Yen for Yuan
Posted on June 6th, 2016

The International Monetary Fund (IMF) has, at long last, released the first tranche of a USD 1.5 bn bailout package for Sri Lanka. The government is over the moon. Sadly, the Granary of the East has come to such a pass that its rulers pride themselves on obtaining loans as an achievement!

The IMF bailout facility is the price the country has to pay for the election bribes the government generously showered on the people to win the presidential and parliamentary polls last year. The biggest of them was the pay hike for public sector workers. Politicians in this part of the world have mastered the art of bribing voters with public funds! It may be recalled that following last year’s regime change, the IMF held that the country’s reserves were not in such a parlous state as to need a bailout and turned down a government request for a loan.

Finance Minister Ravi Karunanayake has lost no time in claiming that the IMF has not attached any conditions to its bailout package. One is intrigued. If so, why has the government burdened people with higher taxes? If Karunanayake is telling us the truth, the whole truth and nothing but the truth, then this must be the first time the IMF has agreed to grant a loan without conditions!

The IMF has made a last minute intervention to prevent Sri Lanka from plunging off a financial cliff, but more funds are needed to help its ailing economy regain vitality and traction. Western leaders, enamoured as they are of the Sirisena-Wickremesinghe administration, make it a point to flip their trouser pockets inside out, so to speak, when they condescendingly press flesh with their Sri Lankan counterparts. They cannot be blamed for doing so because they are without funds even to tide the euro zone over. They are also banking on China for funds!

Interestingly, no sooner had President Maithripala Sirisena returned from Tokyo, where he found himself in the exalted company of G-7 leaders the Chinese government invited him to Beijing. This invitation has warmed the cockles of many a heart in the government, whose yen for yuan knows no bounds. But, there is no guarantee that China will loosen its purse strings for the sake of Sri Lanka. There lies the rub!

It is said that there is nothing called a free lunch. The same goes for invitations, especially those from big countries to smaller ones. China has its own way of making its presence felt. The Rajapaksa government was never short of Chinese funds, but it lacked recognition in the West. The opposite is true of the incumbent administration, faced with a severe financial crunch.

The Rajapaksas unnecessarily confronted the West and did not know what hit them in the end. Their successors imprudently antagonised China. They did so in a bid to curry favour with India and some western governments which, instead of granting aid, leverage their influence over international human rights outfits and the UNHRC to control the developing world.

The state media informs us that some Indian companies have expressed willingness to invest in the Port City project. Whether such measures will pass muster with China and help propitiate the piqued, resentful dragon is doubtful.

The task before the Sirisena-Wickremesinghe government is to perform an extremely difficult tightrope walk. This, it has got to do without a political safety net. If its moves to mend fences with China to secure funds are not to the liking of the West, it will have to face a turn of the screw in Geneva come the next UNHRC session. This is a worrisome proposition for it in that the proposed war crimes probe has already run into stiff resistance at home. Unless Beijing is satisfied that Colombo has got its China policy right, it is not likely to part with funds.

Handshakes, blandishments etc from world leaders may boost one’s ego, but they are no substitutes for much-needed funds.

2 Responses to “Yen for Yuan”

  1. Dilrook Says:

    No sooner the IMF dollars come to Sri Lanka, they will be grabbed and robbed by the Indians. Sri Lanka will be without funds once again. No amount of loans can save Sri Lanka as long as Indians keep bleeding the economy. Indians must be removed from taking profit and wages out of Sri Lanka to save the economy.

    This is why Chinese investments make more sense. Instead of giving money, China builds infrastructure vital for development. As Confucius said, give a man a fishing rod so he can feed himself.

  2. anura seneviratna Says:

    Indeed Chinese investments make sense while western aid too taken on board with a healthy balance of political wisdom and again agreeing with Dilrook must keep away from Indians for good. The root problem with SL is NOT having patriotic national leaders able to deal with country’s all matters with a holistic approach.

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