International Monetary Fund

Sri Lanka’s Economic Incompetence: Don’t Blame the IMF

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The IMF agreement is much more than the USD 3 billion that accompanies it. In the overall scheme of the country’s foreign debt (now estimated at around USD 48 Billion) and overall debt at 115% of GDP, with no funds for foreign debt repayments and no foreign exchange to purchase essentials, the USD 3 Billion is relatively miniscule in the face of the mammoth task before the country. In this context, it is the four-year plan that accompanies this agreement that matters. This plan may drive the country more towards the Western world led by the USA, and even more hardship as contended by some. This contention is however based on a hypothesis and without an appreciation of the political, social, and economic circumstances in other country’s that obtained similar bail out packages, and who reportedly were driven further into an economic and social abyss as a consequence of IMF bail outs.

The question to be asked is whether Sri Lanka has any other choice other than this assistance package from the IMF, and if there is, what that choice is. Criticising the overall thrust of this plan is like refusing to hold on to a tube thrown at an individual struggling in mid sea saying one needs to know more about the tube before grabbing it.

Sri Lankans are divided in their opinion whether to regard the IMF agreement as a lifeline or a cunning plan. They hover between the two phrases “Don’t look a gift horse in the mouth” and “Beware of Greeks bearing gifts”.

Don’t look a gift horse in the mouth is an admonishment to be grateful when receiving a present and not to find fault with that present. A horse’s teeth change as it ages, and looking in its mouth is a good way to judge the health and value of a horse. To question the value of a gift is an insult. The oldest example of this proverb in English dates back to the mid-1500s, where the equine in question is called a given horse. However, St. Jerome sent a Letter to the Ephesians in the year 400, with the admonishment “Noli equidentesinspiceredonati” which translates as “Never inspect the teeth of a given horse”. It is astonishing to consider how old this proverb truly is.https://grammarist.com/usage/dont-look-a-gift-horse-in-the-mouth/

The adage “Beware of Greeks bearing gifts is heard often and is normally used to refer to an act of charity that masks a hidden destructive or hostile agenda. But it’s not widely known that the phrase originates with a story from Greek mythology–specifically the story of the Trojan War, in which the Greeks, led by Agamemnon, sought to rescue Helen, who had been taken to Troy after falling in love with Paris. This tale forms the core of Homer’s famous epic poem, The Illiad (https://www.thoughtco.com/beware-of-greeks-bearing-gifts-origin-121368 

Sri Lankans are good at looking for scapegoats. They are a nation of experts who think they know everything and are good at talking about these but not doing as much to put their opinions into action. All Opposition parties have been guilty of this, as the current Opposition is. People have consistently voted for political parties and elected them to power by not looking beyond their noses. Although no doubt said figuratively, a leader once said on a political platform to loud cheers from a mammoth audience that “if need be, I will bring rice even from the Moon”. Short term agendas rather than longer term policies have been the determinants since independence. Family and personality politics have dominated the political landscape. Allegations of corruption are rife although no politician or a high-ranking official has been indicted on corruption charges. Billions of dollars of ill-gotten money said to be stashed away in other countries are still stashed away, if indeed such funds are there. No serious effort has been made to uncover these although there are international agencies including a UN body (The Stolen Asset Recovery Initiative (StAR), a partnership between the World Bank Group and the United Nations Office on Drugs and Crime that supports international efforts to end safe havens for corrupt funds. StAR works with developing countries and financial centers to prevent the laundering of the proceeds of corruption and to facilitate more systematic and timely return of stolen assets- see https://www.unodc.org/unodc/en/corruption/StAR.html)

Many excel in hindsight analysis and criticism, but few learn lessons from mistakes. This writer and many others are no exceptions. We have all collectively led the country to where it is now. It is time to learn from mistakes and move on and look towards the future and stop scapegoat hunting.

The IMF bailout plan is not a gift. So, there is no horse nor a Greek to consider here. It is an economic strategy and an economic plan for a bankrupt country drowning in a debt vortex created by itself. It has been the only lifeline thrown at the country.

