Should we go back or move forward?
– Former Professor Department of Economics, Vijithapure Wimlarathana Himi
The IMF agreements were inked after a year of negotiations during a time of intense crisis in the country. If we are able to meet the IMF’s terms before the deadline, we can even withdraw from the agreement; but only if the conditions are met. There are other stakeholders involved.
Borrowers can negotiate with the lenders and come to some agreements. There is another way, that is, it can be done with lateral withdrawal. But if there is a crisis in the country again, it will take a long time to negotiate. It is very clear to us where such countries are today. Zimbabwe and Ecuador withdrew from the IMF several times. If we can’t stay on these goals, we can make small changes. In such cases, it should be discussed. We can also negotiate with other parties including commercial loan bilateral creditors. But everyone should think about whether we are going forward or taking the country backwards.
Specific target cannot be changed
– Department of Economics, University of Colombo, Prof. Priyanga Dunusinghe
Although there is some possibility of changing IMF agreements, it is a challenging task. It is necessary to find out whether it is possible to achieve the economic factors related to Sri Lanka and achieve them in a way that does not hinder the basic goals. There are many adverse effects if they are changed, especially for local and foreign lenders, and investors will have some kind of uncertainty.
Also, the IMF will not provide loan facilities until negotiations are completed.
There may be adverse effects on the economy. We must achieve the goals set by the IMF to create sustainability. But the means to those ends can be changed. That is, the matter of which taxes are increased or decreased can be considered. Tax can be increased when earning. It can be done in agreement with the IMF. But specific goals cannot be changed.
If a country defaults on its loans, all the development schemes that are being implemented at that time will be stopped midway. According to the situation, we can expect a positive impact on economic development and security in resuming the development projects that had been stopped in the middle. To create a good economic outlook, to create credibility for foreign and local investors, for the entire people, some credibility will be created in the gradual occurrence of the economic recovery.
Today, with the IMF, we have reached financial stabilisation and started debt restructuring. In the future, many comprehensive reforms will have to be done and we must carry them forward. If adverse decisions are taken for the sake of gaining political power, if there is opposition to these reforms, it is very clear what will be the final result.
This ongoing economic reform may be disrupted. It may cause the biggest obstacle to Sri Lanka’s economic stability in the future.
Therefore, care should be taken to ensure that these reforms are not affected by the upcoming political changes. No matter which way the political power flows, these necessary economic reforms should be implemented in the country. We can no longer promote “welfarist” economic reforms. This economy cannot be built on subsidies. All political parties should understand this. Welfarist populist political promises should not be implemented.
These agreements cannot be changed willy-nilly
– Former Jamaica University of Technology Professor, Pratibha Mahanamaheva
There are several reasons why this agreement is difficult to change. There were economic plans under many governments in this country; the course of action changes with each Government. No matter who comes to power, it is difficult to change these things. This should be sustained until the economy is at some stable level. If there are any conditions, we cannot change them forcibly except via negotiation and consensus. An economic development bill has been passed in Parliament.
The Anti-Corruption Act has been brought. No matter who comes to power, the incoming Government should make some sort of compromise. This country must not go backwards again. This convention cannot be completely broken. Until 2027, we will proceed based on the existing IMF agreements. According to that foundation, an agreement will be reached in 2024 and it will not be resolved by disrupting it in 2025.
No matter which Government comes to power, these agreements cannot be changed like that. It is necessary to move forward based on their conditions. What should happen at this moment is to agree with the IMF conditions to build the country rather than changing the conditions. The method that brings dollars to this country is the export economy. Now we don’t pay the debt. We need to pay off the debt in 2027. What we need to do is develop tourism, garment industries and diversify exports. It is necessary for everyone to aim for the development of the country at this time.
IMF does not dance to our tune
– Department of Management, University of Peradeniya, Prof. Milton Rajaratne
Changing conditions is not a successful strategy. Everyone contesting the elections against the Government says these IMF conditions should be ignored. As I see it, this is not a question of politics but the country. The IMF is not in a position to bargain more. We are the ones who needed the bailout. We are the ones bargaining.
The IMF does not dance to our tune. Whichever political party comes to power, they must put the country first. I think it is more important to continue the program being carried out very successfully than to present an argument against the IMF. I think that the system established by the existing Government is relevant and doable for both parties. There are other countries that have given us loans. The existing program has been carried out by bringing together all these parties.
Our economy has reached some stability. We need to think about the damage to the country by reducing government spending, curbing money printing, avoiding borrowing, controlling inflation and working to reduce import restrictions. According to the leaders of international financial evaluators, once again our country is falling to a negative value. If we are to withdraw from the IMF, the trust that international financial institutions had in us will be undermind. We should understand the danger.
We should act responsibly in this case
– Professor of Political Science and Former UGC Chair, Gamini Samaranayake
We had to go to the IMF for the 17th time in 2022 for financial assistance. We had to get this financial support because there was no definite management in our country until now. Due to the widening gap between our country’s budgets, the level of difficulty for us to pay the amount of debt, and the inability to maintain financial discipline, we became bankrupt willingly or unwillingly.
But we had to take loans from other countries from high status to bankruptcy. The advice given by the International Monetary Fund (IMF) regarding the economy of a country and the advice given to maintain financial discipline are very important. By now, the reduction of corruption has been done. Regarding this program, some people are issuing statements without any concern.
No matter which political party comes to power in the future, we should be concerned about this. We must remember the reasons for which an agreement was reached with the IMF for the 17th time. If we are to achieve any of the basic conditions associated with receiving financial and financial advice, we must act responsibly. I see the behaviour without understanding regarding local financial control as the beginning of turning the country further into an abyss. The IMF agreement is very important. Our country is in a good economic condition today. If some conditions are renegotiated, a crisis may arise again. Therefore, we request you not to act irresponsibly. Today we have become some kind of financial discipline. Today, the country has reached the right path of economic development. Therefore, it is everyone’s responsibility to prevent this situation from happening again.
We should not think about changing IMF conditions
– Dean of the Faculty of Management, Open University, Prof. Nalin Abeysekara
We started negotiating with the IMF in 1950 and received our first loan instalment in 1965. Even back then, we were in a vicious cycle of poverty. At that time, our people did not think it was necessary to build the country. Sri Lanka was spending more than it was making. We did not spend on implementing plans.
We also had no understanding of obligations associated with a loan. As a country, we had to go to the IMF again this time. If we don’t want to go back to where we were, we should analyse the facts listed by them. We must boost efficiency, curb corruption and implement plans. A big social discourse is needed on these issues. Next time we should work with international financial institutions in good faith without going for a loan. We must build an economy oriented towards entrepreneurship. All welfare programs such as Janasaviya, Aswasuma, Samurdhi should benefit those who deserve them. And just like in 2019, we need to build confidence in the youth to bring back an era where they painted murals. A good program should be prepared for the youth to give them hope for a better future and a purpose to foster entrepreneurship. We should follow other countries and work to become a debt-free nation and not regard IMF loans as an inconvenience.
The discourse that the country should move towards self-reliance should be created. We must break the cycle of poverty. We must work to elevate Sri Lanka to be more enterprising. After taking the loan, we as a country must do a follow-up on building businesses. Also, we all should stand together regardless of political party or ideology.
