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by W.G. Chandrapala

The media has revealed that the government has sought a US$ 1.9 billion loan from the IMF. Even though, the conditions set by the IMF for the grant of this loan have so far not been revealed by the Central Bank, I wish to make my personal views on this matter in the interest of the country and its people.

Earlier, the government raised a loan in the open market at a high rate of interest saying that it would not seek loans from the World Bank or other international lending organisations because of the unfavourable conditions set by them would directly affect the sovereignty of the country.

Now it has chosen to obtain this facility from the IMF to be utilised for the ‘development of the north and the east’ and other purposes like resolving the balance of payment issues affecting the country, or so the government says. Financial reports published in the newspapers say that our foreign reserves are enough for not more than five weeks.

Every government that came to power since independence obtained loans from the World Bank and other international financial institutions for the development of the country. But it is a well-known fact that successive governments used these funds for consumption purposes instead of using them to eradicate poverty in the country.

The international lending agencies were able to find out that the country has not reached the required level of development despite their granting subsidised loans for many years because all the funding made available had been used for consumption purposes and not for any development. They also realised that in instances where the funds had been made used of for development, the projects were lopsided and did not benefit all sections of the people.

Having set up various mechanisms to ensure that the funding was made use of for the purpose it was granted, the financial institutions learned to their dismay that the funding was being used for matters other than development and the main cause of this was the politicisation of public institutions. The financial mismanagement in the government also contributed to this evil.

The loans obtained by the governments have to be paid back not only by the present generation but also the generations yet unborn.

Recently, the government passed a new electricity reform bill in parliament, which leaves room for corruption, waste, and abuse of power. Most of the government institutions unlike in the past do not have a consistent policy. Ad hoc policies are drawn up by the ministers in charge of these institutions with an eye on how it could benefit them, instead of the institutions concerned.

Therefore, if ‘unfavourable’ conditions are set up by the lending agencies we cannot blame them, for we as a nation are responsible for this state of affairs. Naturally these lending agencies are concerned about the safety of their funds and hence the unfavourable conditions set by them.

I wish that the IMF grants this loan to Sri Lanka without any unfair conditions being imposed, because if used properly the funds would benefit the people of this country. But the government on its part has to be prudent and more transparent in its policies. The lethargy of the government — and especially the President in delaying the setting up of the Constitutional Council, and the road blocks set up by the constituent parties of the government to derail the Constitutional Council — and consequently the other independent commissions is a serious issue. [courtesy: the Sundayleader.lk]

[Appeared in 'Letters to the Editor,' ~ the Sunday Leader of March, 22, 2009]