19 May, 2024

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IMF Shows It Cares More Than Government

By Jehan Perera

Jehan Perera

The oft repeated comparison between the economic and political chaos that prevailed before President Ranil Wickremesinghe took office and the stability thereafter is wearing thin. Mahatma Gandhi’s observation that preaching to a hungry man is not effective is becoming increasingly relevant in the present context in which government leaders and their supporters claim that conditions in the country are improving. This claim is giving rise to an argument that is subtly and not-so-subtly being made that elections at this time could pose a danger to these gains. But the reality on the ground contradicts these assertions. The economy has been shrinking from the time of the Aragalaya to the present. The economy has yet to make the turn. In the last quarter it shrank by 3 percent, adding to the 11 percent shrinkage the previous quarter. This was on top of the 7 percent shrinkage in the last year.

The reality on the ground is that people are continuing to lose jobs as businesses close. With businesses downsizing or closing, and the job market shrinking, people have less money in their hands. Even these lesser amounts are being further reduced due to the 10 percent price increases in petrol, diesel and cooking gas that took place last week which will have ripple effects on the entire economy. There is now the prospect of a 20 percent increase in the price of electricity, which went up by 100 to 200 percent in the past year, just like petrol, diesel and cooking gas. The World Bank has stated that the poverty level in the country, which was 13 percent before the economic crisis is 25 percent today, and is expected to rise to 28 percent in the coming year. The tragedy of the current situation, which cannot be glossed over by strong denials, is that heavy burdens are being cast on those who cannot afford to make ends meet to match government expenditures with revenues. 

Despite these sacrifices the people are making, the IMF has informed the government that it is not collecting enough revenue and needs to meet the commitments it has made to get the second installment of the IMF loan. As a result, both direct and indirect taxes are likely to increase further squeezing those who have already been squeezed to their limit. The majority who are now paying their taxes were people who were barely able to cover their expenses prior to the tax hikes. They find they cannot pay any more. It appears that the IMF is not targeting them for higher taxes. The problem is that the government is not taxing a wide swathe of the wealthiest sectors of the population and not putting a stop to corruption and tax fraud. These include not only the banks and big registered businesses, it also includes politicians, commission agents, drug dealers and unregistered businesses.

IMF Report

An indicator of the high level of uncontrollable corruption in the government at present can be seen in the ongoing saga over the health system. For months now the country’s top medical and health professionals have been complaining about the shortages of medicines and substandard medicines purchased at higher than market prices. But to no avail. There have been bland denials by the health authorities and the acts of corruption continue if media reports and statements by medical and health professionals are to be believed. Recently there was even a vote of no-confidence against the Health Minister which was defeated by the government using its majority in parliament. Instead of dealing with the problem and resolving it for the sake of the people who use the state health system, there are denials. It appears that those in the government have lost their conscience. Where there is no internal check and balance it needs to come externally and this appears to be happening in the form of the IMF and international community on which Sri Lanka is increasingly dependent for a bailout package.

The IMF has recommended sixteen priority actions in its recently released Governance Diagnostic Assessment (GDA) on Sri Lanka to address systematic and severe governance weaknesses and deep-rooted corruption vulnerabilities across State functions. According to the statement the IMF released, “The technical assistance report released last week revealed widespread corruption vulnerabilities and governance weaknesses originating from ad-hoc tax policy practices, half-baked approaches to Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT), lack of a robust legal framework and poor processes utilized in SOEs, the absence of public procurement legislation, ad-hoc tax policy practices frequently modifying tax laws, conflict of interest concerns of Central Bank managing EPF and regulating NBIFs, and absence of clear mechanisms for information sharing among tax authorities.”  The report also pointed out that “the authorities were yet to take action on recovering stolen funds.”

