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February 3, 2023

What are unspecified conditions laid by the IMF, Kusal Perera asks Ranil

Last Updated on September 5, 2022 by Lankae Cast

Sending an open letter to Sri Lanka President Ranil Wickremesinghe, senior journalist and political analyst Kusal Perera has requested him to publish agreements already reached with the International Monetary Fund (IMF) in full.

People in Sri Lanka have an undenible right, argues Kusal Perera, to know all details of discussions and agreements the government would reach with the IMF, before they are adopted and approved officially.

He stresses upon the importance of publishing hitherto unspecified conditions laid by the IMF which are never mentioned by any party to the discussions.

We publish the leter in full below:

Hon. President
Ranil Wickramasinghe
Presidential Secretariat

Hon. President,

Request to publish agreements already reached with IMF in full and to publish all agreements that would be reached hereafter. It should be said here first, this is an open letter addressed to you as the Head of State and also as the Minister of Finance. There is reason for this open appeal. As we are through a massive economic debacle, it is necessary for People to know of all discussions the government would have, and agreements the government would reach with the IMF and thus to make them all open to the public for transparency and accountability. Let me also stress that it is an inalienable right of the People to decide on their own fate and that right cannot be outsourced to outsiders anymore.

It was announced the IMF on 01 September consented to assist the SL government through their Extended Fund Facility (EFF) with a USD 02.02 billion loan on conditions the government agreed to at Staff-level deliberations held in Colombo.

For the IMF’s Executive Board to approve this loan, your government is now expected to fulfil the pre-conditions agreed to. They include, financing assurances to be received from official creditors, and good faith efforts to be made to reach agreement with private creditors. According to a Fitch announcement made on 02 September your government had agreed on prior actions “not publicly specified” and they too need to be fulfilled. Though there is no mention of these publicly unspecified prior actions, this had been a practise with IMF even in the past.

Except for the suspension of loan aid in 1980, SL has obtained IMF assistance 16 times for now. I would say without hesitation, People have not gained anything of worth from any of these IMF assistances anytime during these 42 years. The main reason for that is, all efforts with IMF assistances had been to repair this utterly corrupt and squandering free market economy. I wish to substantiate that claim with 02 short explanations and a very short mention on your continuous remarks regarding privatisation of State Owned Enterprises (SOE).

  1. We have never been able to earn the required foreign exchange to meet the foreign trade deficit through exports despite all incentives and privileges provided including tax waivers and discounts in attracting foreign direct investments. Leaving all wasteful loans accrued by previous governments aside to focus on external trade deficit only, in 1980 it was almost USD 01 billion. Thirty-five years later when you became the PM of the “yahapalana” government in 2015, the deficit was USD 08.1
    billion. Though with IMF assistance received in 2016 June, when you stepped down in 2019 for Rajapaksas, the deficit still was USD 05.1 billion. There is also the fact that with all concessions and benefits provided, our exportincome has been around USD 09 billion. In 2020 the deficit was USD 05.2 billion. You will probably not deny that all through 45 years of the open market economy we
    have not been able to earn enough forex to bridge our external trade deficit despite incentives and benefits provided.
  2. On theoretical calculations, though agriculture (including fishery and livestock) contribution to the GDP had increased from around 07 percent to over 17 to 1 percent, in practical life that had very little meaning. All cheap labour for FTZs were drawn from rural society. The 30 year civil war was fought with youth from rural society as frontline soldiers. Migrant labour to countries like Mid East and South Korea from whom much dollar remittances are expected are also from poor rural
    society and not from urban families. If they can earn a steady income of about Rs.25,000 to 30,000 per month in this rural economy, they would not leave their spouses and families in the village to seek income as migrant labour. In 2019 too, over 203,000 left their families in villages to seek employment as migrant labour.

The story is simple. Even after 40 years, the open market economy has not improved the rural
economy to allow a decent and an affordable life.

