Features
An open letter to IMF office and IMF Mission in/to Sri Lanka
We are members of a Sri Lankan debt justice collective that worked together with Debt Justice UK to campaign for meaningful debt relief for Sri Lanka. Using our relationships with the academic world, we mobilised a collective letter of 182 academic signatories from the disciplines of economics, international development, political economy and social sciences more broadly – as poverty, inequality and debt are multidimensional issues – to advocate for the immediate needs and long-term interests of Sri Lankan people. This letter garnered widespread international and local attention, leading to several public debates and various discussions on Sri Lanka’s debt crisis. In its wake, we have also communicated with the IMF mission to Sri Lanka on debt justice.
On 20 March 2023, the IMF Board approved a 48-month Extended Fund Facility (EFF) of US$ 2.9 billion, prescribing a plan to restructure Sri Lanka’s economic policies and reforms. This follows the staff level agreement reached between the Sri Lankan government and the IMF mission team to Sri Lanka led by Peter Breuer and Masahiro Nozaki in September 2022. It remains matter of concern that none of the IMF staff reports were available in Sinhala or Tamil, while the agreements itself was for long shielded from the public.
The Sri Lanka government and business elite have welcomed the approval of 17th IMF program and the opportunity to borrow dollars once again. Various political activists, critical journalists, trade unions and political parties continue to raise concerns about the latest IMF deal, however, considering the negative impact it is likely to have on the majority of working people of the country and the fundamentally unsustainable nature of the IMF solution.
There are many imperfections of the global economic order. Sri Lanka is not operating on a level playing field and the IMF involvement in the country seems not to help ordinary Sri Lankans. Sri Lanka needs a government with a clear mandate from its people to be able to fully, creatively and productively engage with the world while also protecting itself against the injustices global economic order.
Prior to the IMF agreement of March 2023 we posed a number of questions to the IMF mission to Sri Lanka around debt sustainability, the IMF mandate, corruption vulnerabilities and debt restructuring negotiations.
Hence, to hold the Sri Lankan government and the IMF accountable to all Sri Lankan citizens, we are publishing our concerns as an open letter so that Sri Lankans from all walks of life will continue to be conscious and vigilant of the critical issues at stake.
The continued lack of transparency is harming the people of Sri Lanka.
Statement by 182 academics on dealing with Sri Lankan debt, January 2023 https://debtjustice.org.uk/wp-content/uploads/2023/01/Sri-Lanka-debt-statement.pdf
—————————————————————
To: Peter Breuer; Masahiro Nozaki; Anne-Marie Gulde-Wolf; 5 March 2023
We do hope that this e-mail finds you and your colleagues well. Many thanks too for your prompt response back in January – and also for offering us the opportunity to clarify any follow-up questions we have.
We have been trying to assess the on-going situation in Sri Lanka with our colleagues in the country – and given recent changes from the IMF end, we would greatly appreciate a comprehensive reply to the following questions:
1) Debt Sustainability
1A: Debt Sustainability Analysis (DSA) of Sri Lanka
- – Why isn’t the government of Sri Lanka required to publish their own DSA before any agreement is signed?
- – Why is the IMF’s DSA for Sri Lanka not published for public scrutiny? If it is publicly available, please do share with us. (This is now published but was not open to public scrutiny prior to approval).
1B: Sustainable debt levels/UN Sustainable Development Goals (SDG)
- – Why is the delivery of UN’s SDG not at the heart of the objectives of debt sustainability?
- – Does the IMF’s prioritise the repayment of loans to creditors over the well-being of Sri Lanka’s people?
1C: Social safety net:
- – Why is an insufficient social safety net (far below SDG standards) considered adequate for addressing debt sustainability?
- – Why does the IMF tolerate social safety net levels that do not genuinely ensure the long-term well-being of people?
2) The IMF Mandate
2A: Medium Income Countries (MIC):
- – Why was Sri Lanka categorised as a MIC when poverty is rampant in the country and inequality was increasing?
- – Why is the per capita income level set so low to qualify for concessionary loans, when the level of inequality is growing, minimum wages are falling below subsistence levels and nearly 67% of the population are daily wage earners?
- – Why then are these countries pushed towards commercial money markets and excluded from accessing essential concessionary loans from multi-laterals?
2B: Funding of Multi-Lateral Organisations:
- – Why didn’t the funding levels for multi-lateral organisations move up in proportion to the massive fiscal programs embarked on by countries in the Global North?
- – Why are countries in the Global South then pushed towards commercial money markets to absorb the trillions of dollars gained by countries of the Global North as a result of unprecedented fiscal stimulus programs coupled with massive quantitative easing by central banks?
- – Has the IMF published a report highlighting the impact of such fiscal stimulus programs on the Global South at a time when multi-laterals are not funded adequately to help nations in distress?
3) Corruption Vulnerabilities
3A: Transparency and measurement:
- – What is precisely meant by the term “reduce corruption vulnerabilities” stated in the staff level agreement? (An outline has now been published—but not meaningfully elaborated or quantified).
- – How is the reduction going to be measured and monitored in an effective and comprehensive manner?
3B: Stolen Assets and Illicit Cash Outflows:
- – As part of “reducing corruption vulnerability” what are IMF’s targets for Sri Lanka to recover stolen assets and stop illicit capital outflows, including by the corporate sector?
- – Does the IMF assist governments of the Global South by campaigning for more transparency in the global banking system, especially private banking and off-shore accounts?
4) Deb Restructuring Negotiations
4A: Private Creditors:
- – Does IMF require a country to restructure “odious debt” from private creditors?
- – Should profit seeking commercial money markets lend to sovereign governments when legislation governing these lands do not have a mechanism for bankruptcy?
4B: Lending into Arrears:
- – Why can the IMF not lend into arrears even if Sri Lanka does not come to a debt restructuring agreement with private creditors?
4C: IMF Neutrality:
- – How can the IMF claim to be neutral while at the same time pressuring countries to negotiate with private creditors and continuing to impose conditions on national economic policy that have historically failed (since 1965 in the case of Sri Lanka) to produce sustainable economic development?
We hope that these questions are taken in the spirit intended. Our intention is to ensure that Sri Lankan people secure a just and sustainable settlement concerning the debt crisis and the fundamentally unequal political-economic structures, both local and global, that precipitated it. By the same token, we oppose all attempts to place the burden of the risks taken by predatory financial interests peddling “odious debt” on the ordinary people of Sri Lanka.
We look forward to hearing from you on the concerns raised above.
Best wishes,
- Charith, Kanchana, Kanishka
- Charith Gunawardena, MPhil, MBA (London)
- Ex-Elected Local Councillor, London Borough of Enfield, UNITED KINGDOM
- Kanchana N Ruwanpura, PhD (Cantab)
- Professor – Development Geography, University of Gothenburg, SWEDEN
- Fellow – Centre for South Asian Studies, University of Edinburgh, SCOTLAND
- Kanishka Goonewardena, PhD (Cornell)
- Professor – Geography and Planning, University of Toronto, CANADA)
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
