Beggars must be
Whenever we get foreign aid we deem it a great achievement. The recent
decision of the IMF to give us US $ 60 million was no doubt hailed
as an achievement. What's more we are told it is given because of
our good conduct! The government has got a good report from the IMF,
presumably owing to the budget proposals. The government has therefore
been successful in getting two tranches of the Stand-by arrangement
that was withheld owing to the inability of the previous government
to fulfil the conditions, the " non-management" of the economy
in 2001 and the political uncertainty that enveloped the nation in
the fateful year.
What have we
got from the IMF? A mere US $ 60 million. Even as the government
was informed of this credit, President Bush's actions had ensured
that we would be losing much more than this in the way of higher
crude oil prices. In these circumstances, the IMF credit will add
to our debt, but hardly provide any substantial relief for our balance
of payments. A four dollar rise in a barrel of crude oil would mean
an additional increase in foreign exchange expenditure of the same
magnitude as this credit. In case oil prices reach US 32 per barrel,
as it did in 2000, our balance of payments would be severely strained
and our foreign exchange reserves seriously eroded.
IMF gives any credit, it imposes conditions that it calls "conditionalities".
(An English mistake made by a high up in the IMF has been also probably
been imposed on the Queen's English!) True any credit organisation
has a right to ensure that the money it lends should be returned.
Yet the "
conditionalities" that the IMF imposes have now gone to such
extents as to compromise the sovereignty of poor borrowing nations.
No longer do the elected representatives decide how to run the health
service or its educational system. It is the IMF and the World Bank
that decides these. After all, beggars are not choosers. We are
not arguing the merits and otherwise of the proposals, but the principle
of these institutions insisting on determining basic national policies.
have gradually extended their conditionalities from financial conditions,
such as the containment of budget deficits to social and economic
policies. The insistence on the privatisation of government enterprises
is best known.
At present, administrative reforms, educational reforms and health
reforms, among others, have become a part of the conditions imposed
by the IMF to get even a pittance. The danger is not only to the
sovereignty of people and the principles of democracy. The fact
is that the prescriptions of these institutions lack contextual
relevance and ignores social and political realities.
often leads governments into great difficulties. Governments are
known to have been overthrown owing to the adoption of policies
imposed by these institutions. Sri Lanka has a very rich history
of democratic politics, socialist and welfare measures and complex
patterns of social behaviour. To ignore these would be at the peril
caused by ill considered IMF policies could ultimately defeat the
IMF's objectives too. The government must tread prudently in following
IMF policies despite the stringent financial and economic conditions
that the country is placed in. Even beggars have to be choosers.