{"id":59273,"date":"2016-09-30T15:38:09","date_gmt":"2016-09-30T22:38:09","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=59273"},"modified":"2016-09-30T15:38:09","modified_gmt":"2016-09-30T22:38:09","slug":"the-imf-leads-our-countries-to-rack-and-ruin","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2016\/09\/30\/the-imf-leads-our-countries-to-rack-and-ruin\/","title":{"rendered":"The IMF leads our countries to rack and ruin."},"content":{"rendered":"

By Garvin Karunaratne,\u00a0<\/u><\/strong>Ph.D Michigan State University\u00a0Former Government Agent, Matara District,<\/em><\/span><\/h2>\n

The IMF has in its recommendation to the Government on Sri Lanka in their evaluation to grant the second tranche- $ 1.5 billion stated\u00a0 that they could not in good conscience\u201d release the funds unless the Government passes the VAT increase to 15%. (Daily FT, 24\/09\/2016). In detail they state it is important that the Government expedites the legislative process of implementing the VAT amendments that are needed to support revenue targets for 2016 and 2017.<\/p>\n

This amounts to an interference into the administration of a sovereign country.<\/p>\n

Let us read the recommendation of the IMF in the historical light, when the IMF started its inroads into the economic affairs of sovereign countries in the Seventies.\u00a0 Till then the IMF never interfered with the manner in which the sovereign governments ran their countries.\u00a0 As a senior administrator we admired then how the World Bank and the IMF were supportive.<\/p>\n

However things have changed.<\/p>\n

Noble laureate Professor Jeffery Sachs states in his book: The End of Poverty<\/u>:<\/p>\n

Western Governments\u00a0 enforced draconian budget policies in Africa during the Eighties and Nineties. The IMF and the World Bank\u00a0 virtually ran the economic policies\u00a0 of the debt ridden continent recommending regimens of\u00a0 budgetary belt tightening known technically as the Structural Adjustment Programme. These Programs had little scientific merit and produced even fewer results. By the Start of the Twenty First Century Africa was poorer than in the later 1960s when the IMF and the World Bank\u00a0 had first arrived on the scene.\u201d<\/p>\n

Professor Jeffery Sachs is no outsider to the IMF and the World Bank. He was an agent of these two institutions in serving several countries to implement the Structural Adjustment Programme. In Bolivia in 1985, in Poland in 1989 and in Russia in 1991, Professor Sachs was advising his shock therapy\u201d. How to be a success in following the market economy. Then he arranged loans for them and paved the path for them to get caught in the trap of indebtedness.<\/p>\n

Both Professor Jeffery Sachs as well as Professor Joseph Stiglitz (once Chief Economist of the World Bank) now happen to be sharp critics of the IMF and World Bank policies. In fact Jeffery Sachs in his latest book The Price of Civilization<\/u> states that free market policies implemented by the IMF do not work and has said:<\/p>\n

The free market system\u00a0 must be complemented\u00a0 with government institutions\u00a0 that accomplish three things: provide public goods such as infrastructure, scientific research and market regulation, ensure the basic fairness\u00a0 of income distribution and long term help for the poor to escape poverty\u201d.<\/p>\n

The recommendation of the IMF today to the Government of Sri Lanka has to be viewed from the points of view expressed by Professor Jeffery Sachs.<\/p>\n

It is a fact that African countries were made poorer by the World Bank and the IMF and so is Sri Lanka a country that had a foreign debt of only $750 million in 1977(taken for project development and not for liberalized spending) when it commenced following the IMF and gradually piled up its foreign debt because the IMF advised Sri Lanka to liberalize the use of foreign exchange and when its resources were insufficient, advised\u00a0 Sri Lanka\u00a0 to borrow and spend. The IMF is itself to blame because the IMF gave loans on generous terms like\u00a0 grace periods of even 5 to\u00a0 10 years where the country need not pay back.\u00a0 The leaders were enticed to take the loans and spend as they would not be there to repay. The very fact that grace periods were offered indicates\u00a0 complicity on the part of the IMF to make the countries indebted. The aim of the IMF was to make the Third World countries indebted so that they can be controlled. They all became \u2018colonies\u2019 once again.<\/p>\n

In my words;<\/p>\n

The Structural Adjustment Policies of the IMF are so flawed that any country that follows them\u00a0 is doomed to a situation of increased poverty, increased deprivation and increased indebtedness. What is necessary today is for the IMF to understand that its Structural Adjustment Programme\u00a0 will not function in the interests of the Third World countries.\u201d(From Garvin Karunaratne: How the IMF Ruined Sri Lanka<\/u>\u2026(Godages)<\/p>\n

Instead of making superficial provisions like insisting that Sri Lanka should\u00a0 implement the VAT provisions, it would behove of the IMF to come up with a growth strategy, a strategy that will alleviate poverty, increase production, create employment\u00a0 and help build a sustainable economy. Every country that had followed IMF\u2019s advise has failed and in fact the IMF\u2019s teachings to the Third World was the laughing stock of the Wall Street Journal<\/p>\n

The IMF Drill is as follows. A Third World poor country with a pegged currency is working towards taming its inflation. Instead of a growth formulae it gets the IMF\u2019s\u00a0 old austerity dosage which slows down the economy. The banks begin to falter in\u00a0 paying their old debts,\u00a0 The IMF recommends\u00a0 yet more medicine- devaluation making the bank predicament and capital flight worse.\u00a0 The currency slumps and the banks are now in real trouble.\u00a0 Is this any way to run an international monetary system.\u201d 22\/02\/2001)<\/p>\n

That very wise statement of the IMF was a full one and a half decades ago. Is it not sad that all this while the IMF has failed to come up with a growth strategy.<\/p>\n

It is upto our countries to understand the fact that the IMF is leading our countries to become debt ridden, to economic\u00a0 ruin and commence action to create employment by getting people into production- the only way to alleviate\u00a0 poverty and deprivation.<\/p>\n

Garvin Karunaratne, Ph.D Michigan State University<\/p>\n

Former Government Agent, Matara District,<\/p>\n

 <\/p>\n

30 th<\/sup> September 2016<\/p>\n","protected":false},"excerpt":{"rendered":"

By Garvin Karunaratne,\u00a0Ph.D Michigan State University\u00a0Former Government Agent, Matara District, The IMF has in its recommendation to the Government on Sri Lanka in their evaluation to grant the second tranche- $ 1.5 billion stated\u00a0 that they could not in good conscience\u201d release the funds unless the Government passes the VAT increase to 15%. (Daily FT, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":["post-59273","post","type-post","status-publish","format-standard","hentry","category-by-garvin-karunaratne"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/59273","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=59273"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/59273\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=59273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=59273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=59273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}