Worse than Shylock, did you say?
By N Sathiya Moorthy
If someone thought the IMF was the last resort of nation’s facing an economic crisis, then you are mistaken.
Of course, ask the average Sri Lankan, he would tell you how this time as ever before, IMF conditionalities for loan-disbursements end up pushing costs and prices, and pushing down the real value of their earnings, daily, weekly or monthly. Those earning annually do not have to care one way or the other though they too would feel the pinch in very many small ways.
Here now comes the icing on the IMF cake, if it could be called so. According to recent reports, the country will be paying two kinds of surcharges on the loans obtained from the IMF. One is based on the amount borrowed by a nation and the other is on the time-duration for which it is borrowed.
It is not just about the surcharges that the nation would have to pay the IMF this time round. It would also be interesting to know how much the country had paid as surcharges in the past – and also the amount borrowed.
The long and short of it is that the IMF’s terms for doling out loans to nations that are stuck in the middle, whatever the reason for their failure in the first place, sounds usurious, to say the least. In another time and context, Shakespeare personified it in the character of Shylock.
Because we are living in the 21st century and the IMF lends money to governments that are impersonal in character and content – and not to individuals made of flesh and blood, they may not ask for a piece of flesh from near the borrower’s heart, as Shylock alone was known to have demanded. There are no Portias here to tell the lender to take his pound of flesh but without dropping any blood from the borrower’s body-part.
Cursed either way
That is what is has boiled down to, now. For those familiar with Third World democracies, the way the IMF bleeds the nation and the population – the reverse is true even more – the IMF-inflicted wounds on the economy are going to bleed out the common man than their corrupt politicians had done earlier and would do so later. It comes all at once, and the price is too heavy for nations and governments to pay.
It means only one thing: You are cursed if you do not get IMF loans. You are cursed even more if you get IMF loans. In contemporary Sri Lanka, the lack of popularity or unpopularity of President Ranil Wickremesinghe – or, perceptions thereof – owe to the higher costs and prices that the IMF loans had entailed since he came to power in 2022.
Definitely, the whole of Sri Lanka celebrated Wickremesinghe when he boldly rushed to take charge of the nation that was running around like a headless chicken. He put the head where it belonged and put his own head where it should be. He stabilised the economy, yes, but in doing so, he also seemed to have put his head on the IMF chopper.
If he were to contest the presidential polls due later this year and loses it, it would not be because his UNP has become too weak for any poll campaign. Instead, it would be because of the price and tariff increases that the IMF conditions have entailed – and the fall in the real value of the rupee, which adds to the common man’s woes, on a daily, weekly and monthly basis.
According to reports, even middle and upper middle class families, whether in urban centres or rural backyard, have had to end up sacrificing a meal, or at least a second dish, each meal, owing to the price-rise. The poor, surveys have shown, have cut down on food intake by adults for families to send their children to school, thus underlying the importance the nation’s population still gives for education.
Aspirational generation
Throughout the past, whenever the government had taken loans from the IMF, the incumbent leader and party have lost elections. Better or worse still, the one that has followed the incumbent had come on the promise of cutting down on prices and tariffs, whether such promises were implied or not.
At the other end of the economic revival story is the post-IMF elected government would create more government jobs that would ensure higher family incomes. There will also be re-negotiation of existing salaries with trade unions. If the outgoing government had already done it, then the successor would have no choice but to create more jobs.
The figures are as shocking as they are tantalising. If the UNP government cut down jobs by more than half to six or seven hundred thousands, the SLFP, on return to power, would put back the original figure – say, 1.3-1.4 million. A successor UNP government would claim to have put the job-strength at the old figure, but no one asked how.
In a way, it made sense in a nation overflowing with an aspirational generation of youth, whose numbers only kept growing. Gone were the days when governments could dampen their spirit by controlling the number of university seats through decades. With only the government and the public sector being the main job-providers that could churn the nation’s economy, too, job-creation in their hundreds of thousands made sense – and nonsense.
Nonsense, it was, because the government did not find ways to productively invest their earnings into capital-building of one form or the other. The government also did not acknowledge that there were limitations to the nation’s economy and market for attracting investments of whatever kind.
Inherent strengths
Yes, the temptation to compare Sri Lanka with the larger Indian neighbour as the fiscal crisis in the larger country hit the nation’s pride as nothing else had – not even the defeat in the China War of 1962. Feeling humiliated, India never walked that path again.
The nation opened up to foreign investments and the like, but it also had the inherent strengths like natural resources and markets, both of which Sri Lanka lacks now and will be so, for a long time to come. Sri Lanka, if anything, only has inherent and also inherited weaknesses.
Despite making all the right noises, the country has not been able to attract big-ticket investments over the past several years, especially in the post-Aragalaya phase, only because the nation does not have much to offer in the respective departments.
All of it means only one thing. Sri Lanka has to do serious tight-belting and consciously, so. If the government is doing it right now, it has not convinced the people about the need for the same. It can lead to a massive exodus of population, which according to reports, has already begun in the professional classes among the majority Sinhalas. No thanks to the ethnic war, the Tamils have been doing it for the past many decades.
The question is this: Does the Nation want it? If so, does it understand the meaning and consequences of the same over the short, medium and long terms? Maybe, the President, in all fairness, could appoint a committee of experts, to study the multiple issues and also come up with reality-checks and solutions, in reports that the common man too can understand.
If Wickremesinghe wants to name it a Presidential Commission, so be it. If Parliament wants to appoint one on similar lines, so be it. It is not about who does it, but it is done before it becomes too late, one more time.
(The writer is a Chennai-based Policy Analyst & Political Commentator. Email: sathiyam54@nsathiyamoorthy.com)
