Airlifting medicines to Sri Lanka and the IMF’s role

Does anyone expect the International Monetary Fund to just pass on billions of dollars to Sri Lanka without corresponding obligations of placing the economy in order?

Published: 02nd June 2022 02:08 AM  |   Last Updated: 02nd June 2022 08:04 AM   |  A+A-

Express Illustrations |Soumyadip Sinha

Express Illustrations |Soumyadip Sinha

An Indian ship carrying the first consignment of much-needed rice, milk powder and life-saving medicines reached Colombo harbour on 22 May 2022. Speaking on the occasion, Sri Lankan Foreign Minister Prof. G L Peiris highlighted: “India has not sent any assistance anywhere of this scale ever before.”

Unlike earlier Indian assistance to Sri Lanka—to put down the JVP revolt in April 1971, the induction of the IPKF on the invitation of President Jayewardene to restore peace and order, and spontaneous assistance (without even a formal invitation) to tsunami-affected people in December 2004—there was some delay this time.

First, differences between Tamil Nadu and New Delhi had to be resolved and a common policy formulated. The initial proposal was that the state would send relief materials to the Tamils in Sri Lanka. New Delhi, for the right reasons, had a different point of view. The man-made calamity had caused untold suffering to all sections of the population and India’s assistance should reach all, irrespective of ethnic origin.

Talks began between Dr S Jaishankar, Minister for External Affairs, and the Tamil Nadu government, and finally, the latter had a change of heart. Two other factors also contributed to this. The leaders of Tamil political parties in Sri Lanka, TNA leader M A Sumanthiran and Malaiaha Tamil leader Mano Ganesan, appealed to the TN chief minister not to adopt a parochial approach. The top bureaucrats of the Tamil Nadu government also advised him that the need of the hour was a statesmanly approach.

New Delhi saw the writing on the wall and brought about the much-needed change in India’s Lanka policy. In 1971 and 1987, New Delhi equated the stability and security of Lanka with the stability of existing governments, though the rulers were unpopular among large sections of the population. In the present situation, if Delhi had supported the regime of the Rajapaksa brothers that the people want thrown out (Mahinda has already resigned as prime minister), India would have been imitating the American policy of supporting tin-pot dictators in different parts of the world such as Lon Nol in Cambodia, Yahya Khan in Pakistan and Fulgencio Batista in Cuba. In repeated statements, spokesmen of the Ministry of External Affairs have affirmed that India stands for democracy in the island and it would provide assistance to all sections of the people. During his recent visit to Chennai, the prime minister declared that India would stand by the people of Sri Lanka and support democracy, stability and economic recovery.

The India International Centre invited Prof. Suryanarayan to speak on ‘Crisis in Sri Lanka: Implications for India’ on 23 May 2022. Suryanarayan pointed out that once a uniform policy was agreed upon by the Centre and the state, India should have airlifted life-saving medicines and milk powder. It would have proved our commitment to helping in the speedy recovery. The academics and journalists in the audience supported the speaker’s plea, but the only people who supported New Delhi were three Sri Lankan diplomats. As IMF assistance would not be released soon, Lanka’s dependence on India is bound to increase. Colombo has already requested an additional loan to import the much-needed fuel.

It is reliably learnt that every packet, with rice and milk powder, had a label attached—from the people of Tamil Nadu, both in English and Tamil. The bag also had the insignia of the Government of India and the Government of Tamil Nadu. What is more, the Government of Tamil Nadu is planning to airlift medicines with the necessary temperature arranged in the aircraft. The materials that were sent to Colombo were handed over to the minister for food for proper distribution. But due to heavy rains, there was a delay in the relief materials reaching the people.

Lanka became a member of the International Monetary Fund (IMF) in August 1950. It is represented on the Board by the executive director who also covers India, Bhutan and Bangladesh. M R Sivaraman was the executive director from 1996 to 1999 and has a thorough knowledge of IMF thinking and working. Though the Left leaders in Sri Lanka are not happy, given the realities of the situation, Lanka has no other option, but to approach the IMF for a bailout.

Lanka went to the IMF 16 times starting from 1965 with the last Extended Fund Facility (EFF) expiring on 2 June 2019. The total amount sanctioned by the IMF was $4.26 billion, with Lanka drawing only $3.585 million. The gap is attributed to the non-fulfilment of conditionalities. The critics of Lanka point out the gross economic mismanagement, which pushed the country from crisis to crisis, finally leading to the present tragedy.

Does anyone expect the International Financial Institutions to just pass on billions of dollars to Lanka without corresponding obligations of placing the economy in order? The International Financial Institutions are not charitable organisations. The very fact that Lanka went to the IMF 16 times is a clear indication that the fault was not with the institution, but with successive governments of the country, which did not have a coordinated and well-thought-out economic policy to put the nation on a stable path to growth.

The International Financial Institutions are lending the money of others or from borrowed funds at very low rates of interest along with a moratorium on repayments where necessary. Have the critics of these institutions so far suggested any other alternative means of financing crisis-ridden Lanka?

Would Lanka be prepared to pay for the much-needed fuel than the import of luxury items? Should the government not give priority to employment generation schemes rather than continue with fancy projects? Should not Lanka embark upon reforming its tax structure? Should it not try to enhance agricultural production, an area where India can provide help? The forthcoming budget, to be presented by Prime Minister Ranil Wickremesinghe, would show whether Lanka has the political will to discard the policies associated with what Prof. Gunnar Myrdal rightly called the “soft state”.

Meanwhile, the trials and tribulations of the common people continue to multiply. The famous lines of Shakespeare in Macbeth echo in our minds: “Alas, poor country, almost afraid to know itself. It cannot be called our mother, but our grave ...”

M R Sivaraman

Former Revenue Secretary, GoI

V Suryanarayan

Senior Prof (Retd), Centre for South and Southeast Asian Studies, University of Madras

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(M R Sivaraman was an executive director of the International Monetary Fund representing Sri Lanka among other countries. V Suryanarayan is Founding Director, Centre for South and Southeast Asian Studies, University of Madras)


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