Columns

By Sandun Jayawardana  

Whilst informing Parliament on Wednesday that Sri Lanka had secured an agreement for an Extended Fund Facility (EFF) of USD 3 billion from the International Monetary Fund (IMF), President Ranil Wickremesinghe appealed to all parliamentarians to support the agreement.

The subsequent three-day debate held on his statement made clear that there would be no such unity, as the opposition attacked what it said was a lack of transparency by the Government regarding the agreement.

The previously unscheduled adjournment debate took place after the government agreed to a proposal by Opposition Leader Sajith Premadasa for a debate on the President’s statement.  

In his opening remarks, Mr. Premadasa expressed amazement at the President’s request for the House to approve the IMF agreement, seemingly because he says so. “This is not a dictatorship but a democracy. In a democracy, we make our decisions after careful analysis and consideration at forums such as this,” he said.

An EFF with the IMF was also in effect when Mr. Wickremesinghe was Prime Minister under the Yahapalana government, Mr. Premadasa recalled. This came to an end when the “Vistas of Prosperity and Splendour” manifesto was implemented under the subsequent Gotabaya Rajapaksa government.

In 2020, the Rajapaksa government withdrew from the IMF agreement, claiming at the time that working with the IMF amounted to a “treasonous act.” Ironic then that less than four years later, the same Sri Lanka Podujana Peramuna (SLPP) MPs who cheered that decision are now pounding their desks and lighting crackers in celebration over a new agreement with the IMF, Mr. Premadasa remarked.

Responding, State Finance Minister Ranjith Siyambalapitiya said the Opposition Leader claimed the best economic minds in the country were with him. They were calling for local government and parliamentary elections now, but why did they not take over the government when it was offered to them on a platter, he asked.

He said Mr. Premadasa and his Samagi Jana Balawegaya (SJB) were afraid to take over a country whose economic growth stood at -12.4% by end of last year. If Ranil Wickremesinghe did not take over the country then, it would have gone to -20% by now, he claimed. Thanks to President Wickremesinghe’s efforts, the situation did not deteriorate to a level where people stole food in the streets or died due to lack of medicines or from starvation, added the State Minister.

The IMF is not a silver bullet and there must be a change in political ideology for the country to move forward, observed SJB MP Harsha De Silva. Since the 1990s, the country has steadily been building walls and closing itself off to international trade. The MP pointed to the severe opposition the Yahapalana government faced when it attempted to sign a Free Trade Agreement (FTA) with Singapore. “The very same people who opposed the Singapore FTA now say we need more FTAs. As such, we need a complete ideological change. Otherwise, we can’t develop our country.”

Dr De Silva also questioned why the letter of intent on the agreement with the IMF signed by the Finance Minister and the Governor of the Central Bank was not among the documents tabled by the President in Parliament. The absence of this most important document renders the debate meaningless, he stressed.

Tourism Minister Harin Fernando dismissed the SJB’s accusations that it had not been consulted regarding the agreement with the IMF. He noted that President Wickremesinghe had extended his hand to the opposition to join the initiative undertaken by the Government in every speech he made in Parliament.

He accused Mr. Premadasa of hypocrisy, saying the opposition leader, who refused to take up the premiership when he was invited to do so, was now attempting to take credit for the agreement with the IMF.

Joining the debate, Sri Lanka Freedom Party (SLFP) Chairman and former President Maithripala Sirisena said his party saw nothing to oppose in the conditions laid down by the IMF to offer Sri Lanka a bailout.

Measures to increase state revenue, introducing a wealth tax, and introducing robust anti-corruption legislation – all of which the IMF has insisted on — were initiatives that the party could support, he noted.

Mr. Sirisena also said the Government should ask unions which were opposing some of the reforms introduced as part of the agreement with the IMF to present their alternatives. In that manner, all parties could discuss the issues and agree on a joint programme.

Even through the most difficult periods, the Government still managed to pay the salaries of the entire public sector and even the pensioners, said Prime Minister Dinesh Gunawardena.

“At the same time, it is evident that reforms are necessary for some of the state-owned enterprises,” he asserted. Such reforms in the immediate future, however, will be discussed with all stakeholders, especially the employees, he said.

“This transparency and trust between the Government and stakeholders is an absolute must. The President has assured that to the House in his speech. We have got an opening to start. Let us extend the maximum possible support. Perhaps it could be critical support but we have to support this move of getting the agreement working,” the Premier said.

National People’s Power (NPP) MP Vijitha Herath said that obtaining a bailout from the IMF was not something to be proud of. “Obtaining a loan should be a cause of shame. We should regret that it has come to this.”

He also argued that it was the IMF rather than the Government that decided to be transparent. It was due to the IMF’s insistence that the Government was being open about the conditions imposed by the agreement, the MP said.

Regarding the tax hikes now in effect, Mr. Herath said professionals did not cause this economy to collapse. “They are victims of wrong economic policies. The ordinary people now have to suffer for the sins of the rulers.”

National Freedom Front (NFF) Leader Wimal Weerawansa took aim at plans to make the Central Bank an independent authority through the new CBSL Act as part of IMF-backed reforms. “How can the Central Bank be an independent authority? Isn’t it part of the State?”

Under the new Act, CBSL would not be responsible to the State but to various external forces. It also sought to exempt CBSL officials from paying taxes, he said, adding that such reforms would only worsen the country’s economic problems.

Chief Opposition Whip Lakshman Kiriella queried how the President could expect the SJB to unconditionally support the IMF agreement when his government did not see it fit to discuss the agreement with them. The conditions imposed by the IMF were not even presented to any committee in Parliament, he pointed out.

People are complaining that their lives had been badly affected by the conditions imposed by the IMF. This included the tax burden, price of goods, electricity hikes and interest issues faced by small and medium entrepreneurs, Mr. Kiriella added.

“Regrettably, it is difficult for us to support them (IMF conditions). If these had been discussed with us beforehand, we could have gone to the IMF with a common agreement,” stressed the Chief Opposition Whip.

Tax reforms such as the move to impose a Pay-As-You-Earn (PAYE) tax on those earning above Rs. 100,000 a month had only affected a small segment of the workforce, Plantation Industries Minister Ramesh Pathirana remarked. “Sri Lanka was among the countries that levy the least amount of income taxes in the world during the past two years. That’s why we need these reforms,” he emphasised.

“High-income earners may face some difficulties but their contribution is vital to the country’s economy. I urge them to be patient. We can revisit this issue in six months and consider revising the taxes as the President said,” he said.

Parliament reconvenes on April 4.