IMF diagnostic on Lanka damning verdict – Harsha

In a scathing indictment of Sri Lanka’s governance landscape, the International Monetary Fund (IMF) had handed down a damning verdict, Samagi Jana Balawegaya (SJB) MP Harsha de Silva told Parliament on Wednesday.

Discussing the contents of the IMF’s Governance Diagnostic Assessment report, he said that the IMF’s verdict was clear: corruption had eaten into all state institutions from top to bottom.

MP de Silva said that one of the main reasons for the delay in disbursing the second tranche of IMF funds was the shortfall in government revenue as well as the sluggish progress in foreign debt restructuring. However, perhaps the most significant roadblock to financial recovery lies in the government’s persistent failure to address its deep-rooted problem of corruption, he said.

The SJB MP urged the Sri Lankan government to swallow the bitter medicine it so desperately needs. With a history of approaching the IMF for assistance a staggering 16 times without lasting success, Sri Lanka now had to adopt comprehensive reforms. The government must seize the opportunity to eliminate corruption and pave the way for a meaningful change, Dr. de Silva said.

The IMF has laid out a rigorous 16-point plan, a blueprint for Sri Lanka’s revival. Those directives, while formidable in scope, were essential steps towards transparency and accountability, the MP said.

They include establishing an Advisory Committee by November 2023 to nominate commissioners for the Commission to Investigate Allegations of Bribery or Corruption (CIABOC).

Dr. de Silva said: “This committee will ensure that the nominations for key anti-corruption positions are not influenced by political interests, which is a critical step in tackling corruption.”

Another IMF recommendation is publishing asset declarations for senior officials by July 2024, an act that brings much-needed transparency, with only 12 out of 225 MPs having disclosed their assets.

“This move will shed light on potential conflicts of interest among top government officials, promoting accountability and integrity,” said Dr. de Silva.

The following are among the IMF recommendations: Enacting Crime legislation by April 2024 to align with international standards, combating money laundering and illicit financial activities, amending the National Audit Act to hold officials accountable for the use of public resources, finalising and implementing regulations for beneficial ownership information and creating a public registry by April 2024, publishing reports on increasing competitive tendered procurement contracts, targeting agencies with low levels of competition, requiring the publication of all public procurement contracts above LK 1 billion and other critical financial information on a designated website, implementing the State-Owned Enterprise Reform Policy to ensure ethical management, abolishing or suspending the Strategic Development Projects Office Act until a transparent process for evaluating proposals is established, and enacting a Public Procurement Law by December 2024, addressing the alarming procurement and corruption issues.

Harsha de Silva said: “It is quite evident the failure in procurement and corruption with the mess that’s going on in the Ministry of Health with emergency procurement but yet no action was taken. If one may recall what happened at COPF not too long ago, when a tax holiday was given to one company for 17 years, I asked only one question: What is the benefit or revenue generated to the government? But they were unable to answer that; they removed me as the Chair of the COPF. Now, the IMF has made it mandatory to reveal the cost of such tax holidays.”

MP de Silva said Sri Lankan citizens were struggling to make ends meet while corruption remained unchecked. Professionals were fleeing the country; public trust in the government was eroding and that the IMF’s intervention was not a burden but a blessing.

“The ball is now in the court of Ranil Wickremesinghe and his SLPP government. Opposition to these measures is not an option, as they represent the only viable path forward. The IMF’s directives are a lifeline, an opportunity for Sri Lanka to cleanse its system, regain trust, and pave the way for a brighter future,” Dr. de Silva said.