Fulfilling IMF demands may not end our woes

In a front-page article of The Island of 14 July 2023, Dr. Howard Nicholas has given Sri Lanka some good economic advice to help overcome its problems. Dr. Nicholas is an eminent economist, lecturing in Holland.

He has serious reservations about the effectiveness of the IMF advice and its proposals to cure Sri Lankan of its economic distress. The IMF track record is mixed – its remedies are not always successful. He says that Sri Lanka needs to seriously assess their position, themselves because this government is only making small changes that mostly are not relevant to the needs of the hour.

Quote: “Apart from privatising state-owned enterprises (SOEs) the government is not doing anything” End Quote. By this he means that no-one is getting to the root of the problem(s). He points to Sri Lankans chronic trade deficits over the period of the last 30 years.

The system currently is where parliamentarians rely on financial inflows from tourism and workers remittances from abroad. But both of these sources of income take a nosedive for every world recession event – sending them scuttling for banking loans.

The root cause of the problem is all the trade deficits. But parliamentarians seem to have little interest in boosting exports to help balance the books.

Dr Nicholas said we must initiate projects that take us along the development of export orientated industrialisation.

I, myself conclude that if only Sri Lanka could boost exports including manufactured goods for export, this would also have a great beneficial effect on employment and jobs. It would expand the economy with all its trickle-down benefits for the economy.

The implications drawn from what Dr Nicholas is saying is that until export revenues increases, Sri Lanka will be in dire straits.

Priyantha Hettige