|Wednesday, 21 April 2004|
A proven recipe for disaster
by Tissa de Silva, Convener, People's Policy Institute
Sri Lanka Joined the IMF (International Monetary Fund) on August 29th 1950. In March 2004 before the election a staff Report; Staff Statement; and Public Information Notice on the Executive Board Discussion, was issued.
This 70 pages document (www.IMF) is like a report card at primary school, where the teacher gives stars to her favourite students. Normally the teacher judges the students not by their performance but by their unreserved loyalty and behaviour.
In this instance the IMF released this report before the April 2, election with the intension, that their favourite, loyal, student UNF, would also get good marks from the electorate.
Their report was rejected by more than 65% of the electorate.
This report card of a group of staff members is amusing as well as been a disaster.
This is the type of recommendations, which during the past 54 years of interference by the IMF, World Bank, and ADB and other donors had made Sri Lanka a beggar state. Let us see some of the views in the report card.
The IMF representative had this to say on March 5:
"The political situation has grown more tense in the run-up to the April 2 elections.
Several election-related incidents of violence have occurred, and observers remain concerned about the potential for further violence as the elections near."
The people as well as the International observes had a completely different view after the elections. The IMF was all out to create panic in the international investment community and their local agents to drop the value of the rupee as well as the stock market. This was not a well studied opinion by a responsible institution. But it was a politically motivated statement so that their obedient servant the UNF will come back too power.
Now the IMF as well as the other donors will commence interfering in our people's government. Has it commenced already? Some of the Cabinet appointments as well as heads of institutions such as the Treasury, has created doubts in people's minds, weather we are back in the same old game. The main reason for the election of the present Sandanaya is the belief the people had in that the young politicians of the JVP as well as the SLFP will keep the PA of 1994 honest.
Sandanaya came on promises well spelled out in a 48-page document. Most of the items where the IMF has given the grading A and B will have to be reversed to keep with the promises. This is the peoples view.
A significant proportion of UNF voters, too from the semi, urban and rural area will want the reversing of the decisions made by the UNF Finance Minister Choksy and Secretary Ratwatte. As quite eloquently said by Ex-Minister Gamini Lokuge, "The UNF did not look to the welfare of the farmers and the workers in the past 2 years" (Lankadeepa)
The same fate will fall on Chandrika and her close band of advisors, if she implements the IMF recommendations without looking at the promises made to the electorate before the elections. It may in fact be worse. The country may return to anarchy. IMF and other donor's will have to take the responsibility.
The people are today geared with very high expectations. They want the cake to be evenly distributed.
They see latest cars in the world on our roads while they stand for hours for buses. They see their Samurdhi cut while those who robbed the State are let loose. They see the International Schools for the privilege few when they do not have teachers in Government schools.
They have to stay from 5 am to reach a doctor at the government OPD when the Government gives public land to private hospitals such as Appolo for nothing. The local graduates have no hope for employment and see the discards from the GCE local, go abroad and get degrees to join the so-called engine of growth of the private sector.
The BOI gives undue concessions to foreign investors while the Ministry of Industries gives step-motherly treatment to local small and medium industries. The IMF hails the free trade agreements of the UNF government while local exports are kept out by the West on frivolous grounds of environment and health. Pharmecuticals are escalating in price while the local manufacturing corporation, SPMC, is being sold by PERC.
The IMF staff report is an exercise in isolation. If implemented will bring immediate disaster. One has to have economic development with the people in mind. Not to expect the people to starve, today, with the hope of tomorrow.
While a few are getting at, at the expense of the majority. The IMF report card conveniently avoided the Inland Revenue Amendment Act of 2003, which was given much publicity in the last days of the election.
The IMF will have to redraft its report to suit the welfare of all. It has to be professionally done to include the political realities.
Just words on poverty reduction printed from the Towers at the world trade center office will not do.
Challenges remain. against this background, the 2003 Article IV consultation discussion focused on how to turn the ongoing recovery into a sustained high growth, raise employment and alleviate poverty.
The IMF's own data does not show increase in employment in the future but only increase in capital. Which shows a projected growth of 6 per cent, due to capital growth.
The IMF and other donors want us to import more and more capital goods but not find employment for the people. This is the growth we have seen in the last few years. That is the gap between the rich and the poor is increasing. Such a society is unstable. Is this the IMF prescription for our ills.
The solution to our problems has to be based on reduced capital growth and increased employment growth. To do this, local science and technology based on our agricultural economy has to be pushed. The UNF destroyed our R and D centers such as NERD and ITI by introducing a user pay basis.
This kept the small and medium industries out of R and D. By this action IMF encouraged the import of industrial goods from their home base in USA. The Sandanaya has promised in its manifesto, that it would lift the local industries, using local technology. The will to implement it that has got the approval of the people. IMF should not be allowed to stand in its way.
In the short term, we will have to divert from the IMF recommendations and impose import restrictions. This could start from the cars seen abundant on our roads, creating environmental hazard, and proceed to most of the consumer items dumped on our streets.
We could use the WTO's own standards of environment, health and employment articles to legally stop this import trade, under so-called free trade agreements, hailed by the IMF report. We all know the exploitation of women and use of child labour in some of those countries such as India.
In fact IMF has hailed the removal of overtime restrictions for women workers, by the UNF. Thus encouraging the exploitation of women. Will this be tolerated in the countries such as USA or Australia. There is no credibility on IMF recommendation due to its double standards.
Now it is left for us to prove that IMF was wrong and improve our economy using our own strength. The people's Prime Minister Mahinda Rajapakse elected from the South of Sri Lanka which has always been neglected, by the governments in Colombo, has to have a free hand to chose his team for this task of developing the whole country.
Produced by Lake House