Readers of the Sunday Times FT polled this week on the issue of the International Monetary Fund (IMF) loan say the $2.6 billion facility is good for the country but doubt whether the government could implement the tough economic reforms it has proposed.
Readers also said this is not an occasion to be happy about. “We are today so bankrupt as a nation that even getting a ' loan ' seems a matter to brag or celebrate as a great occasion rather than to be ashamed to be begging for money,” one Colombo executive wrote.
Another economist who responded noted, “The 5% budget deficit target will be political suicide for anyone. Former Prime Minister Ranil Wickremesinghe and then Treasury Secretary Charitha Ratwatte also tried but failed to keep these targets.” The email survey drew over 250 responses.
The two questions asked were whether the IMF loan is good or bad for the country, or would the government be able to keep to the targets laid out in the agreement with the IMF. On the first question 78.12% said it was good for the country while 53.12 % said the targets were difficult to achieve.
Of the 31.25% who said these targets could be achieved, there were many who said this was possible provided there is political will and direction in achieving these goals.
Several additional comments were received during the poll. Here is a summary of these comments.
On question 1:
- The loan is essential to reduce the budget deficit which is the root cause of inflation and consequently the need to devalue the currency to maintain export competitiveness.
- It is good when used for rebuilding the country
- Why do we need an IMF loan? What are the specific areas targeted for the use of this loan? Why did the Central Bank repeatedly state that the government can manage without this loan? No borrowing is good for anyone if one can manage without such borrowing. Don’t the managers of the finances of this country realise that this money will have to be paid by ordinary people who don’t have a say on unwanted spending and other decisions?
On question 2:
- Waste and corruption plus mismanagement at all levels will not permit us to achieve anything brilliant or even significant. And also let's not forget how much we have to pay back for previous loans /loan interests, etc by the year end.
- Our politicians lack the will power to make it work. Furthermore, the people don't understand the importance of balancing the budget and getting rid of subsidies.
We are so used to expecting everything free (when it really isn't and given via printing money). Having said that, I think the President has the capability of fixing this mess, he may actually do this. I wish him the best.
- The economic programme is achievable and essential to conform to our own Fiscal Responsibility commitments.
- If all citizens work harder and hold our elected representatives accountable then it can be done. I am willing to see how the Head of State will respond to the challenges after the Presidential elections in November. A smaller and a more effective cabinet, a Wesminister style governance structure, fast resettlement of the IDPs, more equitable development, re-establish the rule of law, war on corruption, indiscipline and inefficiency are what is needed.
- What are the terms and conditions of such loan? If subsidies are to be cut what is the implication to the average person. As regards reducing losses at the CPC and CEB why must the public be responsible for waste and extravagant lifestyles of those in charge of our finances? Surely we do have economists and accountants who can point out areas of waste and cut unnecessary expenditure.
General comments :
- No foreign loan is good for any country. But beggars cannot be choosers
- Countries must progressively reduce taking loans. A good example is India, our neighbour. Today India is giving money to the IMF. If a country is progressively increasing borrowing, then it is clear evidence of bad economic management and bad national policies.
- This loan is said to service other loans. So we are borrowing to pay back what we have borrowed before.
- According to the Sunday Times editorial, our children and grandchildren will have to pay back the loan. So the fathers and mothers of today, borrow and live it up expecting our children to repay. What kind of economics is this?
- The first tranche is only a part of the total of US $ 2.6 billion and it would be impossible for the government to keep to the conditions. Most countries specially without strong financial deciplines and pragmatic economic policies fail miserably to keep to the fiscal reform measures agreed with the IMF in the LOI.
It may be that the government was desperate to get the first tranche to reduce the budget deficit. It is also interesting why the President as Minister of Finance did not sign the LOI and got the acting Minister to do the honours.
- There is no way that the government would be able to convince the people that they should pay high prices for electricity and fuel as it will make it unpopular during an election year.
It appears that the reform programmes is mainly to satisfy the IMF and has no bearing on the country. If the IMF closely monitors the performance of the government it will definitely not go beyond the first tranche.