IMF help: Not so easy

Choon-paan karaya Aldoris came down the lane, merrily one would say, as he signalled his appearance in his red tuk-tuk with music blaring through fitted-in speakers. “Kohomada (How are you)?” he greeted the trio, who like him, had returned from their villages after the Avurudu holiday week.

“Hondai, hondai (Fine, fine),” said Kussi Amma Sera, asking: “Mona wada apita ada thiyenne (What have you got for us today).”

Serapina, amused by his happy demeanour, said she was surprised that he was cheerful today when everything else in Sri Lanka is negative.

“Mata sathutui janathawa virodathwaya prakasha karanawa kiyala, wenasakata. Pela-pali loku wenanwa davasin davasa (I’m happy that people are protesting and seeking a change and that demonstration is getting bigger and bigger),” he said.

“Oya hithanawada aluth amathi-waru saha agamethi ayin wei kiyala (Do you think the new ministers and the Prime Minister will step down),” asked Mabel Rasthiyadu.

“Eka mama danne ne. Eth mage jeevithe palamu wathawata mata penawa danaathmaka pravanathavayak ratata (That, I don’t know but for the first time in my life I see some positive trends for the country),” he said, while dishing out buns and pastries to the trio.

As the trio ended their conversation with Aldoris and retired to the margosa tree, also armed with mugs of tea, the phone rang in the house. It was Kalabala Silva, the often agitated academic, on the line. “Hey… we are in serious trouble, aren’t we?” I asked Kalabala, after pleasantly greeting him.

“Very serious,” he replied, adding: “The situation is so bad that private companies are for the first time coming out in support of the demonstrations at Galle Face. They have never, in the past, aligned themselves to a call for a regime change,” he said.

He was referring to a call by MAS Holdings, Sri Lanka’s biggest exporter and one of the largest employers in the country. “As a responsible organisation, we unconditionally support the call for change and good governance, and earnestly request the nation’s leaders to heed the voice of the people and act on it, whilst respecting legal and Constitutional due process,” MAS Holdings said in a statement this week.

“Given the ensuing events, MAS reiterates the need for immediate and decisive action to resolve the current economic and social crisis, in a peaceful and sustainable manner,” the statement said.

Going one step further, the Joint Chambers – made up of the biggest chambers in Sri Lanka – also this week urged President Gotabaya Rajapaksa to repeal the 20th amendment to the Constitution. “The Joint Chambers urge Your Excellency, as President, to immediately initiate legislative action to repeal the 20th amendment to the Constitution which contributed to the present situation. This will be viewed as a historic positive development for this country both from a political and economic perspective,” it said in a letter to the President on Tuesday.

Many big corporate houses have joined the call by civil society and western ambassadors for the government to allow peaceful protests to continue and not block the freedom of expression and dissent. Mounting pressure on the government has led to a possible return, with changes, to the 19th amendment of the Constitution – which reduces the powers of the President.

In corporate Sri Lanka, the IT industry has led the protests during demonstrations at the Liberty Plaza roundabout in Kollupitiya with well-known figures in this industry coming out in support unlike the big barons of the corporate world, hiding behind statements, rather than joining the protests. However, a few directors of conglomerates were seen at the Galle Face protests and also fearlessly expressing their views in TV interviews, seeking a regime change.

Continuing the conversation, Kalabala said he felt more and more corporates should join the protests since the economic woes have affected every industry, every sector of commerce and every household. This week, the dairy industry complained that the shortage of foreign exchange had adversely affected their industry due to the lack of fuel, storage facilities and fertiliser.

“I don’t think those (companies) who supported the present regime will change their stance while the corporate sector, itself, has been shy in exposing their political affiliations,” I said. “That is why the situation has become so serious that organisations that normally stay away from politics are making their voices heard,” he said.

The crisis is not going away easily, since according to all available accounts, the help from the International Monetary Fund (IMF) after extensive discussions this week between a government delegation led by Finance Minister Ali Sabry and IMF officials might take a while – maybe six months. The situation is so precarious - fuel ships are anchored outside the port while the authorities desperately try to open Letters of Credit (LCs) and sometimes ships are turned away when there is no money - and Sri Lanka needs help urgently in days and weeks and cannot wait for six months.

Both the IMF and the World Bank, which also had discussions with the Sri Lanka delegation, have expressed concern about the political and social instability in the country.

During his discussions, Finance Minister Sabry requested the IMF for a Rapid Financing Instrument (RFI) loan for countries needing urgent balance-of-payments support. In response, IMF Sri Lanka Mission Chief Masahiro Nozaki said in a statement that while the IMF is very concerned about the current economic crisis in Sri Lanka and hardships suffered by the people, especially the poor and vulnerable, the IMF staff had determined last month in an annual economic review that Sri Lanka’s public debt was unsustainable and the country needs to take steps to restore debt sustainability prior to any IMF lending, including the emergency RFI.

“Is the IMF playing politics in demanding stability as a precondition for support,” asked Kalabala. “That I don’t know,” I said.

In the short-term, and it’s inevitable, Sri Lanka would have to rely on more loans from India, China, Japan or even West Asia to pay for the import of food, fuel and medicines. Receiving my second mug of tea from Kussi Amma Sera, my mind wandered to a situation where Sri Lankans would have to further tighten their belts as the much-awaited IMF assistance won’t come in as quickly as anticipated.