Is the IMF a Member of the UN Family?

by Dr Sarala Fernando

The UN Secretary General seems to think so when he recently urged the Security Council and the Bretton Woods institutions to undertake reforms. Yet as the IMF programme unfolds in Sri Lanka one can see the divergence in the methods and objectives deployed by the IMF with its emphasis on domestic fiscal reforms and the UN which is advocating sustainable development, strengthening of health, education and protection of the environment and addressing global emergencies like climate change.

The mismatch is reflected in the growing chasm between the government and the public. The government had hoped that after Covid, Sinhala/Tamil New Year would be held in grand style this year, even providing funds to government institutions to organize events. Contrary to such expectations this year was marked with an absence of the usual cacophony of celebration. Instead of fireworks, the regular tv and radio counted down the auspicious times. The public was protesting the escalating cost of living as a result of new taxes, rupee depreciation causing food inflation, closing of enterprises and loss of jobs under the current IMF programme.

Reports galore on the increasing “misery” level with the deterioration marked among the most vulnerable under five-yearnold children, while women appear to be among the most affected whose plight, suicides, domestic violence, despair, are shown on live tv every night. Added to the woes it seems a sort of apathy has gripped the working people – that is those who have not been able to go abroad – seeming to prefer to voice their grievances and sink into depression rather than buckle down to work harder for more pay. Fortunately in Sri Lanka in time of any crisis, there is a huge network of humanitarian relief provided by the private sector, religious organizations, NGOs and concerned individuals which is making up for what the government cannot do.

People are asking now about the real cost/benefit of the IMF deal especially since it turned out that a substantial amount of the first tranche went back to the multilateral banks and bilateral lenders like India to meet outstanding debt repayments, as part of the IMF conditionality. In contrast, Bangladesh made the first positive move, offering to defer debt repayment on their $500 loan for another six months followed by India offering one year’s deffered repayment on their billion dollar loan.

The government argues that the IMF deal is a seal of approval opening the way for more assistance from multilateral banks and bilateral investors. But multilateral assistance has been slow to disburse in Sri Lanka such that when Covid hit, the World Bank just canceled their unutilized projects and redirected balances for the urgently required vaccines (in the haste, cancellation may have included expenditures already made by the government and not yet forwarded for reimbursement).Now the ADB has done the same, repurposed unutilized grants for emergency assistance of $350 million. For multilateral assistance to be well utilized there must be a strong domestic disbursement tracking system in place for timely reimbursement –has that been put into place and has the IMF provided necessary advice on that?

An early catastrophic consequence of the recourse to the IMF has been instead of strengthening human capital, there is an exodus of skilled workers and professionals for foreign employment leaving Sri Lanka’s flagship health and education system in dire straits, beset by strikes and shortages of equipment and essential drugs. Worse still, it is a blow to the national psyche where robust national health and education systems had given Sri Lanka its high social development standards, quoted as an example in early international indexes like the PQLI.

After the tsunami hit, our medical services responded immediately and prevented epidemics, hailed by WHO as exemplary. Now, young doctors well trained virtually free of charge in Sri Lanka, are leaving in droves attracted by study offers converted to work visas in overseas countries . Encouraged by the government release of foreign exchange for educational purposes, Sri Lanka’s students are facing a barrage of advertisements from foreign universities judging by the press advertisements and other inducements like work visas and permanent residence status upon graduation. There was even one advertisement recently by a foreign educational institution scouting for underage students with the added incentive of visas being provided for accompanying parents!!!

Has the IMF considered how focusing on revenue is disastrous for organizations like zoos which need not to boast about raising visitor revenue but rather on how they care for the animals in their charge? A similar situation exists for wild life parks and cultural triangle sites which are now encouraged to focus more on visitor revenue than on protecting the treasure in their charge. It is not only the family silver that is being put up for sale but even the wild animals are under threat.

The Agriculture Ministry has even entertained a proposal to export our wild monkeys for lab experiments and has been taken to court by a number of voluntary organizations, for this atrocious proposal. Now the Ministry of Agriculture is giving more firearms to farmers to kill monkeys, peacocks, wild boar etc claiming they are pests. What an example at this time of Wesak and Poson when the emphasis should be to highlight the Buddha’s message of compassion to the animals!

Having come out of two bloody youth insurrections, do we need to develop a gun culture in Sri Lanka or should we pursue UN sponsored programmes to collect and destroy small arms and light weapons? A domestic gun manufactory in Kadawatha has even started to advertise its wares in the local papers. Is there some connection between this new manufactory and the recent government initiative to promote gun distribution to farmers? Those concerned with national security would agree that the need of the hour after the end of the armed conflict is to reduce the numbers of small weapons in the hands of the public.

If culling is the only option, should not this be handed over to the military or police which is trained in the proper use of weapons? Compare our failed policies to the success of the wildlife campaigns in India under Prime Minister Modi with tiger numbers rising and parks well patrolled and conserved which has given the Indian Prime Minister excellent credentials internationally and a domestic political benefit as well, helping to draw the youth voters in India who are most interested today in nature and wild life protection.

