By Shivanthi ranasinghe Courtesy Ceylon Today

Last week, there was a buzz over the unfounded report that the IMF may consider approving the USD 2.9 billion Extended Fund Facility (EFF), even without China’s assurances. This was politely refuted by the IMF Asia and Pacific Department Director Krishna Srinivasan, for he thinks the ideal way would be to await financial assurance from China. Thus, we are back to square one, which is to wait for the IMF ‘bailout’ with our any day now” attitude.

Alternative Solutions

While all eyes turn back towards China, the outspoken former Central Bank Governor Ajith Cabraal points out that multilateral lenders as IMF, World Bank and ADB as ‘Senior Creditors’ must, in the sovereign debt re-structuring exercise, also have their loans restructured like other bilateral and commercial creditors. He further urges IMF’s top management to grant a moratorium of at least one year on all emerging nations’ debt due to ‘Senior Creditors’ at the onset of the Covid-19 pandemic – something he had been reiterating since March 2020.

Earlier, the non-profit British campaign group Debt Justice and a group of 182 economists and development experts, from around the world, had called on hedge funds and other private creditors to ease up their hardline stance in the debt-relief negotiations with the Island nation. It is their opinion that all lenders, bilateral, multilateral, and private – must share the burden of restructuring, with assurance of additional financing in the near term.”

It has been pointed out that almost 40 per cent of Sri Lanka’s external debt is held with the private creditors. These are mostly in the form of international sovereign bonds, which charge a higher interest rate due to the risks involved in lending to weak economies as Sri Lanka’s. Consequently, through the interests levied by these bonds the lenders receive more than 50 per cent of the external debt payments. It is these higher interest rates that directly contributed to Sri Lanka’s downfall.

In the opinion of this group of financial experts, as the risk anticipated by the private lenders have come to pass, those who charged a higher premium for taking that risk must now be willing to accept the consequences of that risk.

Recently, in Parliament, a young MP from Jathika Nidahas Peramuna made a poignant speech. MP Uddika Premarathna, taking the Tuna-Tourism concept of the Maldives, the agricultural venture in Dubai and the home grown solutions adapted by Ethiopia advocates that we too look into our own resources and start developing our own economy. He disdained the very idea of sending our young blood, especially our mothers, overseas for foreign remittances.

Faithfully Waiting for the IMF

Yet, instead of considering these alternatives, we stay faithful to the hope that the IMF can and will bail us out. The staff agreement that was reached with the IMF in September 2022 has so far only been a bait.

In anticipation of this fund, we have increased our taxes and interest rates. We have adapted these measures notwithstanding the effect it will have on our SME and resulting economic contraction. Subsidies have been cut off, which have has resulted in our utility bills shooting up. By reducing the retirement age, the State sector has been drastically reduced.

All these measure’s definitely need to be implemented if we are to move away from our current welfare State. However, this drastic course correction will not yield overnight results but disasters. It is important to understand the costs and benefits of these measures. For instance, will reducing the State sector alone improve efficiency is an important question before us.

Reducing the cadre will certainly ease the Treasury’s burden significantly. However, is that alone enough to strengthen our economy? If the economy is not providing employment opportunities for those who retire from public service, what will be their fate when they need more than their pensions to meet their personal responsibilities and obligations?

We must not forget that we were a nation in recovery after a 30-year costly war against terrorism. Just before the 10th anniversary of eradicating terrorism, the devastating Easter Attack adversely affected tourism – one of our major forex earning avenues. Before tourism could recover, we were plagued with the Covid-19 pandemic, which curtailed most of our forex revenues.

Thus, people in this country need a little bit of breathing space to recover. Instead, when the economy is deliberately contracted, the shock to the system and society might be too much. The unfortunate sequence of events in 2022, that forced a democratically elected President to resign from Office or lose his life, puts every government henceforth in danger of anarchy and being ousted by an angry crowd.