What can and should be done by political parties, organisations and individuals is to support this plan, but, if it is to be opposed, to come up with an alternate plan that would assure the country’s creditors that their loans will be repaid, how the country would generate enough foreign income to do so, how the country would generate enough foreign currency to purchase essentials like oil, coal, medicines etc, how the country would meet its domestic expenditure with domestic income and borrow only for development projects that will yield a return on investment. These critics must also spell out what they will do to stop the massive haemorrhaging that is going on subsidising entities like Sri Lankan Airlines, the Petroleum Corporation, the electricity board among others. They must either put up or shut up. What is desperately needed now is not political point scoring to continue duping the voters with no alternate plans but short-termpolitical hyperbole.

If indeed some countrieswho received similar IMF packages met with the an unfortunate fate as alleged, it is more than likely that they themselves were the cause of it. Sri Lanka too could face a similar fate if the stakeholders in the country do not own this plan and work together to make it a success. As suspected by some, if the IMF is playing a game as in Homer’s famous epic poem, The Illiad, the country needs an Odysseus to overcome such a challenge. While not suggesting or imputing that the IMF has any kind of a cunning plan, the challenge for Sri Lanka would be to demonstrate their ability to manage its economy well and do so with the assistance of all other development agencies and via bi lateral agreements but within the terms and conditions of the IMF agreement it has signed.

The IMF agreement is a four year agreement and neither the current President nor the government has four more years in office unless they are re-elected. It is imperative that a party or parties in Opposition who could well form a government at the next general election, and a future President, if the current President either does not stand for election or is defeated, works with the IMF over the next four years. An abrogation of this agreement will be the ultimate death sentence for the country. If the Opposition has contentious issues in the agreement, they should highlight these now, and work with the government to address them collectively with the IMF now, and not later. If they are opposing the agreement, they should submit an alternate plan to save the country from its current disastrous situation. Failure to demonstrate their concern for the country by not teaming with the government on this specific issue or not presenting an alternate plan to save the country from its economic abyss may even test Democracy itself and possibly the sovereignty of the country as well.

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Sri Lanka: Chamber congratulates Government on securing IMF Bailout

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The Ceylon Chamber of Commerce congratulates the Government on securing the Extended Fund Facility (EFF) with the IMF. We appreciate the efforts of the Government led by the President, the Governor of the Central Bank of Sri Lanka, Secretary to the Treasury, other key officials and independent experts who have assisted in this process. We also appreciate the bilateral and commercial creditors for providing the necessary financial assurances towards debt restructuring. Along with the initial proceeds from the IMF program, we expect multilateral agencies to also support the country by unlocking fresh financing.

We acknowledge and hail the difficult steps taken by the Government in the lead-up to securing the EFF, such as cost-reflective tariffs for utilities, tax regime changes, legislation of the new Central Bank Act and the move towards a flexible exchange rate, to name a few.The country cannot afford to revert to an unsustainable subsidy driven economy and a fiscal deficit that is financed by the Central Bank. We believe this is a crucial point for the economy, with the implementation of long overdue economic reforms acting as a vital impetus towards sustainable economic revival.

We urge the Government to prioritize focus on reforms such as tax administration, State-Owned Enterprises, trade and competitiveness, labor and land reforms, which need to be unlocked in order to pursue a sustainable growth path. The country will need to prioritize these reforms in meeting its fiscal targets, which  will be central to the IMF program and debt restructuring. In focusing on revenue, the State should look at overall productivity improvement and curtailing of government expenditure where possible. These can be achieved by ensuring data driven and evidence based policymaking that will incorporate technology and digital tools.

The country must prioritize these reforms in order to ensure a successful 17thIMF program which will complement the macro stabilization efforts undertaken. The country cannot afford any pauses in the program, or returning for an 18th program with the IMF,where similar reforms will eventually and unavoidably need to be undertaken. In this regard, we request all political parties, civil society, trade unions and the public to view this IMF program positively and support the reforms process so that the country can move towards greater prosperity with a stable economy for all its citizens.

