Sleepless, godless, restless night fearing ‘make or break’ IMF wordView(s):
- Lanka faces economic Armageddon if the unthinkable happens at Board meeting tomorrow
If Ranil Wickremesinghe is of the nervous sort then tonight will be one sleepless, with many harrowing tosses and turns marking his half-wake-half-sleep nightmare, as he lies, in a cold sweat, fretting what the inscrutable fates have ordained for the morrow at the IMF Board’s crucial meeting.
Though IMF Managing Director Kristalina Georgieva had tweeted on March 7 that she looks forward to presenting Lanka’s brief to the Executive Board on March 20 and had even praised him and his government for taking the steps necessary for the programme to be presented, it would be hazardous to second guess the IMF Board’s final decision: and a folly to pin desperate faith on her exuberant mood swing and polite praise and rest assured it would dispel the troubled night’s nagging disquiet.
What if the Board’s decision turns out to be negative? What if some last-minute unforeseen hitch crops up to queer the pitch?
Had he walked each remorseless inch of the whole IMF six yards, had he unfeelingly imposed each cruel hardship upon hardship on the collective back of a prostrate people, and showed the glint of arms if they blasphemed at the economic altar, had he earned the sworn hate and wrath of the masses, all for nothing?
Could he put it past the IMF Board from severing the rope that tenuously tethers the burning Caucasian bridge to the other end of the cliff, while he was nervously crossing the yawning gorge mid-way and, without qualm, let him and his foster infant, free-fall to the rocky abyss below? The destitute nation’s last hope of redemption to be callously winched out at the last moment by a denial of IMF grace?
It will leave him politically wrecked, dashed among the rocky outcrop; leave the bankrupt economically destroyed nation, beyond all hopes of an early recovery, with its forlorn people doomed in despair to stage protests among themselves as a means of mass catharsis.
With an IMF ‘no’ branding Lanka as the world’s economic pariah, the nation will perforce be condemned to live on charity, and anarchy’s only answer, whatever the utopian alternatives political parties captivatingly tout to gain power, will be to seek the assistance of a regional power whose seeming largess subjugate the freedom-loving sovereign people and will hold them in the shackles of an alien sterile political creed.
In the ungodly hours of tonight’s starless dark, it will be torture without end to contemplate the terrible consequences fated to flow from an IMF rejection; and though the resulting tumultuous cacophony will render a sweet musical refrain to the anarchist ear, it will toll the solemn funeral dirge for this island people who will not need to rhetorically ask for ‘whom the bells toll’ for they will know, it tolls for them.
But what if the much hoped, much prayed, much expected finally manifests for real on Monday? What if the Board gives its optimistically awaited seal of approval?
Though he will be spared the nightmare from revisiting the following night, too, the one-year storm-wracked journey to reach the forbidding IMF’s inner shrine will seem like a cakewalk considering the tortuous road and challenges ahead. The IMF blessing will not mean we have cleared the woods as yet. It will merely be another hurdle the Government has jumped in this grueling marathon to reach the elusive IMF Grail.
At least, if the IMF deal is approved tomorrow, the expected release of the first tranche of the 2.9 billion dollar facility will be a welcome breather for the nation that had for long felt the watermark rise above its nose. But for the alarming tide to recede, Lanka will have to strictly stay on the IMF’s chartered course. Any deviation from the IMF Board’s straight and narrow, will risk Lanka hitting the rocks, shipwrecked again, with none to answer her Save Our Souls call.
Immediately, as per the IMF accord, Lanka will need to restore debt sustainability; with debt restructuring with creditors being the most important requisite of the exercise. It will be time when hard-nosed negotiators roll up their sleeves and get down to brass tacks with one focused purpose to fight for their quarter and gain the best deal possible for one’s own State.
Now comes the round table pow-wows, not the peaceful Native American kind but resembling more their before battle war-war tomahawks’ dance version. It will be attendant with arm twisting, ultimatums, diplomatic tactics, quid pro quos, and cunning stratagems devised to trap the unwary, fraught with all the dangers of landing face down in the mud, and conducted in the backdrop of bankruptcy, with the fallen held to ransom by the mighty. It will also be surrounded by suspicion, mistrust and backstabbing.
The President’s first task even before the IMF greenlight, was to allay the fears that would stalk creditors’ meetings. On Tuesday, for what it was worth, he wrote an open letter to the main creditors, Japan, India and China and to all the commercial ones as well, assuring them: first, of transparency, second of the need for equal treatment, and third, of the need for ‘equitable sharing of the debt burden’. It was his testament of good faith.
Japan was the first to agree to restructure her debt as the President announced on January 14 this year. India swiftly followed in the same week. On January 19, India’s External Affairs Minister Jaishankar arrived in Lanka to announce the good news that India had on January 16 extended their financial assurances to the IMF to clear the way for Sri Lanka to move forward to recovery and had decided ‘not to wait for others, but to do what is right’.
Three days before the public announcement, India had done the needful by dispatching her financial assurances direct to the IMF as protocol demanded. Thus, she became the first nation to solidly support Lanka‘s effort at the IMF. Her actions spoke louder than the mumbled words of China whose spurious claim to being ‘good friend’ to Lanka depends on whether its sunshine or rain.
Unlike Japan or India, China has been the odd one out. Right from the start, she had refused to play ball with the rest, preferring to carve out her pound of flesh from Lanka’s moribund carcass on her own terms. Soon after Lanka went to the IMF for a bailout loan and financial assurances were required from all creditors, China has striven to strike her own deal, blithely ignoring the equitable principle of sharing the load equally between all.
