Celebration of debt

Wednesday 22nd March, 2023

The SLPP-UNP administration is cock-a-hoop at the unlocking of an IMF bailout package. What is the world coming to when a government which has bankrupted a country, defaulted on debt and visited untold miseries on more than 22 million people, paints the town red after obtaining another loan on constricting conditions?

At the height of Eelam War IV, Lakshman Kiriella, who was a UNP MP at the time, audaciously claimed that onema goenkuta yuddha karanna puluwan (‘any fool can fight a war’). Similarly, one may say ‘onema goenkuta loan ganna puluwan (’any fool can obtain loans’. The government has been able to secure the IMF bailout package because it readily agreed to all loan conditions, some of which have not been made public yet, according to the Opposition. No less a person than ex-Chief Economist and Senior Vice President of the World Bank, and Nobel Prize winner, Joseph Stiglitz, has inveighed against the IMF for causing riots in the countries that have had to follow its programmes. In Sri Lanka, too, a perfect storm is brewing on the horizon with workers taking to the streets in large numbers. However, it is our failed, corrupt leaders who should be blamed for our predicament.

Ironically, the IMF happened to announce its decision to release Sri Lanka’s credit facility, on the eve of the World Puppetry Day! The grandees of the Rajapaksa-Wickremesinghe regime claim to be managing the economy themselves but they are only a set of puppets controlled by the IMF. They have to do as the IMF says, and it does not require much grey matter to do so. But care will have to be taken to ensure that they will not help themselves to the dollars to flow in. It behoves the IMF, and the nations that have been considerate enough to part with substantial amounts of their citizens’ money to help ameliorate the suffering of Sri Lankans to ensure that the government of Sri Lanka handles financial aid in a transparent manner.

It’s one thing to obtain an extended credit facility, but it’s quite another to put an ailing economy back on an even keel, and repay loans that have been defaulted on. That the IMF has agreed to provide assistance is no guarantee that Sri Lanka will achieve economic recovery. There are countries that have failed to straighten up their economies fast despite IMF help, Greece being a case in point.

Greece is vastly different from Sri Lanka in that its bailouts came from a powerful troika—the European Commission, the European Central Bank and the IMF. Still, it has been struggling to achieve realistic primary surpluses and return to investment grade. Needless to say, Sri Lanka’s task will be even more difficult, given the fact that a failed, corrupt government continues to be in power.

The failed politicians who bankrupted the economy by mismanaging it, indulging in waste and corruption and stealing public funds, are still at the levers of power. They must be salivating at the prospect of being able to line their pockets again when forex begins to flow in. Doomed will be the economy if it continues to be in the clutches of these failed, corrupt elements who have not mended their ways and are all out to gratify their insatiable appetite for power and public funds.

Now that the IMF bailout has become a reality, the people must be given an opportunity to exercise their franchise and indicate whether they have faith in the current regime, which has inflicted so much suffering on them and ruined the economy. Hence the need for the local government polls to be held without further delay. There is a massive build-up of public anger in the polity and it has to be defused if the country is to be prevented from being plunged into chaos again. Expenditure on an election is a worthwhile investment in that it helps make the irate public simmer down and bring about political stability, which is a prerequisite for economic recovery.