The Chamber recognizes that the Private Sector is an equal partner in ensuring an accelerated economic recovery, and to this end will continue to support the Government in implementing progressive reforms.

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IMF’s Support for Sri Lanka: A Victory or a Curse?

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Editorial Comment

The International Monetary Fund (IMF) has been a key player in providing financial assistance to many countries worldwide, including Sri Lanka. While some may see this as a positive development, others view it as a form of manipulation by the West, which is facing economic and structural decline.

From the IMF’s perspective, they are pleased that they have been able to provide support to Sri Lanka, despite concerns about the country’s ability to implement effective policies. However, it is important to note that the IMF is not a panacea for all of a country’s economic problems. Instead, it is a business that provides financial assistance to countries in need. It is understandable that some may view Sri Lanka as just another customer for the IMF, given the number of times the country has sought assistance in the past. However, it is important to recognize that each situation is unique and requires individualized attention and support.

While the IMF may have some doubts about the policy implementers in Sri Lanka, it is important to remember that the country is not alone in its struggles. Many other poor countries around the world also rely on the IMF for support.

Indeed, President Wickremesinghe and his presidency have an enormous responsibility to steer Sri Lanka through these troubled times. As the only viable alternative to manage the crisis, he needs to take bold steps to address the root causes of the country’s economic and social problems. It is imperative that he recognizes the urgent need for social reform and addresses the concerns of the public in a transparent and accountable manner. Selling profitable institutions is not a form of social reform, whether they are under full state control or semi-state control for capitalists.

As a ‘guardian’ of democracy, Mr Wickremesinghe must refrain from curbing the liberty of the people and play a positive role in ensuring that the state management system is fair, just and free from nepotism, cronyism, and favouritism. While western democracy may have lost its luster, it is crucial to recognize that transparency and accountability are essential to creating a healthy and vibrant society. Therefore, it is essential to craft a home-grown solution that is in tune with the local needs and culture.

The IMF’s support can provide much-needed breathing space to Sri Lanka, but it cannot be a substitute for a long-term sustainable solution. The country needs to develop a centralized, efficient, and accountable governance system that can effectively address the issues of institutionalized corruption and mismanagement that have plagued Sri Lanka’s economy for far too long. This requires a concerted effort by all stakeholders, including the government, civil society, and private sector.

The Sri Lankan people have suffered for too long from a political system that has failed to deliver the basic services they need. It is high time that the political class takes responsibility for their actions and works to create a better future for the country. This will require a collective effort to build trust, restore confidence, and promote a culture of accountability that puts the needs of the people first.

It is essential that Sri Lanka learns from its past experiences with the IMF and other countries that have dealt with the institution. While the IMF can provide much-needed financial assistance, it also comes with conditions that often require countries to undertake painful economic reforms that can lead to social unrest and political instability.

Many countries that have worked with the IMF have seen their economies shrink, their public services deteriorate, and their societies become more unequal. The IMF’s policies have often aggravated existing social and economic problems, leading to a cycle of dependency and underdevelopment.

Sri Lanka must be careful not to fall into the same trap. It is essential that the government develops a comprehensive plan that takes into account the country’s unique economic and social circumstances. This plan must be based on transparency, accountability, and good governance, with a clear focus on poverty reduction and social justice.

Moreover, the Sri Lankan government must ensure that any agreement with the IMF is transparent and inclusive, with broad-based participation from civil society, labour unions, and other stakeholders. It is crucial to engage in an honest and open dialogue about the costs and benefits of any IMF program and to ensure that the public is fully informed about the implications of such an agreement.

Sri Lanka needs a new kind of leadership that is focused on building a fair and just society. Mr Wickremesinghe and his government have a historic opportunity to set the country on a new path, one that is built on transparency, accountability, and good governance. The IMF’s support can be an important part of this process, but it is ultimately up to the power of the powerful in Sri Lanka to make the changes necessary for a brighter future. In essence, IMF support cannot/shouldn’t be boasted about, as it merely acts as a painkiller that does not cure the underlying illness. 

