Rhetoric and reality
Friday 15th March, 2024
The JVP turned down President Ranil Wickremesinghe’s invitation to a meeting with the IMF, but some of its senior members met a visiting IMF delegation yesterday in Colombo perhaps as part of its strategy to gain political mileage. Whoever would have thought, a decade or so ago, that the JVP leaders would glad-hand IMF representatives, whom they used to condemn as agents of neo-imperialism. Their long stay in democratic politics seems to have had a mellowing effect on their Marxist ideology. However, the JVP’s change is welcome.
The JVP said, after yesterday’s meeting, that it had told the IMF delegates in no uncertain terms that a future JVP-led government would revise some sections in the IMF bailout agreement anent the divestiture of state assets, etc. Whether the IMF representatives took that warning seriously is the question.
The JVP says it will not abolish the Provincial Council system, which it went on a killing spree to scuttle in the late 1980s. It has also come to terms with the executive presidency, which it condemned as a wellspring of evil, and the open economy, which it said was the bane of the country. It has deep-sixed slogans such as ‘Death to capitalism–Victory to socialism” and forgotten the state assets worth billions of rupees it destroyed during its second uprising in an abortive bid to capture state power. It is also silent on its undertaking to abolish the free trade zones. It is therefore likely to renege on its pledge to take over the privatised state assets even if it came to power by any chance. The SJB has also said it will revise the IMF bailout agreement, but such promises are only for the consumption of the public.
One cannot but agree with the JVP that state assets must not be sold at fire-sale prices. However, the question is whether any future government will be able to reverse the current divestiture programme. Beggars are said to be no choosers. No aid package comes without strings attached. China granted Sri Lankan governments loans generously and got a port and built a port city. India made available emergency funds, in 2022, and prevented Sri Lanka’s descent into anarchy, and it should be thanked for that timely intervention, but now we have Gautam Adani knocking on the door!
Sri Lanka is in the current predicament because no action was taken to straighten up its economy at the first sign of trouble. When the SLPP government slashed taxes, waived import duties for the benefit of its cronies and resorted to excessive money printing with no action being taken to ensure the repatriation of export proceeds to shore up the diminishing foreign currency reserves, it became obvious that a crippling economic crisis was imminent. When state revenue decreases and foreign currency reserves diminish, there is no way a country can avoid an economic crisis.
True, the current economic crisis is the culmination of a process that lasted over several decades, with successive governments making contributions thereto, albeit to varying degrees, by resorting to reckless borrowing and thereby worsening the country’s indebtedness and indulging in waste and corruption. But the Gotabaya Rajapaksa regime could have managed the crisis, and taken steps to resolve it if it had heeded independent economists’ wise counsel and prescient warnings.
It is being argued in some quarters that Sri Lanka should/need not have sought IMF assistance. Nobody likes IMF bailout conditions, which are constricting and hurtful, but Sri Lanka was left with no alternative; even China wanted it to enlist IMF help. Beijing has adopted a similar policy towards Pakistan. The Gotabaya Rajapaksa administration, in its wisdom, worked out what it called an autochthonous method to resolve the economic crisis and it turned out to be something like Dhammika peniya or a herbal syrup touted as a cure for Covid-19. Gotabaya’s economic peniya proved inefficacious, and the country had to opt for a debt default, and we are where we are.
Can’t Sri Lanka overcome its dependence on the IMF and other lenders? It surely can, but the success of such an endeavour will hinge on Sri Lanka’s ability to eliminate the root causes of its present crisis, enhance its national productivity and rebuild its economy bigger and better. Hence the need for all political parties responsible for debilitating the economy over the decades to put their shoulders to the wheel and help achieve economic progress instead of playing the blame game, hoodwinking the public, and running behind foreign dignitaries to gain political mileage.
