IMF: The Pandora’s box

Sri Lanka appears to be very much engrossed in a discussion of issues about evils that are hidden. Politicians, economists as well as quacks with the media are very much involved in this tangle. Today it has grown up to a level of even assuming proportions of divergences and difference of opinions conjectured to exist as conflicts among the government insiders. The subject at the centre of this issue is nothing but the IMF.

Those like us with “nothing to hide” can view this situation more complacently to express our views than many with histories of events undisclosed if revealed might cause embarrassment, and those with perceptions which they have been using to indoctrinate their not very understandable political theories. The former group are those who may be having skeletons in the closets and the second group are the ‘fire brands’ used to castigate international organisations as enemies of people to achieve their political gains. In the middle is a group that is subject to influence and pressure from those in the first category although they on their own have nothing to hide.

Since I used the ‘nothing to hide’ phrase many times my mind was dragged to a 2018 French dramatic comedy Nothing to hide, which was an adaptation of 2016 Italian film “perfect strangers”. Just to break the monotony of reading long stories about IMF and criticisms about it, I thought of taking the minds of my readers (in a lighter tone) to the theme of this comedy.

A lady learns about her husband’s shady disreputable deals (may be sexual) long after his death when she un-locked his phone messages (a lesson to all!). At a dinner party she disclosed this to a group of invitees during the casual dinner table talks. Then all agreed to a suggestion made by the host (just to spice up) for everyone to surrender their phones and start a session of sharing all messages, emails and calls to be shared by the others. As the game went on many embarrassing secrets were unravelled. The fun thus became the comedy which depicted how friendships and marriages caused suspicions and doubts among partners!

This example in my opinion is not really applicable to our situation dealing with the IMF only because the IMF has been very much involved in our affairs. Even now we are subject to their continued

Finance Minister Basil Rajapaksa

Central Bank Governor Nivard Cabraal

surveillance programs both as a member country and also as a country which has already obtained facilities under its lending programs. On 3 June 2016, at the request of the then government of Sri Lanka IMF agreed to grant a facility to the value of $ 1.5 billion under its EFF lending facility. The Government sought this facility for three reasons.

• The continuing current account deficit
• Weaker FDI inflows
• Capital outflows from the government. Bond market

This borrowing was much less than what the Sri Lanka Government borrowed in 2009 to tide over the post-war difficulties.

Now some important issues arise from this;

I. The situation the country is facing today is nothing new. The same ailments have been there previously too,

II. The much-doubted devilish influence of IMF was there too

III. Remedial rectifications have already been recommended

IV. Whether the recommendations were followed is unknown

V. The continued monitoring of the IMF has been there because the loan was released in 4 tranches and each tranche was conditional upon the recommended remedial measures of the IMF

VI. The country did not become unpalatable for human survival due to conditions imposed

VII. We have gone through such conditionalities several times during bigger facilitations before

VIII. The IMF surveillance process has and is being continued, ever since under such conditions

So are the fears about the IMF expressed, unjustly and unnecessarily confounded? And what are the new areas of concern, if any, by those critics and by those who are taboo?

The other area of doubt is the fraud and corruption element. Those who pressurise the Government to somehow go to the IMF forgetting this background are of two schools of thought.

1. The previous Government guys who sought assistance from the IMF to overcome the situation then may feel a little infra dig about the current Government trying ways and means of our choice to overcome the situation without seeking refuge in the IMF

2. Then there are others who think that opening the IMF avenue will expose frauds and corruption

The critics who harbour such concerns should know that before granting as well as during the period of utilising those facilities the country has been constantly under surveillance of their supervisory programs.

Article IV consultations, where the IMF country teams analyse governance and corruption issues and provide policy advice to combat any shortcomings revealed.

Lending programs: with conditionality to assist in the achievement of the committed Governance and anti-corruption and preventing misuse of funds;

Governance diagnostics: IMF staff making diagnostic analyses that go deep into governance weaknesses and make specific and prioritised reform recommendations to strengthen governance;

Capacity development: for IMF to provide technical assistance and training in the areas of fiscal governance, financial sector oversight, central bank governance and operations, anti-money laundering measures, and anti-corruption frameworks.