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Challenging the IMF’s ‘China Card’: Why Sri Lanka Doesn’t Need to Choose Between China and the West

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by Our Diplomatic Affairs Editor

The whole is greater than the sum of its parts. – Aristotle

China’s involvement in Sri Lanka’s economic development has been a contentious issue, with many alleging that China is engaging in “debt-trap diplomacy” to gain leverage over Sri Lanka. However, this allegation is baseless and is nothing but a story fabricated to defame China’s global image. Instead, China should be left alone to help Sri Lanka in its own way, without any interference or criticism.

The International Monetary Fund (IMF) has the ability to help Sri Lanka without China’s assistance, as other major creditors in the Western Bloc and India have already provided written assurances for debt restructuring. According to Shanta Devarajan, Professor of the Practice of International Development at the Edmund A. Walsh School of Foreign Service of Georgetown University and a top adviser to the Sri Lankan government for economic revival, Sri Lanka has already implemented all 15 demands made by the IMF. [Click here to read his interview with the Political Editor of Colombo Sunday Times published today, 25 February 2023] Prof. Devarajan told the newspaper that, the “Extended Fund Facility could be given even if China does not give financing assurance”. Therefore, it is now up to the IMF to show its generosity and sincerity in helping Sri Lanka without playing the China card.

This is a prime opportunity for the IMF to prove its neutrality and humanity, despite being accused of playing politics on behalf of the West. The IMF has been criticized for its actions in the past, with Sri Lanka having sought assistance from the organization 16 times without success. However, now is the time for the IMF to demonstrate that its actions are intended to help poor countries uplift the livelihoods of vulnerable communities, rather than benefiting cronies and corporations that plunder the assets of these countries and store them in the West.

It is important to recognize that China’s involvement in Sri Lanka’s economic development is not a one-way street. China has invested significant amounts of money in numerous developing countries, and if the West demands that China execute specific actions over Sri Lanka, it could have a ripple effect on other countries where China has lent financial assistance. This would ultimately impact China’s economic interests and global ambitions, and the West and India should be cautious not to demand too much from China.

Sri Lanka should not be used as a scapegoat to weaken China’s footholds in other countries from East Asia to Latin America. If the West and India attempt to cause a domino effect on China’s economy by using Sri Lanka, it will strongly impact the Global South, which may be the hidden truth behind the IMF’s China card. It is important to recognize that without China’s assurance, the IMF can still offer the requested financial assistance to Sri Lanka while China continues to help the island’s economic revival in its own way.

Therefore, it is crucial for the IMF and other Western creditors to be aware of the potential consequences of their actions and avoid demanding too much from China. Instead, they should focus on providing assistance to Sri Lanka in a manner that benefits the country and its people, without infringing on China’s interests. A balanced approach that takes into account the concerns and interests of all parties involved is necessary to ensure a positive outcome for Sri Lanka and the global community as a whole.

It is unfortunate that certain groups are attempting to damage China’s strong reputation by funding allocated money to specific groups of so-called “civil societies” and utilizing empty politicians to voice against China. Such actions are counterproductive and will not bring about any positive change in the island nation. It is important to recognize that China has consistently shown itself to be a country that is willing to help other nations in times of need, without any ulterior motives. Without China’s assistance in wiping out the fascist terrorists, Sri Lanka would likely still be embroiled in conflict. In fact, Sri Lanka remains indebted to China for its provision of defense hardware, including ammunition, which was critical in the fight against the Tamil Tigers and the rescue of Tamils from terroristic control. During a time when other nations attempted to exert control over Sri Lanka, it was countries such as China, Pakistan, Russia, and Ukraine that stood by Sri Lanka to help defeat terrorism.

Not only that, China has a long history of providing assistance to developing countries, and its Belt and Road Initiative is a testament to its commitment to supporting economic development and infrastructure projects around the world. What China pursued in its international relations is what exactly a Chinese proverb says, “If you want happiness for an hour, take a nap. If you want happiness for a day, go fishing. If you want happiness for a year, inherit a fortune. If you want happiness for a lifetime, help somebody.” In contrast, certain Western countries and neighboring nations have been accused of interfering in the internal politics of other countries, often with disastrous consequences.