The IMF with its focus on graphs and paper figures also needs to consider whether the value of tourism should be calculated in tourism arrival numbers and revenue forecasts or on goals of sustainability such as installation of renewable energy and recycling? Should unsolicited attractions like cable cars be entertained when unusually intense rains caused by climate change are causing the hillsides to collapse and what is required is more regulation to control construction in vulnerable areas? Forest conservators whose prime duty should be to protect the upper watershed from where all our major rivers derive, instead are being asked to sell off residual forests to raise revenue without a thought of the priority to increase forest cover to combat climate change as agreed under UN auspices.

As for bilateral assistance, sadly we hear from the press only about the controversial unsolicited projects, the return of the costly light rail system once abandoned due to protests from our transport specialists and a barge mounted nuclear power project apparently ignoring the perils of contamination from the worst maritime disaster experienced in Sri Lanka, Express Pearl. Following the IMF lead, the government focus is only on collection of compensation, yet what is needed is tightening of the regulations on carriage of hazardous materials as suggested by experts. Maritime zones around the country should be strictly protected and passing ships monitored for dropping plastic waste, excess oil etc in our waters as discussed under UN auspices.

Under the IMF raising revenue mantra, the government has lined up a list of failed SOE’s for sale or restructuring but has the IMF shared experience on how to do this with minimum social disruption? Why privatize strategic ventures like Sri Lanka Telecom which is a strong vibrant organization making profits and providing a good service? As a consequence its staff are demoralized and worrying about whether there is some deal already in the works for the new owner and whether that party will be interested in building the organization or just taking out its profits as quickly as possible.

Inevitably the discussions turn to queries of how geopolitics will play given the need to pay off the debt owed to India. It seems there are Indian companies lined up already to purchase these government assets, one such major player being the Adani group once brought to Sri Lanka as a “prestigious” investor subsequently smeared by legal challenges. The larger question that looms is the anxiety of the public over the growing Indian presence in our economy which if mishandled will become a major bilateral headache.

The government argument was that with the IMF nod of approval, it would open the path for new foreign investments, multilateral and bilateral. This approach has been contested by the public suggesting alternate domestic options ranging from moving to a knowledge economy including music and cinema exports, debt for nature swaps, bringing back “stolen” assets etc. In other words, their message to the government is that it should look inwards for domestic solutions instead of the old pattern of depending on foreign assistance and incurring more debt.

To restore its credibility, the government could begin by moving on the long overdue Ministry reorganization– finally let there be agreement on a fixed number of ministries with fixed locations which will facilitate public access. This reform has been stagnating since the time of Lakshman Jayakody who visited the Indian National Planning Commission for advice. A proposal worth considering is merging the Foreign Ministry with the Ministry of Trade, which has been accomplished in Australia for example quite successfully.

Consulting a respected Australian colleague, his comments were as follows: ” the Canberra amalgamation between foreign affairs and trade was so many decades ago that it now seems totally natural. At the time it involved a lot of pain and was divisive but time elapsed has more than demonstrated that it is a natural alliance and very sensible. Indeed much of the serious stuff and careers are now made on the trade side of the house. Our HC in Colombo would be able to obtain the various reviews etc but in short it’s been a huge success. We have two Cabinet ministers and two junior ministers to make the workload bearable.”

The Government can also do much more to cut down waste, requiring government ministries and agencies to give up rented buildings and declaring a moratorium on new building construction in favour of better usage of existing facilities. Seeing the shortage of beds for cancer patients in Anuradhapura main hospital and a building project which is stagnating, one wonders whether those emergency treatment centres opened for the Covid could not be repurposed to fill urgent health sector needs? Official reports suggest there are many unutilized building assets, empty small schools without teachers or students, unused small hospitals without doctors or proper equipment, which could be converted to support the morale of local communities.

As the IMF officers sit in far away offices and draw economic models on paper, they need to face the human predicament of those undertaking their reform programme and the need for conformity with UN expectations. The IMF is also learning and it is good therefore to note this time around that the visiting IMF team in Sri Lanka is meeting and facing questions from the public, the press, trade unions and opposition parties. Elsewhere in the world political leaders are pushing through unpopular measures and paying the price, like in France where as a result of pension reforms it seems President Macron is now unable to walk the streets without being accosted by protesters and heckled.

Little wonder that no elections are likely to be held in Sri Lanka in the near future and a mirage is being created by speculation over possible candidates for a quick Presidential poll. Fortunately for the IMF it has a charming Managing Director able to reach out to political leaders and with a friendly public image, a stark contrast to her stony faced officials!

(Sarala Fernando, retired from the Foreign Ministry as Additional Secretary and her last Ambassadorial appointment was as Permanent Representative to the UN and International Organizations in Geneva . Her Ph.D was on India-Sri Lanka relations and she writes now on foreign policy, public diplomacy and protection of heritage).