Economic models that prioritise debt repayment and austerity over social investment deepen inequality and undermine the fabric of Sri Lankan society, said Binaifer Nowrojee, President of the Open Society Foundations. He was speaking in Colombo recently at a lecture organised by Factum, a foreign policy think tank.
Addressing an audience of activists, policymakers, and academics, Nowrojee drew parallels between Sri Lanka’s current IMF-backed stabilisation efforts with broader global trends that, in her view, “transfer the pain of repayments onto their people, widening poverty even more.” She said, “rather than default on their creditors, Governments are defaulting on their people.” These austerity measures weaken people’s trust in the system and makes them receptive to messaging from groups that could undermine hard won democratic gains, she said.
Agreement
Nowrojee’s remarks come as Sri Lanka continues to deal with the strict terms of a $2.9 billion bailout from the International Monetary Fund, secured to stabilise the economy after the economic crisis of 2022. The agreement has required the Government to cut spending, raise taxes, and reform state enterprises. While these measures have stabilised macroeconomic indicators, they have fuelled public frustration over higher costs of basic goods and services, eroding social safety nets and job losses.
“Sri Lanka is an example of how sovereign debt can force a developing country to carry a burden it cannot bear,” Nowrojee said.
She said IMF recommendations are cheered by free market fundamentalists, however, free market economics has not delivered on its promises to make country’s more prosperous and to enhance GDP growth rates. The global GDP growth rates have slowed down since the 1980s, while inequality has grown rapidly. “When we strip away regulations, when we slash taxes for the wealthy, when we suppress wages, when we dismantle public services in the name of free markets, we don’t unleash prosperity. We unleash inequality.”
Outcomes
Pointing to World Bank figures, Nowrojee said that more than three billion people worldwide now live in countries that spend more on servicing their debts than on health or education. “It is the actual result of a system that is designed to produce such outcomes,” she added. “This growth-less concentration of wealth, in turn, has given rise to a new oligarchy, or as some call it, the tech-broker Government, dominated by a handful of billionaire silicon men who now wield immense power over our economies, our politics, and even our courts.”
She described Sri Lanka’s recent experience, marked by shortages in essential goods, price shocks, and pressure on state institutions, as part of a wider crisis of “market fundamentalism.” She said that market fundamentalism has not only failed to deliver prosperity, but also actively undermined it. By treating the market as an end rather than a means to serve the common good, it’s created a world that’s richer in wealth, but poorer in justice, dignity, and sustainability, she said.
Nowrojee called on policymakers to “rethink the international economic architecture” and added that “the work of defending our society’s values and human rights will never be done.” She said that genuine economic recovery requires safeguarding public investment in education, health, and social protection, rather than sacrificing them to meet debt obligations.
Transparency
“Communities most affected by these policies should have a say in shaping their own future,” she said, urging greater transparency and public participation in economic decision-making. Nowrojee also said that “when public education and health are eroded, and private options are unaffordable, we are limiting the possibilities and futures of the next generation.”
Reflecting on Sri Lanka’s recent history, she praised the resilience and activism of its youth, adding that the protests in 2022 were part of a global wave of movements demanding justice and economic rights. “Young people across the world aren’t just protesting bad policy decisions. They want to transform the systems that have dominated their lives and reclaim sovereignty for themselves and the countries they belong to.”
Nowrojee’s said she has seen a growing public debate over whether Sri Lanka’s path to economic stability can be achieved without deepening social divides. “There is enough money and resources in the world,” she said, “but it’s the way they are distributed that determines whether societies recover with dignity or become further divided.”
Nowrojee added that Sri Lanka will be working with the IMF and other global lenders for the foreseeable future. While negotiating with creditors and continuing its reform program the country’s decision-makers must remember that economic justice must be at the heart of any solution. “The vision of an open society is one that we need to hold on to in these times, and we need to defend,” she said.