Therefore, it is important to view China’s actions in a positive light and recognize its contributions to the global community. Rather than attempting to damage China’s reputation, it would be more productive to work towards building stronger relationships and partnerships that can benefit both China and other nations. This would require a shift away from outdated notions of competition and towards a more collaborative approach that seeks to address common challenges and promote mutual interests. After all, the power of balance will secure our common ambitions while respecting mutual sensitivities of each other’s.

It is time to move beyond the politics of division and focus on building a more positive and cooperative relationship with China. By working together, we can create a more prosperous and stable world that benefits everyone, regardless of nationality or political affiliation. The time has come for a new era of cooperation and partnership, based on mutual respect and understanding.

Yes, it is time to put aside baseless allegations and let China help Sri Lanka in its own way. The IMF should step forward and provide assistance to Sri Lanka without playing politics or favoring one country over another. The focus should be on uplifting the lives of the people of Sri Lanka, rather than serving the interests of a select few. This is an opportunity for the IMF to demonstrate its commitment to humanitarianism and make a positive impact on the lives of people in developing countries.

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Sri Lanka: IMF’s new Jamaica?

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by Our Economic Affairs Correspondent

“The IMF’s emphasis on fiscal austerity has proven to be misguided and has resulted in economic stagnation, high levels of unemployment, and increased poverty in many countries.” – Noam Chomsky

Sri Lanka is eagerly anticipating change. Sri Lankans are tired of being robbed by many parties, be the local or foreign. Recently, politicians who were on the run have been now secured their safe houses, while innocent people are being targeted with usual measures. This has been attributed to the International Monetary Fund (IMF), a well-known international financial institution that relies on the support of others. Even those in rural areas who previously showed little interest in the IMF are now discussing its role in the country.

However, the IMF is not a charity, and it is not expected to resolve Sri Lanka’s crisis. Instead, it will provide guidance similar to an accountant overseeing the accounts of a struggling company. Unfortunately, neither the IMF nor the power-hungry politicians in Sri Lanka seem to genuinely care about the country’s crisis. We must thank Gotabaya Rajapaksa for unmasking, knowingly or unknowingly, the issues that Sri Lanka faces, and for forcing Sri Lankans to acknowledge the country’s state. If the IMF is honest in its efforts, it should explain why their interventions failed the last 16 times Sri Lanka sought assistance. Could Sri Lanka become the next Jamaica, with the IMF taking control? We must take a closer look.

No doubt, the International Monetary Fund (IMF) has been a key player in the global economy since its creation in 1944. The IMF provides loans and technical assistance to countries facing economic challenges, with the goal of promoting economic stability and growth. However, there are many examples of IMF policies and loan conditions that have had negative consequences for the countries they were intended to help. One of these examples is Jamaica, where IMF policies have been blamed for exacerbating economic inequality and hindering long-term development.

Jamaica is a small island nation in the Caribbean, with a population of just under three million people. Like many other countries in the region, Jamaica has faced significant economic challenges over the years, including high levels of debt, inflation, and unemployment. The country has received multiple loans from the IMF over the past few decades, with the most recent loan approved in 2016. However, many Jamaicans feel that IMF policies have only made their economic situation worse.

One of the key criticisms of IMF policies in Jamaica is the focus on austerity measures, which often require the country to reduce public spending and increase taxes. These measures have been particularly harmful to the poorest sections of the population, who are most vulnerable to economic shocks. In Jamaica, the government has implemented a series of austerity measures over the years, including cutting social spending and increasing taxes on essential goods such as electricity and fuel. These measures have contributed to an increase in poverty and social inequality, as well as undermining the country’s long-term development prospects.

Another criticism of IMF policies in Jamaica is the focus on privatization and liberalization. These policies have led to the sale of state-owned assets, such as utilities and transportation, to private investors. While these policies may lead to short-term gains, they can have negative consequences in the long run. For example, privatization can lead to higher prices for essential services, as private companies seek to maximize their profits. This can further exacerbate the economic challenges faced by the poorest sections of the population, who may not be able to afford these higher prices.

