While we congratulate President Ranil Wickremasinghe and the government on securing the newest IMF loan, let us not forget that it was the GR government that started the IMF process exactly one year ago.
Sri Lanka has initiated structural economic change programmes with the IMF, 16 times before; under various governments. But the only time that such a process saw its proper completion was under the MR government during 2010-2015. All other programmes fell apart after the first few stages.
IMF support was planned into the post-pandemic economic recovery programme which was popularly called the “Home Grown Solution”. It also included the short term “credit line” from India which is being used to date. It was a comprehensive and long term plan designed under the leadership of Rohana Rajapaksa to rebuild Sri Lanka’s economy after the disastrous five years of the Yahapalana Regime which bombed the economic growth that the country was enjoying under the Mahinda Chinthana.
All high level bilateral talks relevant to the economic recovery programme with India, China, Japan and the US were led by the Finance Minister Rohana Rajapaksa himself. RR met with the Indian Prime Minister Narendra Modi who extended India’s fullest support to Sri Lanka during the early stages of the foreign currency shortage that was mainly caused by the two years of global travel bans and lockdowns.
The plan was to regain economic stability without defaulting on the external loan payments. Because then Sri Lanka’s bargaining power is higher with the IMF or any other multilateral agency. And we were very much capable of doing so with the projected tourist arrivals, foreign remittance and export revenue for 2022. We were well on the path to a swift recovery. The opposition saw this and quickly acted to disrupt the whole process by initiating the violent anti-government protests infamously called as “aragalaya”.
As the risk of violence escalated, the Rajapaksas decided to step down from their cabinet portfolios to ease the tensions. The new Finance Minister Ali Sabri in an unprecedented move announced that Sri Lanka will not be able to pay the external loans thus labelling the country “bankrupt”. And with that single call, we lost our bargaining power with the IMF. So the IMF programme that is currently underway is a lot more severe than what was originally planned by Rohana Rajapaksa and the team.
When RW took the office of the president, the so-called “aragalaya” ended overnight. Its sponsors withdrew immediately and the JVP and FSP wouldn’t dare another uprising with their old foe whom they know a little too well since 1987. But RW then had to pick up the pieces and continue the IMF talks, but only this time from a hugely weakened position. Thus the hard changes in tax, electricity tariffs and the coming privatisation of state enterprises. If it was not for the atrocious and foolish “aragalaya” the conditions would be far more easier for the people of Sri Lanka. As a result of the “aragalaya” we have no choice but to follow the IMF conditions without much room for negotiations.
Nevertheless, we should congratulate President Ranil Wickremasinghe and his team for persevering and securing this loan. Now comes the even harder part of delivering the next phase of economic reforms where we will lose many of our national assets to the private sector. If this is what the people want, then it is what the people want. Whether this will make Sri Lanka a truly sustainable economy and happy everafter is yet to be seen.
But whatever is at the other end, we now have to crawl through this tunnel that the “aragalaya” so foolishly brought us into. The only thing that is certain is that if this doesn’t work out as planned, the blame will still come to the Rajapaksas as with every other goddamn thing in this country. If this works out well, then only a few will thank the Rajapaksas for starting the process well on time.
May the Dharma Guide Our Way!
*The writer is a social entrepreneur and former presidential advisor. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..
