Bt Garvin Karunaratne

It is good news that we have reached an input of $ 1 billion aid from India and that China is considering and very likely to give a 2.5 b. loan, but this can bring us out of the economic mess we are in if only we act in a prudent manner. It all depends on how we spend the funds.

We do not have to wonder far, because if we closely copy the blueprint economic model of the days of Premier Dudley Senanayake, 1965-1970, days when we had no food, gas and fuel queues, we can be dead certain of victory. That was also the one model we followed earlier too when we built the Gal Oya Project spending dollars we had in 1950- 1954. when my father in law had purchased his A 40 brand new, as the first owner, not from the company but from someone who had deposited money and waited long. There were small allocations for valued imports. In 1958 I waited for two months to buy a new Peugeot 203. Then we did not provide any foreign exchange for foreign studies or for foreign travel. When I marched out of the Administrative Service and went abroad for study I was not given even a single dollar. I had to earn, live and study. Foreign exchange was a guarded item and we did not have private currency dealers, buying and selling dollars emassing a profit. The total intake of every bank was the property of the Government and disposed as decided by the Controller of Foreign Exchange of the Central Bank.

Today unless we are strict and spend for essentials first and see to an era of no queues for food and essentials like cooking gas, medicines and then detail a small allocation for fuel, etc we will not win. We have to forget skyscrapers, bridges, roads, flyovers for the time being till we do not have to hear of deaths of common people in food and gas queues. It is sad that four people have succumbed to deaths in queues by today(22/3). Then very small allocations were given for non essentials like cars, fridges, grapes etc. Working as the Additional Government Agent in Kegalla in 1969, I knew of no food queues or any shortages of essentials like food including medicines.

Our automobiles can easily guzzle out billions. We have that many. The rich have not one or two, but fleets of vehicles and enjoy endless travel. Allowing the rich to revel while some citizens are confined to be in queues for days to buy a can of gas is a No No situation that needs never to happen.

My mind travels back to my days at Matara as the Government Agent when the JVP struck on 5 thApril 1971, when the JVP actually controlled 90%of the District for close on three weeks. No fuel bowsers could be expected till roads were opened up. As the GA, I was in charge. Only some ten officers out of some 400 reported for work and that included my Assistant Govt Agent, Sugatadasa Jayawickrema. The two of us decided that we will impound all stocks of petrol and diesel. All petrol shed were closed to the public- told to issue only to army and police vehicles and on permits issued by either of us. Many big wigs in Matara criticised us but we were very firm and did not give in.  If I had not made that decision the fuel would have run out and we would not have had any fuel for the army, police and essential services like the distribution of essential food. Then the Police withdrew the security at the katcheri, closed the Police station gates and barricaded the entrance with a large tree and were armed to the teeth with machine guns inside, awaiting the enemy- the JVP. Matara was saved by the Gemunu Watch volunteers running in katcheri jeeps with petrol found from my development funds, ensuring security and essential food transport for the area near Matara and the coast which we controlled at times. If I had not controlled the use of available fuel, the JVP would have had a walk over and we would not have lived to tell the tale. Casualties due to JVP bullets included my jeep driver, Major Wettasinghe and the Member of Parliament for Deniyaya, Sumanapala Dahanayake. Sumanapala had to be moved to Colombo. That morning Radio Ceylon reported that the JVP  had shot dead a casualty in the Elpitiya Hospital  and I myself wrote out a fake bed ticket for Sumanapala giving him a fake name so that if when passing a JVP held area Sumanapala would be safe.  Had I not impounded fuel stocks the ambulance would not have had fuel.  It is mandatory that we  limit the use of fuel to produce electricity and for essential services. There is no other way ahead. Permits have to be issued by the Divisional Secretaries to owners of motor vehicles for the essential travel like going to work and for schooling. Unless this is done the dollars will end in smoke.

