Sri Lanka’s great IMF lie

Sri Lanka has been subject to a great lie: the IMF solution! For close to a year now, the country has been implementing the International Monetary Fund's recommendations with complete obedience. The sudden devaluation of the Sri Lankan rupee, a drastic increase in interest rates, the withdrawal of fuel subsidies and severe cuts to state expenditure all amount to harsh austerity measures. The consequence is economic devastation as the country sinks into a depression. Millions now suffer dwindling incomes, tremendous increases in the cost of living, food insecurity and even starvation.

Yet the much-touted IMF funds presented as a way to salvation, a meagre USD 2.9 billion over four years under the proposed agreement, have proved elusive. Compare this amount to Sri Lanka's foreign earnings for last year, which added up to USD 18 billion. The IMF insists that Sri Lanka first convince a range of creditors to commit to restructuring its defaulted external debt before the organisation's Executive Board will release the funds. But Sri Lanka's economy is in free fall. Its GDP contracted by roughly a tenth last year and is on the path to continued contraction this year. Under these circumstances, the IMF agreement and its paltry funds may as well go into the dustbin.