Initially, China’s proposal was for Sri Lanka to repay her existing debt to China in its entirety. Simultaneously, China would grant a new loan, equivalent to the debt repaid. Under this quaint mandarin scheme of settling old scores with new liabilities, Lanka would receive further grace to repay the new loan and, therefore, not be in default to China anymore.
But this offer fizzled out when it became starkly clear that it wouldn’t pass muster with IMF’s laid down criteria on restructuring debt. China had pushed her luck to secure – and she had every right to do so in her own national interest – the best terms possible by playing the lone rogue without the rest of the creditor pack.
In the same week that both Japan and India had shown positive responses, a top-level Chinese team was busy in Colombo adding the final touches to a new ‘standalone’ offer. Not to be outdone in the international goodwill stakes, China sent her financial assurances to the Lankan Government.
As the SUNDAY PUNCH of February 5th commented: ‘China appeared to bow to international pressure by announcing that she was joining the creditor’s high table but the small print revealed all she offered to bring to it was a two-year moratorium on a USD 2.7b debt, with the balance mid and long term loans of USD 5b to be negotiated with Lanka alone.’
This, too, failed to win IMF acceptance.
Then on February 28 came the good news of a Chinese miracle. China seemed to have given acceptable financial assurances, though no details of those assurances have so far been revealed. The President told Parliament, ‘Lanka had received the all-important financial assurance from China’s Exim Bank on Monday night, and we sent it that same night to the IMF.’
China, who played the lone wolf, up until then, appears to have returned to the fold. But has she, really? Or has she stealthily lined up first for special dispensation?
In the first paragraph of his open letter to all the creditors, the President encapsulates two main ingredients that will allay creditor fears, namely, equitable burden sharing and equal treatment for all creditors. However, in the second sentence of the same para, he states: ‘To alleviate any legitimate concern in that regard, there are commitments that we can make to those of you willing take action ahead of others’.
What in the world can this possibly mean?
Does it mean that if any creditor has a strong grouse against sharing the debt load with others which she, severally or jointly with Lanka, considers justifiable to hold, any special proposal she has of her own to make will be duly taken into account and accepted as part of her individual debt restructuring, provided she lodges it before the others?
If so, does it mean that all the noble ideals expressed in the first sentence, of equal debt sharing and receiving equal treatment, stand negated in the second? That, despite the high-flown babble about equality, a sovereign creditor’s debt restructuring will be tailor-made to suit the creditor’s cloth? Custom designed according to individual specifications, strictly on a first-come-first-served basis?
This is further reinforced in the subsequent para which deals with the all-important commitment to ‘transparency’. It says: ‘We commit to communicate transparently with all of you on any debt treatment terms that are agreed with any creditor or group of creditors, before being formalised, in the same vein, we commit to report regularly on our indebtedness’.
So ‘bespoke debt restructuring’ Rules Okay if made first, and if the exclusive dispensation, the special privilege granted to one for being the first to ask, is told to the others later before it’s finalised, in the same way that Lanka has undertaken to inform them of the current extent of her indebtedness?
However, a limit is set to any favouritism shown towards an individual creditor. The second section on ‘equal treatment’, makes clear that debt service to any creditor will not be resumed unless it is within IMF-supported parameters. The third section on ‘equally sharing the debt burden,’ holds that though some special privileges can be given to a sacred cow, dwelling amongst creditors, the terms shall not be more favourable than the ones offered to the rest.
But will not these qualifying statements, the ambiguity as to the exact degree and nature of exceptions granted, the vagueness of the ill-defined boundary lines that unreliably seek to delineate the permitted scope of action, the ambivalent air that blurs and fogs the message of equality in the open letter, serve only to heighten creditor fears rather than allay them?
It may even lead to increased quibbling and to open warring as sovereign creditors interpret its indistinct terms, according to their own national interest, at bankrupt Camelot’s newfangled round table of supposedly equal knights.
If all goes well with the IMF decision on Monday, President Ranil Wickremesinghe can look forward to a welcome respite tomorrow night from the ordeal of tonight’s restless sleep. But his relief will be but brief. The old ghosts of Christmas that once haunted old Scrooge so much, will now return, from two centuries past, to taunt him endlessly in gaunt Lent, a trying time when sacrifices must be made before the expected day of economic resurrection.
On the international front ceaseless torrents of torment over the turbulent process of debt restructuring, with determined Shylocks out to extract their legally entitled pound of monetary flesh to the last ounce and dime, will rise to gnaw and keep him awake in the godless hours to rob him of half a night’s restful sleep.
In the moonless, starless, desolate nights to come, the other half of the remaining night will be stolen by a spine-chilling force of agitated demons from the domestic domain, returning from raging protests to commandeer his sleep with their eerie demand for his guts for garters that makes him break out in cold sweat, and crying to his deafened ears to put a speedy end to their hell sent hardships, they must perforce endure, under his insensitive rule and reign.
How much lighter will the Parliament crowned head lie, how more tranquil his sleep will be, should mass protests abate for fewer causes to rebel against?
This may come to pass if, in the self-same manner he issued last week an open letter to all international creditors, assuring them transparency and equal treatment at the debt restructuring table, he proclaims in an open gazette to all Lankan citizens, enforceable, unqualified guarantees of transparency in government, equal law enforcement, holding of constitutionally scheduled elections, and the equitable distribution of the national wealth, to confirm the commitment to good governance.
As Plato said over 2000 years ago: ‘Where the law is subject to some other authority and has none of its own, the collapse of the state is not far off; but if law is the master of the government and the government is its slave, then the situation is full of promise and men enjoy all the blessings that the gods shower on a state.’
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