In addition to these specific policies, some critics argue that the overall approach of the IMF is too focused on short-term fixes and not enough on long-term development. IMF loans often come with rigorous conditions that require the borrowing country to implement specific policies or undertake specific reforms, but these conditions may not address the underlying structural issues that have contributed to the country’s economic challenges. This focus on short-term fixes can make it difficult for countries like Jamaica to build a sustainable and resilient economy that benefits all its citizens.

Well, Jamaica is not alone. There are several other examples of countries where IMF policies have been criticized for their negative impact on the economy and society.

If the IMF fails in Sri Lanka, it will be just a case study for them, but it is the fate of more than 22 million people. Who will take note of this seriously when those in power are playing modern-day Nero?

One such example is Argentina, which has a long history of economic instability and has been a frequent borrower from the IMF. In 2018, Argentina received a $57 billion loan from the IMF, the largest loan in the organization’s history. However, the loan came with strict conditions, including austerity measures and cuts to social spending. Critics argued that these policies exacerbated economic inequality and contributed to a deepening recession in the country. Consequently, according to Xinhua, “Argentina recorded 98.8 percent year-on-year inflation in January, after starting the year with a monthly price increase of 6 percent, the National Institute of Statistics and Censuses (INDEC) reported Tuesday, 14 February 2023.”

Another example is Greece, which received multiple loans from the IMF and other international lenders during the debt crisis that began in 2009. These loans came with conditions that required the Greek government to implement austerity measures and structural reforms. However, these policies were deeply unpopular with the Greek people and contributed to social unrest and political instability in the country. Many argue that the IMF’s focus on austerity measures delayed Greece’s economic recovery and hindered its long-term development.

A third example is Zambia, which has received multiple loans from the IMF over the past few decades. Critics argue that the conditions attached to these loans, which often require the government to reduce public spending and increase taxes, have contributed to social inequality and undermined the country’s long-term development prospects. For example, the IMF’s requirement for Zambia to reduce public spending on healthcare led to a decrease in the availability of essential medicines and equipment, making it harder for people to access healthcare services.

These examples illustrate the complex and often controversial role that the IMF plays in the global economy. While the organization’s loans and technical assistance can be helpful in promoting economic stability and growth, there are concerns about the impact of its policies on the poorest sections of society and on long-term development prospects. As such, it is important for the IMF to take a more comprehensive and long-term approach to its lending policies, one that prioritizes sustainable and inclusive development over short-term fixes.

True, it is difficult to predict whether Sri Lanka will become another Jamaica, Greece, or Argentina, but there are certainly concerns about the impact of IMF policies on the country’s long-term economic and social development. Sri Lanka has received loans from the IMF 16 times in the past and is currently negotiating its 17th bailout, with the aim of addressing the country’s ongoing economic challenges, including high levels of debt, inflation, and unemployment.

To avoid the negative consequences of IMF policies seen in other countries, Sri Lanka could consider adopting some of the recommendations put forward by top economists and experts in the field of development economics. One key recommendation is to focus on sustainable and inclusive economic development, rather than short-term fixes and austerity measures. This could involve investing in infrastructure, education, and other long-term development initiatives, with a focus on creating jobs and promoting economic growth in a way that benefits all citizens.

Another recommendation is to address the underlying structural issues that have contributed to the country’s economic challenges, such as corruption, inefficiency, and poor governance. This could involve implementing reforms to improve the business environment, increase transparency, and reduce bureaucracy, which could help to attract investment and create a more vibrant and dynamic economy.

In addition, Sri Lanka could explore alternative sources of funding and technical assistance, such as regional development banks or partnerships with other countries. These alternatives may offer more flexibility and a more nuanced approach to development challenges, which could better address the specific needs and priorities of the country.

Overall, Sri Lanka has a challenging road ahead as it seeks to address its economic challenges and promote sustainable development. To avoid the negative consequences of IMF policies seen in other countries, it will be important for Sri Lanka to take a comprehensive and long-term approach to economic development, one that prioritizes the needs and interests of all its citizens.