One can also look to the manner in which Mahatir Muhammed responded when the East Asian Financial Crisis hit East Asia. I quote from my book:How the IMF Ruined Sri Lanka & Alternative Programmes of Success(Godages:2006):

In 1997, the East Asian Financial Crisis caused the death of many economies in East Asia. Malaysia, Thailand, Indonesia, Korea succumbed and the malaise spread to Russia, Brazil and Argentina. All these countries had their currencies trashed and their economies ruined. Prime Minister Mahatir Muhhamed of Malysia declared war with the IMF by doing the exact opposite of the IMF advice. He effectively controlled the economy of his own country. He was entitled to do it. He imposed very strict controls. Every country earns foreign exchange through exports and services and remittances. He grabbed this money and did not allow any foreign bank or anyone to spend on unnecessary imports. He clamped severe restrictions on the use of foreign exchange. This even went to the extent of stopping funds for Malaysians studying abroad. There was Mayhem in student circles in London. Some of my students took leave of studies and flew home, those who stayed back were compelled to do menial work in restaurants etc to pay themselves.”(Pg.238)

It was only Malaysia that faced the crisis without falling into debt. Thailand was given a loan of $ 17.1 billion, Korea $ 58.2 billion, Indonesia $ 39.9 billion. Their foreign debts commensurately increased by that amount. In each case the IMF insisted that the local economy should be further prise opened more to foreign investment. This means that the doors are yet being wider and wider opened for foreign exploitation, As Professor Stiglitz states, the IMF chose to squeeze the countries further thus driving their banks and corporations to deeper crisis and worsening investor confidence”(Stiglitz: IMF policies make patient sicker)”. The IMF has come up with two Aid Schemes- the Highly Improvised Poor Countries Initiative(HIPC)and supplemented with the Multilateral Debt Relief Initiative(MDRI). Both declare loans as paid up but open up the country more for foreign investment. As Carrasco of the University of Ohio opines that the HIPC is, a program designed by creditors to protect creditor’s interests, leaving countries with unsustainable debt burdens.”(Foreign Debt Forgiveness & Repudiation,University of Iowa, Center for International Finance & Debt, 2007) . The MDRI is no better.

Sri Lanka is currently negotiating with the IMF. It is hoped that the IMF will provide a chance for Sri Lanka to wipe out the food and fuel queues and subsequently provide a development agenda, which is not yet on its books.

It is sad that the IMF despite helping- giving loans on strict conditions to some 80 odd countries, cannot quote a single instance where any country has developed under their tutelage. However it is hoped that this message will serve to open their eyes and enable them to speak of success.

These words come from someone who designed and implemented the largest and premier employment creation programme the world has known- the Youth Self Employment Programme (YSEP) of Bangladesh, created when he served as the Commonwealth Fund Advisor to the Ministry of Labour and Manpower in 1982. That happened in the face of an ILO programme that spent millions and failed to establish a self employment programme in Tangail, Bangladesh in 1980-1982. The YSEP has in its four decades 1982- 2022, guided over three million youths to be commercially viable entrepreneurs.

It is hoped that the IMF will kindly consider allowing Sri Lanka the chance to wipe out the food and fuel queues first and will also help the country to stand on its feet in development. May I suggest that the IMF detail that Sri Lanka should show the development starved world that it is possible to enable true economic development, creating production locally bringing about employment and incomes for the people , within a successful development programme.

Such a programme will be a feather in the cap for the IMF and will get into the history of successes in development like Mahatir Muhammed in Malaysia in the days of the East Asian Financial Conflict of 1997 and the Youth Self Employment Programme of Bangladesh. The Sri Lankan High Commissioner in Delhi, His Excellency Milinda Moragoda in his Manifesto for Mayor of Colombo in 2011 refers to a scheme to solve the problems of youth unemployment: In this regard, he should seek to implement the Youth Self Employment Programme of Bangladesh which incidentally was an amazingly successful scheme introduced to that country by a distinguished son of Sri Lanka, Dr Garvin Karunaratne, who served Bangladesh as an international consultant.”

Let me live in hope that the IMF will get this message.

Garvin Karunaratne, Ph.D Michigan State University.

Author of:

How the IMF Ruined Sri Lanka & Alternative Programmes of Success(Godages:2006)

How the IMF Sabotaged Third World Development, (Godages/Kindle:2017)

How the IMF’s Structural Adjustment Destroyed Sri Lanka(Godages:2022)

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