Sri Lanka’s pact with IMF faces flak

'Alliance for Economic Democracy' says despite the "dangers inherent" in the agreement, there has been no critical public scrutiny.

A recently-formed coalition of trade unions, student unions, progressive intellectuals, social organisations and activists has criticised the Sri Lanka government for its agreement with the International Monetary Fund (IMF).

The coalition, Alliance for Economic Democracy, has said the IMF's Extended Fund Facility, providing an assistance of $1.5 billion over three years, comes with a “number of conditions that will adversely impact the economic and social life of the people in this country.” Despite the “dangers inherent” in the agreement, there has been no critical public scrutiny of the arrangement.

‘It is a BoP crisis’

Arguing that the current economic crisis facing Sri Lanka is mainly a balance of payment crisis due to “the flight of capital, falling exports and rising imports,” the Alliance has attributed it to capital market liberalisation, which, according to the coalition, has made Sri Lanka susceptible to capital flight, and mega development projects funded by borrowings of successive governments.

Criticising the government for seeking to shift the burden and responsibility for the crisis onto the people, the coalition has contended that the new agreement and the related neoliberal economic policies will “further burden” the people in future.

The Alliance has demanded that the 2017 Budget, (likely to be presented in November) consider the people’s demands and not be reduced to the IMF conditions. It has drawn up plans to mobilise public opinion against the agreement.