In this open market economy, developing and improving rural life has only been mere rhetoric to date. After you became PM in December 2001, the Singaporean company CESMA was contracted in 2003 to develop Western Province as a megapolis. Commenting on that mega urban development plan to the Sunday Times in 2011, you had said, “The risingAsian economies were all converged in big cities such as Seoul, Tokyo Beijing, Shanghai, Hong Kong, Hanoi, Bangkok, Jakarta, Kuala Lumpur, Dhaka, Delhi, Mumbai, Chennai, Kolkata and Karachi – each city housing populations that range from five to fifteen million.

These densely populated, large urban cities made economies of scale possible and thereby provided an impetus for growth. In comparison, Sri Lanka did not have a large metropolis to power large-scale growth”.

It is quite clear; your perspective of economic growth is terribly restricted to urban expansion. You seem to have stopped with “Washington Consensus” and its “trickle down effect” the World Bank trashed in late 80’s. It is therefore quite evident, this IMF assistance would also be about the urban middleclass and in resurrecting a disastrous city centred open market economy. The IMF too works on their global liberal market perspective in imposing conditions for restructuring.

You were seen during the past 02 months preparing the ground for IMF conditions with your continuous mentions on privatisation of SOEs. As Finance Minister you have allocated Rs.200 million in your 2022 Interim Budget to establish a special unit for privatisation. In short, this belief in privatising SOEs is a flawed belief. In most EU member countries, the share of the State in their economies is around 30 percent or more. They have adopted different models in establishing SOEs. One of the models is what we successfully adopted in 1996 to restructure the telecom services that was with the Post and Telecommunications Department. As “Sri Lanka Telecom” it is still with the State as the majority owner.

The tragedy of the open market economy that is wedged to the global market is not only in privatising SOEs and leaving the rural society pauperised. It is also about the whole planet including us being subject to a massive environmental disaster. Our uncertain weather conditions are results of Global Warming and Climate Change. It is also the result of the “filthy rich” in this open market economy devastating our own environment.

With unrestricted hacking of the “green canopy” it is no more possible to control sudden floods and landslides. In November 2010, Colombo got submerged in floods with 260,000 getting displaced according to the Disaster Management Centre. Kalutara district was devastated by floods in 2014 June. Reports say there were 27 deaths, 1,300 plus houses damaged and over 25,000 individuals left as refugees. Four months later in October a massive landslide in Koslande left 150 families destitute and the number missing still unaccounted for. Two years later in 2016 May another string of massive landslides in Aranayake left a whole village under rubble, with 150 deaths reported. Over 70,000 families were reported

Please don’t feel comfortable calling them “natural disasters”. They are not. They are all man-made tragedies from unrestricted plunder of our environment by the filthy rich and their political allies.

Also, reason for education, health and public transport that should be managed efficiently as State services with equal access to all are now left ignored and allowed mere existence is for the private sector to earn huge profits. What is also not spoken loud is the dismantling of the decent and morally sound society there was before. Social values and ethics are no more. Drug addiction and trafficking, rape and child abuse, murder and extortions are ever increasing. Please don’t blame all that on individual citizens. This destruction of the once civilised society is due to the open market economy that during 30 to 40 years turned citizens into extremely selfish, enormously greedy consumers in a competitive free market that left all State agencies inefficient and corrupt.

This certainly is a mega corrupt and a life squandering economy. This country does not need such an economy at least hereafter. What we need is a stable, futuristic economy that can ensure a decent cultural life with social justice and parity for all in a stable society.

Therefore, People now need to know all details of discussions and agreements your government would reach with the IMF, before they are adopted and approved officially. They should invariably include even hitherto unspecified conditions laid by the IMF and are never mentioned by any party to the discussions.

This very cordial request for all information from you is also because I believe you would comply with the request as one who have been advocating transparency and accountability for good governance.

Thank you.
Yours sincerely,
Kusal Perera
Sri Lankan Citizen
C.c : Secretary to the President, Saman Ekanayake –