|IMF at last
After months of speculation and controversy about an issue that
was more political than financial, the International Monetary
Fund (IMF) announced this week its decision to grant a US$ 2.6
billion loan to Sri Lanka, a virtual lifeline to the country’s
ailing foreign reserves.
The loan became an object of political bartering in the backdrop
of Sri Lanka’s relentless war against terror. After the final
assault on the Liberation Tigers of Tamil Eelam (LTTE) and the
ensuing humanitarian crisis in the North and East, no less a
personage than the Secretary of State of the United States,
Hillary Clinton announced that the “time was not appropriate”
for the disbursement of funds.
That led to charges of the IMF being politicised, with
Minister Sarath Amunugama going so far as to name the United
States as a bully that was trying to arm twist the IMF into
carrying out its political agenda.
After all this brouhaha, the IMF has now announced that the loan
would indeed be granted. It has not stopped the ruckus though,
as Britain this week said that “it was not the right time to go
forward with the loan” because of “the humanitarian situation”
in the country.
While the international community engages in this collective
bout of breast beating, the government has come in for some
scrutiny on the domestic front as well. Opposition Leader Ranil
Wickremesinghe, while agreeing in principle that loans from
institutions such as the IMF were more appropriate than
borrowing from commercial banks, led the critics in Parliament
claiming that the Letter of Intent (LOI) for the loan had not
been made public.
The government, we have been assured by Deputy Finance
Minister Ranjith Siyambalapitiya, will place all facts before
Parliament shortly, but we wish to nevertheless comment on the
issue of borrowing from international lending institutions.
For long years, such borrowing has been looked at with a
jaundiced eye. The left leaning parties, now personified by the
Janatha Vimukthi Peramuna, have always claimed that this was an
act of mortgaging future generations to foreign capitalist
forces. They have also claimed that most of the conditions
imposed on the country, in return for financial favours, were
unreasonable and not in the best interests of the masses.
The act of ‘mortgaging future generations’ is a philosophical
argument which we would not dwell on here. However, the
conditions that are imposed, as a result of these financial
transactions, are worthy of re-examination.
The bottom line is that the funds disbursed are a loan and
therefore, has to be repaid. No lending institution wants a
borrower to become bankrupt subsequently, as it diminishes the
chances of recovering its dues. Rather, it wants the borrower to
prosper, so that repayment is free of any hassles. The same
principle applies for billion dollar international transactions
The ‘usual’ conditions placed when such loans are granted are
that a country enforces stringent financial discipline and
manages its money frugally. There may be some welfare measures
that will feel the pinch, but that again will be in the interest
of maintaining fiscal control.
This would ensure that governments are not indulging in
whimsical welfare programmes, solely for their political
benefit, when it has been proven time and time again that such
programmes are not sustainable in the long run, even though they
may win elections in the short term.
Having traversed these ‘welfare’ avenue many times in our six
decades of Independence, and having just ended three decades of
a separatist war, we, as a nation, need to ask ourselves whether
such financial self discipline is necessarily evil.
We think not. Politicians of whatever hue are often tempted by
the lure of the next election, and they are rarely mindful of
the next generation when they draft their manifestos and make
their promises. Therefore, there needs to be some checks and
balances in the system, to ensure that they do not drag the
country into a financial quagmire.
If it is the IMF dictates that does that job, we daresay, so be
Devolution and Education
This week, there would have been consternation in many
households, as school children grappled with their term tests.
The confusion was because the test papers in several provinces
contained many howlers, so much so that the matter took up quite
a bit of time in Parliament.
The finger has been pointing firmly in the direction of the
respective Provincial Councils (PC), which have been tasked with
conducting these examinations at a regional level. And, they
have bungled big time.
At a juncture when the entire country is debating the pros and
cons of PCs and their effectiveness, in the context of
devolution, in the aftermath of the end of the war, these
incidents should be an eye opener to those who advocate PCs as
the be all and end all of all of Sri Lanka’s socio-political
We are not for a moment suggesting that primary and secondary
education should not be devolved to the provinces. We only wish
to highlight the fact that such devolution - carried out for the
sake of devolution, without the proper infrastructure or
personnel to implement it - can end in disaster. Similar
experiences abound in the health sector, where certain State
health institutions have been entrusted to the PCs.
The powers that be would therefore, do well to ensure that, when
devolution does take place, it is done in a manner in which it
would be meaningful and practical, and not just a disaster
waiting to happen.