Sri Lanka, a beautiful island nation in South Asia, has been facing severe economic challenges for decades. Despite multiple interventions by the International Monetary Fund (IMF), the country’s economic crisis has not been resolved. In fact, Sri Lanka is currently seeking its 17th loan from the IMF, but there are doubts about the effectiveness of this latest effort to address the country’s economic woes. Why Sri Lanka has not been able to solve its economic crisis, and why the ongoing 17th IMF loan may lead to social turmoil without producing a lasting solution?

Sri Lanka’s economic challenges can be traced back to the country’s long-standing civil war, which lasted for nearly 30 years and ended in 2009. The conflict caused significant economic damage, and the country’s post-war economic recovery was slow. Moreover, the country’s high levels of public spending, corruption, and lack of investment in key sectors such as infrastructure have contributed to a sustained economic crisis. These challenges have been compounded by the COVID-19 pandemic, which has further weakened the country’s economy.

The IMF has been a key partner of Sri Lanka in its efforts to address its economic challenges. The IMF has provided loans to Sri Lanka for 16 times in the past. However, despite these efforts, the country’s economic situation has not improved significantly. There are several reasons why the IMF’s interventions have not been successful in addressing Sri Lanka’s economic crisis.

First, the IMF’s loan programs often require the borrowing country to implement strict austerity measures, such as reducing public spending and increasing taxes. These measures can have a significant impact on the poorest sections of the population, who are often the most vulnerable to economic shocks. In Sri Lanka, the government has been reluctant to implement these measures, fearing the political backlash that could result from public protests and unrest.

Second, the IMF’s loan programs are typically focused on addressing short-term economic challenges, such as balancing the budget or reducing inflation. These measures may not address the underlying structural issues that have contributed to Sri Lanka’s economic crisis, such as corruption, weak institutions, and lack of investment in key sectors. Without addressing these structural issues, any short-term gains achieved through IMF programs are unlikely to be sustainable.

Third, the IMF’s loans often come with conditions that require the borrowing country to undertake significant economic reforms, such as liberalizing the economy or privatizing state-owned enterprises. These reforms can be politically challenging and may not be implemented effectively if there is insufficient political will or capacity to do so.

Given these challenges, the ongoing 17th loan from the IMF may not produce a lasting solution to Sri Lanka’s economic crisis. The loan program is expected to include conditions that require the government to undertake significant economic reforms, including reducing public spending and increasing taxes. These measures are likely to be politically unpopular, and the government may face significant public protests and unrest if it attempts to implement them.

Sri Lanka’s economic crisis is a complex and multifaceted challenge that requires a long-term, sustainable solution. While the IMF has been a key partner in Sri Lanka’s efforts to address its economic challenges, the organization’s loan programs may not be sufficient to address the country’s underlying structural issues. Without addressing these underlying issues, any short-term gains achieved through IMF programs are unlikely to be sustainable.  

Sri Lanka needs a comprehensive, long-term strategy that addresses its underlying economic and social challenges, including corruption, weak institutions, and lack of investment in key sectors. The government must prioritize addressing these structural issues and work towards building a more resilient and sustainable economy that benefits all Sri Lankans.

While the IMF can be a valuable partner in this effort, the government must take a leadership role in driving the necessary reforms and ensuring that they are implemented effectively. Without a sustained and comprehensive effort to address its economic challenges, Sri Lanka’s economic crisis is likely to persist, causing further harm to its people and undermining its long-term stability and development. Consequently, no wonder if Sri Lanka becomes the IMF’s new Jamaica.  

Nothing better than take the sage words of a well-known economist, Joseph Stiglitz, “the IMF has a history of imposing harsh economic policies on developing countries, which often lead to social and economic turmoil, and are designed to favour the interests of wealthy creditor nations and international corporations over those of debtor countries.” If the IMF fails in Sri Lanka, it will be just a case study for them, but it is the fate of more than 22 million people. Who will take note of this seriously when those in power are playing modern-day Nero? Real Nero never did that, but in our time Neros, certainly will. 

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