The IMF also stated “Current governance arrangements have not established clear standards for permissible official behavior, acted to deter and sanction transgressions, nor pursued individuals and stolen public funds that have exited the country. Regular civil society participation in oversight and monitoring of government actions is restricted by limited transparency, the lack of platforms for inclusive and participatory governance, and by the broad application of counter-terrorism rules. GDA stressed that the impunity for misbehaviour enjoyed by officials continues to undermine trust in the public sector and compounds concerns over limited access to an efficient and rule-based adjudication process for resolving disputes and hurts the integrity of the judiciary.”

Regain Support

Sri Lanka is today at risk of losing support from the international community. IMF support cannot be taken for granted any more. It requires major changes in governance, or at least evidence of a start in that direction. One of the IMF requirements is that the new Anti Corruption law should be implemented. President Ranil Wickremesinghe who met USAID Administrator Samantha Power on the sidelines of the United Nations General Assembly (UNGA) sessions in New York said that tackling corruption would take time. He noted that the Anti-Corruption Commission is currently grappling with the task of recruiting staff with formal training. Given this circumstance, it is anticipated that it will require an additional year to realize the anticipated outcomes of the anti-corruption law adoption, making the timeline for achievement approximately two years. This is too late when the IMF is demanding change now. The Bribery Act of 1954 was amended in 1994 leading to the establishment of the Bribery Corruption Commission. Unfortunately, no substantial progress has been made during the past 30 years. It is not surprising that many of our parliamentarians, some of whom are currently in the House, were unable to recruit staff with formal and professional training. 

The government’s response to the multiple crises affecting the country is to deny them. President Ranil Wickremesinghe’s interview with DW German Television saw him get into confrontation with the interviewer who asked him questions about the most serious problems facing the country. These included the issue of child malnutrition, human rights violations of the past and the investigations into the truth of the Easter bombing. The president had to defend the indefensible. The government’s answer is to push ahead with two proposed laws that are currently before parliament– the Anti Terrorism Bill and the Online Safety Bill which will give the government more power to suppress the rights of free expression and the right to protest. 

The tragic reality for Sri Lanka today is that the parliamentary majority who form the government appear to be in no mood to be held accountable for economic or war crimes as the IMF and UN Human Rights Council are urging. In these circumstances, the next installments of the IMF loan and the EU’s GSP plus tax relief will become more difficult to access, and may even be lost to the further detriment of the country and its people. If the majority in parliament are unwilling to follow the reformist path that the president needs to follow, he should consider dissolving such a recalcitrant parliament without further delay so that he has a new and less corrupt team of elected representatives of the people to work with to lead Sri Lanka to the IMF’s second tranche and more.

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Latest comments

  • 9
    0

    ‘… which was defeated by the government using its majority in parliament’.
    Why a surprise?
    Every government has been defeating every appeal, using its majority. Nothing rational ever gets thru.

    • 16
      0

      IMF shows it cares more than Silly Lankan governments ( including Millions who elect these crooks) Jehan , absolutely right , at last you got it . IMF should care more, so that, they get their money back. Rational and sensible thing, isn’t it.

      • 10
        0

        Psssss ……. let me let out a little secret. ……… Ranil is not fixing anything: not even his own problems!

  • 2
    14

    “IMF Shows It Cares More Than Government”
    Sure, it does– about ensuring that the country is in eternal debt and keeps servicing the loans without fail.

    • 15
      0

      IMF cares more than Lanka’s Silly / stupid voters , immoral and corrupt politicians, racist monks , conspiracy theorists, enablers , pseudos , countries who were not willing to loan anymore, so called friend who trapped them in eternal debts that kept servicing their previous loans , country refusing to work on any debt restructuring, mafia families, Vyathgama… do I have to mention more????

      • 0
        15

        Rattling off offensive names is no sensible response, and gets nobody anywhere.
        Read this good work on the subject: “Confessions of an Economic Hit Man”, a semi-autobiographical book by John Perkins, first published in 2004 and revised several times since– or even a good review of it.
        Then there can be an informed debate.