While Waiting to be Bailed Out

As we wait for foreign experts to figure out a plan, to get us out of this financial mess, we have been quite busy. A special committee was appointed to decide if the national flower should be called the nil manel or just manel. Also the decision was taken to rename ‘Slave Island’ as Kompagngna Veediya and so blot out a colonial blemish”.

While PM Dinesh Gunawardena took a leading role in these acts, he is still to utter a word against plans to implement the 13th Amendment in full. It appears these controversies are only bridges to cross to reach the pinnacle of one’s political career.

In the meantime, we celebrated the 75th Independence Day, spending an approximate Rs 200 million. We did not want to be stingy with the expenses lest the world thinks we could not afford to celebrate our own independence. It seems that we need a little bit more time for the penny to drop and realise that the reigns of a country is with the one who controls the economy.

Almost coinciding with our Independence Day celebrations is the release of the movie ‘Gaadi: Children of the Sun’. Though we faithfully celebrate the Independence Day every year, proudly showcasing what we have inherited from the British – right down to the kilt, we do not speak of the extraordinary events that took place before or after 1815 or for that matter of the treaty we signed with the British or what happened to that treaty.

It is in this vacuum that movies like ‘Gaadi’ that highlights the trials of a condemned woman are released. Therefore, this story is taken completely out of context from the actual events. Instead of being a historical anecdote, this continues to feed a fallacy spun to justify the forced occupation of the British.

In this day and age, almost all information – including accounts of history – are freely and easily available. It is thus truly shocking that we continue to teach our children the falsehood that after the brutal execution of the Ehalepola family and others, people were so disgusted with King Sri Veera Parakrama Narendra Singha and wanted him replaced with a foreign king. For the record, the movie does not make any such statement. Nevertheless, by maintaining a deafening silence over all other related events but only accentuating on this, it feeds the fallacy.

Our Forgotten Heroes

At the very least, we do not honour the Most Venerable Wariyapola Sri Sumangala Thera. It was he who forced the Union Jack down and insisted that our national flag continue to be hoisted until this treacherous treaty was signed. The Venerable Thera’s actions were very much akin to that of the 21-year old naval rating Wijitha Rohana Wijayamuni in 1987.

Wijayamuni too made history by demonstrating his opposition to another treaty signed with another foreign power during a different era. The Indian Premier Rajiv Gandhi twisted the then Sri Lankan President JR Jayewardene’s arm and on 27.07.1987 and forced the Indo-Lanka Accord despite the severe opposition from the country.

Key ministers, including J.R. Jayewardene’s own Prime Minister Ranasinghe Premadasa, had to be kept under house arrest as they were vehemently opposed to the Accord. Despite this opposition, President Jayewardene signed the Accord and with it passed the controversial 13th Amendment to the Constitution. Curiously, PM Ranasinghe’s son, incumbent Opposition Leader SajithPremadasa is for the full implementation of it.

Soon after the signing of the Accord, the Indian Premier was invited to inspect a Guard of Honor on his behalf. The Indian Premier appeared both smug and arrogant as he made his inspection, only to be assaulted with a rifle butt by young Wijayamuni.

Both Venerable Sri Sumangala Thera and Naval rating Wijayamuni depicted the mood of the nation as leaders took foolish decisions that endangered the country. By forgetting these heroes, we forget who we are, our values and our worth.

As things stand, the IMF bailout may never materialise. Even if it does, their remedy might be worse than the malady.

Conversely, searching for alternative solutions and heeding alternative advice will certainly not kill us but broaden our perspectives and options. We should not be afraid to go against the IMF’s word for it was under their guidance that our robust economic growth of seven per cent in 2014 was reduced to two per cent by 2019, which also contributed to the ongoing economic crisis.

ranasingheshivanthi@gmail.com

(The views and opinions expressed in this article are writer’s own and do not necessarily reflect the official policy or position of Ceylon Today)

By Shivanthi Ranasinghe