Krishna Srinivasan’s Address in Colombo in His Capacity as Director of Asia and Pacific Department, IMF, May 15, 2023
What does this challenging global environment mean for Sri Lanka?
Sri Lanka, as you know, has been facing a severe crisis (A) involving back-to-back economic shocks. We have been deeply concerned about the impact of the crisis on the Sri Lankan people, particularly the poor and vulnerable groups, and about the economic costs arising from the delay (B) in the country’s access to external financing.
On March 20, the IMF Executive Board approved a 48-month Extended Fund Facility of about 3 billion U.S. dollars to support Sri Lanka’s economic policies and reforms. This marked an important step towards the resolution of the Crisis (C).
Sri Lanka immediately received an initial disbursement of about $330 million from the EFF arrangement, which is expected to catalyze new external financial including from the Asian Development Bank and the World Bank. Given the weak external environment and domestic policy tightening, (D) aimed at restoring macroeconomic stability, the economy is expected to contract by 3 percent in 2023, before registering a modest growth of 1.5 percent in 2024. Prospects hinge quite critically on the implementation of the economic reform program (E)
Fourth, policies to safeguard financial sector stability, to ensure that the financial sector can play its key role in supporting economic growth.
And fifth, structural reforms to address corruption vulnerabilities and enhance growth
Anti-corruption and governance reforms are imperative to ensure the hard-won gains from the reforms benefit the Sri Lankan people. Sri Lanka is the first country in Asia that has undergone the IMF governance diagnostic exercise. The IMF governance diagnostic report (G) is expected to be published by September this year—the mission visited Colombo in March and engaged closely with stakeholders and civil society organizations on this critical reform area. We look forward to further discussion with them.
Commendably, Sri Lanka has already started implementing many of the challenging policy actions in these five areas. It is now essential to continue the reform momentum under strong ownership by the authorities and the Sri Lankan people, more broadly. (H)
Economic impact of the reforms on the poor and vulnerable needs to be mitigated with appropriate measures. In this regard, we welcome the authorities’ firm commitment to strengthen social safety nets, including through a minimum spending floor, well-targeted spending through the new social registry and establishment of objective eligibility criteria.
Let me conclude by saying that the IMF supported program is an opportunity for all Sri Lankans to come together to work through this crisis to restore economic stability and put the country on a sustainable growth path. The key is implementation. The IMF is here to help you along the way.
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CRITICAL & CHALLENGING REMARKS from a Sri Lankan in International ‘Space’
A =The IMF and those In governance must in priority recognize that this is the worst crisis faced by the people since independence and especially that it is with unequal misery to many segments of society,especially the elderly, poor and vulnerable persons and most daily wage earners and a majority of the farmers , fishermen and micro and sme sector workers) because of past policy missteps (taken by a few at the apex of governance wilfully and knowingly of consequences disregarding best advice of caring professionals; and acting outside the statutory empowerments; in egoistic all knowing manner, even disregarding obvious risk signals, best option risk mitigation options and caring professionals best advise) (and that they remain without bearing any accountability for their Economic crimes, misfeascence in governance and unaffected financially or socially not condemned and shamed publicly by the poor and suffering innocent people)
B = where current projections show that restoration of the GDP of 2019 will take 10 years of hardship for the common people without any impact on those who caused it.
C. Agreed; but are the persons in top apex governance positions today genuinely managing the reforms programme or More interested in self serving and power accumulation longer term uncaring for the suffering segments and are yet engaged in very high levels of corruption and money laundering?
D = impacting severely and unequally on the impacted segments with dire consequences of malnutrition, hunger, lack of medicines, disruption of education and manpower development and essential services and forcing professionals along with thousands of youths to go overseas to meet ends and escape from the severe impacts out of the crisis!
E= Regrettably those in governance have not placed this priority as the most important priority.
F = Regrettably this area remains a no-action talk only focus by those in governance: and laws will be passed leaving out essential other reforms; with enforcement driven not with independence and professionalism and hence an effective pressure group active and effective is essential)
G =focus areas of critical priority attention left out and have been pointed out to the IMF by civil society and trust will receive IMF attention
H = a professional and focused Peoples movement must be fostered and allowed freedom of protest and their voice must be heard and positively respond and their pressure must be a concern of the government and the judiciary must support such an environment and above all independent institutions and key executives must foster a work environment where god governance and ethical conduct is assured with all non compliance with laws and regulations made transparent.
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ALSO NOTE
- https://www.houstonchronicle.com/news/world/article/imf-sri-lanka-s-crisis-hit-economy-likely-to-18099753.php
- https://www.cnbc.com/2023/03/21/imf-bullish-sri-lanka-economy-will-recover-as-it-gets-3-billion-bailout.html
IMF prescription is nothing new. And addressing the symptoms not the causes.