      • 11
        0

        Last but not least IMF cares more than those local geniuses who told us Lanka will never be bankrupt and there is no Covid in Lanka. Amidst Cabraaaal writing his own
        book / theory ” road to prosperity and splendor “, IMF / WB warned years ahead about economic meltdown and potential bankruptcy. Now they care to suggest ways to recover. ( Whereas friend promised more loans to corrupt Mafia family)

        • 0
          11

          Sad, but true that informed debate is beyond you.

    • 12
      0

      SJ,
      Yes, those who gives loans always want to get it back including China. But the government it got money should not put it on their pockets.

      • 0
        15

        A
        Do not shoot from your hip as usual.
        The loan burden was not caused by mere theft. It was a build up since 1978.
        There are informed accounts of the run up to crisis.
        The biggest lenders are private companies in N. America and Europe. their interest rates are high too.
        The IMF lets them off the hook.
        If you are in love with the IMF I will not hurt your tender feelings.

        • 6
          0

          It was built up in 1978.
          Year by year list please, from your fascist comrade Solomon to communist Hitler King, with cumulative column. Out of those, how much is the check Bathiudeen wrote for UK university?

          “The biggest lenders are private companies in N. America and Europe. their interest rates are high too.”
          Who forced you to go and get commercial loans for government projects? Anyway, which member of the Solomon family appointed you as Finance Minister of Langkang?

          The Solomon Family quit politics without paying off the debts they created.

          Remember, Chinese free trade was started with BMICH! SLFP stooges got the BMICH, gave the Hangbangtota Port. Jayawewa for Stalin Modaya Communism! Long Live Ma O’s Buddhism!

          (It was the Rowdy SLFP Royals who went to issue foreign sovereign bonds in the New York market. The same rowdies created the system for Central Bank Robberies. While they were borrowing, they invested in Greek Bonds)

    • 12
      0

      SJ – Your comment with regard to the title of this piece “IMF Shows It Cares More Than Government”, was: [Sure, it does– about ensuring that the country is in eternal debt and keeps servicing the loans without fail.]
      ~
      Anyone with common sense will know that if you take up a loan it will have to be serviced in line with the agreed terms for repayment. Otherwise don’t take up the loan. One should not blame others for Sri Lanka’s eternal debt, whether that be the IMF, China, India, Bangladesh, etc. The blame for Sri Lanka’s eternal debt lay entirely with Sri Lanka for mismanaging its economy (widespread corruption, inefficient SOEs, inadequate tax collection, misguided fiscal policies, etc to name a few). You appear to ignore this blatantly obvious truth.

      • 10
        0

        KP ” anyone with common sense ” . Isn’t it too much to ask from person with mental block.??? Lanka takes massive unwanted loans from China for an interest usually charged by Chinese pawnshops so that Kaputas can get their share of profits. Whereas since independence Lanka received loans from IMF every 4 years and was never trapped to bankruptcy. Now IMF provided us a life line and showing the way to recovery. But Lanka as in every thing else prefer continuing their old ways. For all the right reasons IMF is withholding the deal. Haven’t we heard enough from local experts.

        • 0
          11

          Here comes the cheerleader for the IMF.

          • 7
            0

            When IMF moves out China moves in with more debts. China blocked debt restructuring and IMF withhold loans fue to uncontrolled corruption, mismanagement, inefficiency and rights violations China is preparing for debt restructuring. In peak of crisis it’s China which delayed immediate help to those suffering masses.

            • 0
              0

              IMF withheld loans due to uncontrolled corruption,

      • 0
        10

        The answer is not the IMF.
        That is all what I have to say.

  • 2
    0

    MF Shows It Cares More Than Government.

    President facing Interview with Deutsche Welle should use this opportunity to any question asked not to dodge the answer he can those void of truth never ask about anything because their self-image and arrogance prevent them from doing so. Therefore, they will always remain ignorant. Giving answers is not nearly as threatening. Any one question can be more explosive than a thousand answers. IMF cares The economy has yet to make the turn and the president is rounding with its fund did not bring anything to the country on his trip.

