Following the IMF: Where has it taken us.
Posted on March 9th, 2024

By Garvin Karunaratne

The Mirror Business Page of 16/2/2024 tells it all:

  • Economic recovery gathers pace with progress on structural reforms

Asserts any disruption to the programme would create high economic costs, including growth setbacks, loss of confidence and prolonged negative investment sentiments.

(From Sri Lanka’s Economic revival hinges on IMF Deal”)

Our President himself tells us:.

We made an economic plan with the IMF. As a result of implementing this Planthe country returned to normalcy:(Adaderana:6/3/2024)

We commenced following the IMF advice in mid-1977. Where has following the IMF taken us? Our foreign debt has gradually increased to $ 9.7billion when Premier Chandrika took over in 1995, to $ 14.2 billion by 2009, to $ 34.8 billion by 2014, to $ 54.8 billion by 2019 and to $ 56 billion by July 2022 when President Gotabhaya handed over the Presidency to Mr Ranil Wickremasinghe. It is important to note that now the foreign debt has ballooned to a massive $ 91 billion as revealed by Professor Charitha Herath in the Lankadeepa of 9/2/24: Tatu Nodena Nayata Ka Satutuweema_ Living happily on loans, in ignorance.”

A massive increase of $ 35 billion within 21 months. An alarming increase and if we go on at this rate of importing everything and allowing the relaxed use of foreign exchange, the sky will be the limit. This is the advice of the IMF and increasing our foreign debt has to stop. How did we stop the petrol queues? We invited multinationals to come in and are we not in debt to them?

What has to be done is to follow the Divisional Secretary at Kotmale in 1970-1977. Charged with the task of making things we import and finding employment and alleviating the poverty of our people he started a project to collect all the waste paper from all government offices, rolled up his sleeves and with youth entrepreneurs, churned the waste paper and spread them out to dry. The youth entrepreneurs made cardboard and paper. This was a very successful industry that created foreign exchange, by effectively reducing imports. .

Since President Jayawardena closed the Kotmale Paper we yet do not have any projects to convert waste paper to paper. Instead of following the footsteps of the Div Sec at Kotmale we started collecting all the waste cardboard we could find and exporting them- 8000 tons per month to India and get paid a few cents and then we import the paper and cardboard that India makes out of it and pay them in fat dollars. Fine economic thinking- this ridiculous task is what we do even today. Wander around Colombo and you are certain to see a lorry being loaded off to India.!

This New Year came to me with New Year Blessings from the Prime Minister’s office with a Greeting Card and a Diary made out of Alimana by the Divisional Secretary at Patahewaheta. Thank You Excellency.

It is a simple process, The Way ahead is to get the PataHewaheta Div Sec and the Divisional Sec of Kotmale, if he is alive, to organize making paper out of alimana and waste paper.

If you want a foreign specialist phone the Prime Minister of Bangladesh and request her to send one of my youths who collect waste paper and cardboard and make a living out of it. A number of youths on the Youth Self Employment Programme that I designed and implemented in 1982 are specialists in papermaking art. Mind you that programme of self-employment creation has created youth entrepreneurs out of over three million youths. It is an ongoing programme, the largest programme of employment creation one can find.

Our President, our elected PrimeMinister and our Central Bank may also find out about the success of Coop Crayon at Morawaka.

That commenced when I persuaded my Planning Officer Vetus Fernando to find the art of making crayons. My Planning Officer was a grad in Chemistry and after a myriad of experiments done over three months closeted within the dingy walls of the science lab at Rahula College Matara he found the art of making crayons. We sat together and did experiments again and again till the quality was equal to Reeves, the best of the day.

Then I wanted it to be a Cooperative run by us. I summoned Sumanapala Dahanayake the Member of Parliament for Deniyaya who was also the President of the Morawaka Cooperative Union. The moment I authorized him to use cooperative funds to establish a crayon factory he rolled up his sleeves and within two days cleared two rooms in the Coop Union. Working with my Morawaka Divisional Secretary, they recruited twenty youths. Vetus and a few of us from Matara moved to Morawaka and we commenced training the youths It was a 24-hour non-stop task and we made crayons, fitted them into packets and filled two large rooms in two weeks. The Minister of Industries Mr Subasinghe opened sales and our youths were on the streets selling coop crayons.

It was the most successful industry and became the flagship industry of the DDCP.

President Jayawardena even wanted to discredit it and sent a team of investigators headed by NT Ariyaratne, Deputy Director of the Cooperative Department to check and find fault and send the Member of Parliament Sumanapala to the gallows. But the flying squad checked the books for four days and concluded that the coop crayon project was a grand success with all books in proper order.

May I stop writing about what we did for now. I can continue writing endlessly if called upon.

Sri Lanka’s economy is in the doldrums with a massive foreign debt of $ 91 billion. Tourism brings tourists but not the dollars, as we do not collect dollars from them as they enter Katunayake. Even Hotel Booking Companies ask the tourists to pay the hotels in Rupees unlike in other countries where all hotels collect only dollars. Further, the Booking Companies send an invoice to the hotelier to pay 15% of the collected rent and the hotelier takes the invoice to the banks where it gets paid from our dollar reserves. The expertise of our experts fails to grasp that our reserves go down for every tourist that comes in.

I gather now that our Garment industries are in trouble with around thirty per cent of factories closing down.

The only option we have is to make what we import today -in sort follow the footsteps of our Divisional Secretary at Kotmale. Our success will be a feather in the cap of the IMF because up to now not a single out of hundreds of countries under IMF guidance have been a success.

My humble message is to Take development- training and making things out of party politics, all parties have to do that task if we are to get out of the woods. Let us start today to make everything we import and get going.

Mind you this task of producing all we import is to be implemented with printed Rupees. No foreign exchange is needed, but when we produce what is imported we save foreign exchange- in other words, we do create dollars.

Over to our leaders. We did it once and can do it again.

Garvin Karunaratne

former GA Matara and

Commonwealth Fund Advisor to Bangladesh 1982-1983.

garvin_karunaratne @

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