Followed by research and outreach in the areas covered under the programs.

So the IMF is already into these areas. Nothing to be done new. If the IMF has not exposed anything serious happening then it can be concluded that either such things are not happening Or, those conditions are not adequate under the present conditions.

Do we need baby feeding to carry on our governance as a country?

It is an insult to us. In addition to what has been shown to us, our own systems in place have clearly pointed out where we have gone wrong and what are the causes for the economic fall down we are experiencing. Every successive government has engaged in political manoeuvres now and again to propagate their survival process unmindful of the economic consequences. Policymakers forget that they are only the custodians of affairs. They think they are the eternal source of power and policy of a country. They are destined by turns to make or mar the fortunes and decide on the destiny of the people. They conveniently forget during times of their regimes what has to be done as part of their duties towards the people. We have witnessed these through several regimes. 

When declining trends were setting there have been advice and exposures from many quarters. The international bodies, government organisations responsible for audits as well as monitoring affairs have indicated by way of rules guidelines and supervisory mechanisms as to what has to be done to prevent further decline. These have fallen into deaf ears. Having not only allowed the downfall, debacle and destruction due to their negligence or wilful connivance, many have today turned to appear as prophets and saviours. Are we to be guided by such elements or should we help them to remain and continue in the safety of the oblivion they are consigned to. They need to appear resurrected as newborns to make people forget their previous sins.

The World Bank, IMF and the ADB have clearly pointed out what is happening in our SOE sector for a long time. Each successive regime condoned the existing state of affairs and allowed the deterioration to continue. The plight we are in is the result of this crime. None of the leaders had the backbone to put a stop and change the course directions of the SOEs. They are all facing bankruptcy serving only to finance the ongoing corruption and wastage even on the verge of collapsing. Look at the five or six leading State-Owned Enterprises. The whole country is suffocating due to their throttling. Energy, electricity, water, state banking, national airline, ports and harbours are all sunk below their nose in indebtedness making the poor and innocent public the victims of their crimes.

If a careful assessment of the total obligations of these SOEs towards the banks and towards each other, including external sources (due to forced borrowings on behalf of the State) is taken, the country will realise what a debt trap we are all in, and being pushed into, by those whom we elected to power. Do we need an IMF to show this to us? Do we need their advice to correct the waste, corruption and mismanagement in those places perpetrated by the very people appointed into those, by the State?

Dear all, we are in the middle of a mirage. Blaming each other is a first-class fraud and a deception. We are led to believe and have faith in things they promise to deliver to us in the future. Whereas they have nothing for us. Each one of them has designed their destiny at our expense. Some of the decision makers are too slow, too obsolete , outdated and do not have the ability to either grasp things happening around them Or plan and steer a course in keeping with the advancing trends in the world.

Out future generations will curse us when they hear, read and see from a distance a world where manufacturing is taking place staffed by robots, call centres will only have computers, vehicles will be driverless, food ordered on a menu will come to the table mechanically auto cooked in fully automated kitchens, shopping completely online and the human lives will depend on algorithms and computer systems. They will curse their great grandfathers and the generations that followed.

We here are using rocket science, introduction of new technology and research allocations to plunder the state funds. Our resources are wasted. We discuss audit reports of the SOEs only to expose huge frauds, abuses and mis-appropriations only, never to give our minds to new areas, new thinking and new applications. Those who are exposed for huge frauds and rackets undisputedly, are reappointed to the highest places in the same field of activity and industry. It happened and it is happening. Disgusting but it is the truth!

The media which is highlighting many sordid things observe a deadly silence on such matters because of the dependence on the perpetrators of crime.

Politicians who act as if they are at each other’s throats, ostensibly to deceive us, are enjoying our ignorance, prompting puppet shows staged in connivance to hoodwink us using persons who will do anything to save their necks from the pending predicaments against them.

IMF, World Bank and all other organisations, East or West will be of help to us, only if we maintain our friendly gestures with all. I recall the humour filled but very serious words of President Jayewardene, who on the day he presented a baby elephant as a gift to the American president Ronald Reagan, in a speech delivered to a stunned audience, “We wish to be friendly with all and the enemies of none.”