  • 3
    12

    Ello

    IMF does not care more than the Government . They have had minimal success rate where their prescription is not accepted by the populace ex Argentina Lebanon . So that have been left with egg on their face. Government it trying to explain the bitter pill that’s all

    • 0
      14

      a14455
      True.
      But there are mental blocks that are hard to penetrate.

    • 2
      0

      I understand the IMF’s stupidity that creates their failure. The staff come out of a kind of theoretical studies that are neither tested in the advanced Western environments or even understood by the Swedish Nobel Prize board. Such a practically impossible ultra-modern.

      The failed countries’ leaders are the army men, Thalikodi snatchers, use rape as weapon and loot and deposit borrowed money in New York Stock Exchange, London Stock Exchange, Frankfort Stock exchange, Tokyo stock Exchange, Belarus, Seychelles, …. and then employ for penny and shillings Sadampi like half-baked but knows surly which side their bread is buttered.

      Neither sugar cane or Bamboo cane work for these donkeys. Even White Flag Murderer’s Thirukaivaal didn’t work. We had asked when IMF intruded into it, let them fix it themselves, because IMF’s trails had failed 15 times, earlier.

  • 5
    4

    Jehan ( Ranil’s man in Sunday telegraph) is not suitable to write articles in Sunday telegraph. He is very good candidate to be Ranil’s campaign manger in next presidential election.

  • 12
    1

    yIf the IMF cares, it would not give loans to Sri Lanka. It would insist that the corrupt monies stashed away in foreign countries are brought back to Sri Lanka. These monies far exceed the 3 billion that is to be given to SL. Why not simply get back what is estimated to be over some 8 billion dollars stashed away by the crooks? Why give money to a government headed by Ranil, who has not given back the proceeds of the Central Bank scam? Why give money to Sabry the lawyer for the corrupt Gothabaya who takes his son on a jaunt with the taxpayers money? Why does Jehan P keep writing such pitiful articles without pointing the finger at the chief of all crooks and his minion who now runs the country?

    • 2
      14

      IMF was brought into the picture when Basil R was a minister.

      • 10
        0

        SJ – You say: “IMF was brought into the picture when Basil R was a minister.”
        ~
        In the interest of greater clarity, let me restate your statement: IMF was brought into the picture when Basil R was a minister. As a minister, BR represented the government. It was, therefore, the Government of Sri Lanka that invited the IMF.

        • 0
          10

          KP
          I did not say who but when.
          Did I exempt the government from fault?
          That comment was because many think that it was RW who started the IMF chase.

        • 7
          0

          KP, “ask MS , or ask Basil ” you know what it means. As Ranil said to media , why are you asking me, about Easter??? Lankans call this a informed debate ???? Bankruptcy is a serious discussion, not a debate to score cheap points.

          • 7
            0

            KP , Ranil and Basil together are planning to abolish Presidency.????? Lets wait for their next act . LOL

  • 5
    0

    “IMF Shows It Cares More Than Government”.

    Why then the IMF not care more for the people and the country by way of vetoing the Government that is working day and night deploying all its TACTICS to undermine the Democratic Rights of the people?

    The latest in this “Tactical Move” is to postpone both the Presidential and Parliamentary Elections. Hasn’t the IMF seen this?

    Towards this, the Minister of Justice, Wijedasa Rajapakse is preparing to submit a “Cabinet Paper” seeking approval to change the electoral system. This would mean, if approved by the Parliament to go for a Delimitation process that would take at least another year or possibly two. Together with that, there is news coming from the Government side that it would take steps to abolish the Presidential system and go for a referendum. What do all these “Dirty Tactics” mean? Is IMF so NAIVE to observe and take some action to call it a day to put the Government on its toes with a view to care for the democratic system to be preserved in the country?

