IMF AND THE SRI LANKA BAILOUT DRAMA

How many more International Monetary Fund programmes will Lanka need to put itself through to reach that manna of economic stabilisation?

- KANDASWAMI SUBRAMANIAN

THIS is not the first time that Sri Lanka has come out of a battle with the International Monetary Fund (IMF). It is sufficiently battle-scarred over the years since the sixties. As one study in Financial Times reported, “…. Since 1965 Sri Lanka has been a ‘repetitive client’ of the IMF. The country has entered into 16 economic stabilisation programmes during 1965–2000. Macroeconomic management of the country has been under IMF programmes for approximately 33 of the 55 years.” It may raise a valid question: How many more programmes will Sri Lanka need to put itself through to reach that manna of economic stabilisation?

Over the years of Sri Lanka’s tango with the IMF, we observe the same elements: drama, tension, reluctance to approach the IMF for succour and, lo and behold, failure to comply with the IMF conditions or conditionalities and, at times, the cancellation of the programme due to political upheavals. We may observe the same pattern whether it is Argentina, Brazil, Pakistan, Greece, Spain or Sri Lanka. The scenario is familiar. For some months when the crisis looms in the horizon, countries are reluctant to seek redress from the IMF as they are apprehensive about the hardships that flow from its austerity prescriptions. Once the crisis deepens and foreign lenders seek their pound of flesh, it becomes unavoidable to knock on the doors of IMF. The ratings agencies foretell the doom. There is also an advice that the pundits offer: “The earlier you reach the IMF, the better the terms will be. Be aware.”