka’s economists not know what happens with IMF donors keep exchange rate in their favor, resulting in poor nations becoming poorer.

What happens when government spends less on its people, raise taxes & prices resulting in people reducing consumption? The quality of the people deteriorates while the people become increasing vulnerable and volatile to be used by further destabilizing forces. Social unrest results in riots & protests that Govts cannot control and in many instances leads to foreign corporates using mercenaries – all these lead to deaths & unnecessary turmoil, simply because the decision makers did not have foresight to visualize the ultimate outcomes & bring about some checks and balances to control eventual outcomes.

Can economists show how a govt’s taxes increased the country’s GDP from IMF/WB SAP policies from all SOEs that have been privatized? All of the SOEs that are earmarked for privatization are profitable entities shown as unprofitable. These interferences into internal affairs of national sovereignty needs to be taken at international levels & stopped.

The situation is compounded as corrupt politicians are ever ready to agree to anything & everything so long as they can remain in power or as politicians sharing power while the corporates are happy to make hay under national governments or even tied up with international companies. Ultimately, it is the ordinary citizens who end up suffering the consequences & end up having to be burdened with price increases and tax increases without regulation or checks and balances as the government has siphoned the powers delegated to them by constitution to either local private companies or international MNCs. Both to be considered gross violations of Sri Lanka’s Constitution.

It is agreed that the GoSL has a list of faults & the public sector & local corporates are equally guilty as are the citizens (the upper middle class & elite) who use all influences to ensure governments do not implement real social policies that impact their lifestyle & livelhoods. These need to be taken separately & addressed

Can Sri Lanka’s Economists & Business “leaders” outline

  • How sustainable is the IMF/WB conditions & CBSL/GOSL’s as well as local corporates blanket agreement to them?
  • When water, food production, fuel, gas (essentials to citizens) fall out of government hands into international corporate hands or even local corporate hands & when these entities begin to raise prices at will, when they decide to deny supply – what can citizens or the government do, especially when companies are now taking governments to international courts with the people having to foot the compensation bill for mistakes made by governments & their advisors? (international courts is the latest entrant to punish governments not towing the neo-liberal line)
  • When IMF’s membership is divided along income lines – countries that have bigger financial resources have a bigger say. The “creditors” are from developed countries while the “borrowers” are from developing countries. The developed countries are always the creditors & the borrowers end up building the kitty via taxes on loans given.
  • Having weakened the Government – fiscal arm of a state, the economists and local corporates are also conniving to weaken the monetary arm (CBSL) that functions as a complimentary tool of the fiscal arm of a State.

Have the economists and top corporates knowingly or unknowingly contributed to the economic collapse because they serve to gain by weakening the state apparatus?

This is a question for the economists and local corporates to ponder & answer.


Shenali D Waduge

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