    • 3
      13

      D
      We got into a mess by borrowing and spending unwisely and beyond our means.
      We also fought a wasteful war.
      When a crisis was impending post-COVID19 what did the government do? Reduced taxes and imported luxury goods.
      That was suicidal.
      Running after the IMF is doubling on that.
      IMF does not care if people are hanged on lampposts a long as the country keeps borrowing and pays with interest.

      • 2
        0

        “IMF does not care if people are hanged on lampposts a long as the country keeps borrowing and pays with interest.
        Could you give a list of lamp post killing from start to its end with dates and names? So from where did the government bring the Thermobaric bombs, Chemical Bombs, Cluster Bombs which are photographed and listed in INGO’s reports? Russia?

        “a long as the country keeps borrowing and pays with interest.”
        What was the Chinese loans’ interest and what is the IMF loan interest?

        “When a crisis was impending post-COVID19 what did the (SLFP) government do? Reduced taxes and imported luxury goods…Running after the IMF is doubling on that. Could you explain to us step by step instead of proving that you are one of those dancers who complained about the stage, and destroyed 1000s of UOJ students.

        Don’t put the books’ titles you read on Google search. But bring here the points you read from those and explain to all here.
        Don’t live as a Savam for your entire life. If you don’t understand, don’t insert yourself in unwanted things. Say two times “Siva Siva” (One is to correct your past blunders, other is for the contemporary ones) lie down on the bed and sleep. Don’t suffer repeatedly by throwing stones at beehives. All readers know all the games you and your masters are experts of.

        • 0
          10

          Sorry
          I forgot that quite a few people here have a soft corner for lamppost hangmen.

  • 7
    1

    Ranil Rajapaksa Weerawansa is fast becoming a lunatic. All he wants is to stay in power knowing well that he came to become the President of the Nation through the back door as the voters not only kicked him out of the Parliament but also every single candidate in his party.

    I would like to ask what has he achieved upto now? Only thing he has done is to stop paying loan interst and captial and using those funds to pay for a mega cabinet, unwanted cluster of State Ministers and gS

  • 7
    1

    Ranil Rajapaksa Weerawansa is fast becoming a lunatic. All he wants is to stay in power knowing well that he came to become the President of the Nation through the back door as the voters not only kicked him out of the Parliament but also every single candidate from his party.

    I would like to ask what has he achieved up to now. The only thing he has done is to stop paying loan interest and capital and using those funds to pay for a mega cabinet, an unwanted cluster of State Ministers, and getting his UNP boys as advisors. Although SLPP MPs hold minister posts they are being managed by these UNP boys.

    As far as the economic field is concerned, all he has done is deliver speeches saying various investments, economic improvements, and progress are coming. However, none of these have arrived so far. Ranil Rajapaksa Weerawansa’s promises are all coming but never arrive.

    I am happy that the IMF is holding its ground and it appears very soon SL will move away from the IMF agreement and claim that it is doing so because of National Pride.

  • 4
    0

    JP
    Dissolving the Parliament at the current juncture will only ALLOW the crooked ones ( loaded with illegally obtained money) to contest the elections. New Constitution should be passed by referendum in order to keep
    uneducated uncouth criminals to become the parliamentarians.. The GoSL should do this ASAP

    • 1
      0

      Crooked ones are already swarming in the parliament

      • 0
        10

        J
        Outside too.

    • 1
      10

      “The GoSL should do this ASAP”
      Are you serious?

  • 0
    0

    Most readers of CT are hoping for the day, the country will be put on the RIGHT TRACT to achieve prosperity and peace. We can only suggests ways to do it.
    The countries that wants to meddle in our affairs find it EASY to deal with crooked ones! this applies to China USA & India especially.
    Hope the GoSL will release the draft of the NEW constitution to be released to the public in order to make it PERFECT!!!

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