Post-Aragalaya & who benefitted from IMF & debt restructuring?
What does a $6b debt restructuring deal to secure IMF $2.9billion mean?
What has Sri Lanka had to commit to, to get $1b out of this total $2.9b?
Let us not forget that this $2.9b bailout is not without strings & is given in tranches depending on what Sri Lanka is willing to give up & cough up!
Sri Lanka defaulted on repayment of $6b in foreign debt while its total debt was $50b in 2022 which has spiraled to $100b debt, what does this mean to Sri Lankans?
What is this “rescue” that IMF is actually giving?
In March 2024, Sri Lanka’s unelected interim President declared he was seeking a loan repayment moratorium until 2028. From 2022 to 2024 Sri Lanka’s debt increased by $50billion, how much will it be by 2028?
How much is it going to cost the Sri Lankans who will have to start pocketing up billions in repayment from 2028 to 2042? It is more than likely that by 2042 most of the culprits of the debacle would not be living! As things stand, Sri Lankans have no buying power due to high taxes & currency devaluation while unemployment is high as a result of industries not able to function to full potential.
Since the economic pundits are unlikely to give the true scenario – the IMF loan with interest came only after agreeing to “reforms” which included giving “autonomy” to the Central Bank, in other words an entity that listens to the IMF & Co & doesn’t listen to the Sri Lankan government! Maybe because they didn’t have to listen to the Sri Lankan government that they thought to violate the Constitution’s “Equality” and gave themselves massive salary increases to be paid by the poor Sri Lankan tax payers. This is just one example of what “independent” entities end up doing! They are only independent of the nation but dependent on the foreign sources who give them their orders! Parliament has no say!
Are Sri Lankans foolish to think that simply because electricity is being supplied, essential goods are freely available, all unnecessary goods are getting imported everything is honky dory in sunny Sri Lanka? Obviously, they are. Those that are happy to enjoy their luxuries & comforts seem not bothered about the weight it is costing those who pay the taxes. This brings to the surface how honest the upper society in Sri Lanka are & how genuine their contribution to the economy is. Many of the corporate pundits that were seen issuing statements demanding deferment on debt repayment were garnering public support as they iced their statements about taking care of the general public, yet the question that should be asked is now many of these top corporates are guilty of keeping their profits in offshore accounts & how many are also guilty of under invoicing or not paying taxes? If these corporates were so concerned about the people, why did they not decide to pay the $2.9billion given that they were unfairly keeping their profits overseas instead of subjecting their people to the conditions set out by IMF in order to secure their loan that has to be paid back with interest. Why couldn’t these corporates have lent the $2.9b to Sri Lankan government with interest too!
Who does Sri Lanka owe?
Inspite of Sri Lanka’s economists also parroting about “China-debt trap” Sri Lanka owes China only $4.7b.
Sri Lanka owes $10.9b to multilateral banks. But restructuring is not with multilateral parties.
The debt restructuring is with private bondholders majority whom are US based & hold 50% of outstanding ISBs & hold $12b of Sri Lanka’s total debt. This group is being advised by White & Case & Rothschild & Co. The bondholders want Sri Lanka to issue macro-linked bond (MLB)
Who are these bond holders?
BlackRock & its subsidiaries – Eaton Vance Management, Grantham, Mayo, Van Otterloo & Co, LLC, HBK Capital Management, Morgan Stanley Investment Management, Neuberger Berman, T. Rowe Price Associates Inc, Wellington Management and Amundi Asset Management.
Some of the proposals being made are “debt for nature swaps” and the sale of Sri Lanka’s assets & resources.
The vicious nexus is not difficult to identify – corrupt local politicians + their cronies + IMF (US) + bondholders (mostly US) = domestic restructuring = take over Sri Lanka’s assets/resources & turn Sri Lanka into a vassal state (after reforming governance which means weakening the Sri Lankan state, laying off state employees, closing state institutes, privatization of strategic assets, increasing taxes to the people & austerity only for middle class & poor) All of the above is no solution to taking Sri Lanka out of the mess except to land Sri Lanka is a bigger mess. All the bloated figures & happy stories are applicable or flagged for those invited to take over Sri Lanka (not necessarily in the interest of the people or the nation) A perfect neocolonial agenda has been laid out by those that knowingly or unknowingly steered the aragalaya, change of power from one puppet to the next.
Before Iraq was illegally invaded, it was recipient of international accolades. The same fate for Libya & not surprisingly, Sri Lanka too was upgraded to an upper middle income country by World Bank in 2022. How did the “bankrupt” fit into the scheme of things? Can a country be declared bankrupt simply because it did not have dollars, a currency that was created in 1792 (just 232 years) & by a country with the same number of years history? Is a nation to be measured only by its dollar holding?
There is no nation that is not in debt. Post-colonial international trade was designed to make sure nations were in debt & they paid interests to the powerful nations to sustain their nations. Therefore, debt is not the issue, but the manner governments & policy advisors have handled fiscal policy & managed the nations wealth to ensure that sovereignty of the nation & the welfare of the people would not be compromised. A People’s Tribunal must identify the individuals responsible for the state Sri Lanka has fallen into.
Shenali D Waduge
