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IMF programme: Is there a way out?

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by Garvin Karunaratne

The Sri Lankan government is finding it hard to fulfil the regulations agreed upon with the IMF in the Houses of Parliament on April 28, 2023. However, there was no other option but to agree. According to Professor Vasanta Atukorale, the increases in taxes amount to a staggering 441%. The IMF’s experts fail to understand that implementing these regulations will cause untold hardships to the public and may even lead to a severe recession. Perhaps, this is the ulterior motive of the IMF.

Sri Lanka was not a dollar in foreign debt in 1977. From 1948 to 1977, the country made strides in development, opening up land, colonisation schemes for people, building tanks, developing agriculture and industries, and implementing welfare measures. The country became self-sufficient in paddy production, its staple crop, and produced all its textiles. This development effort involved agricultural marketing, agricultural extension, small industry, and district administration. The golden era of Premier Dudley Senanayake’s rule, lasting 29 years, was where the people enjoyed freedom and development.

The IMF abolished many development programmes in 1978. The problem began with the Structural Adjustment Programme imposed on Sri Lanka by the IMF when President J. R. Jayewardene sought assistance from the IMF, which gave loans freely on condition that Sri Lanka follow neoliberal economics and allowed the rich to spend foreign funds that the country had obtained as loans. This led to foreign debt. Worse still, President Jayewardene and his Minister of Finance Ronnie de Mel were made to believe that this path would lead to development.

In 1978, the IMF even gave grace periods, when Sri Lanka did not need to pay the interest and repayment instalments on loans so that the leaders would not be burdened with the repayment. The burden was shifted to future leaders.

Many specialists have proposed alternative ways of dealing with the current crisis. The World Bank Country Director Fariz Hadad Zerous has said that the current crisis is not a temporary liquidity shock but the result of longstanding structural weaknesses, poor governance, and a public debt that is unsustainable. However, the World Bank Country Director needs to be told that it was the IMF itself that is to blame for taking Sri Lanka on this path of living on loans.

From Independence in 1948 to 1977, Sri Lanka’s development was done through various development programmes that involved people in production aimed at self-reliance. The IMF abolished all the developmental departmental activities and confined the administrators to the barracks while coming up with the ludicrous basis that the private sector was to be the engine of growth. It was this decision of the IMF imposed in 1978 that crippled the development of the country. The private sector has self-aggrandizement as its aim. The development of the country is not their concern.

Until 1977, the country had import restrictions in place to ensure that it could manage with its earnings. The development of the country was entirely run with local currency – the rupee – collected by taxes supplemented by money printing, while the foreign exchange that came in through exports and services was precisely collected and used for the purchase of importing essentials. Very small allocations were made for imports. The total expenditure of Sri Lanka in 1961/62 was Rupees 2013 million, all local rupees. The 1963 Budget Speech of Minister T. B. Illangaratne tells how imports of textiles were reduced by a third, powerlooms were imported, but imports of cars were banned.

The Budget Speech outlines the strategy to manage imports within the available expenditure, highlighting its potential as a developmental exercise. Minister Illangaratne said, “We stopped the import of coffee to increase coffee production” (p.1237). I met Minister Illangaratne in 1971, when I needed his approval for foreign exchange allocation to import dyes for my Crayon Factory in Morawaka. The Ministry of Industries refused to provide us with an import allocation because we were a cooperative. However, I learned that the Controller of Imports was about to allow an allocation of foreign exchange for the import of crayons. So, I intervened and convinced the Import Controller that by giving our Crayon Factory a foreign exchange allocation for the import of dyes, he could cancel all imports. I needed Minister Illangaratne’s approval as this procedure had never been done before. When I showed him the crayons we produced, I remember the gleam on his face. He insisted that I establish a Crayon Factory in Kolonnawa, his electorate, and ordered the total cancellation of all imports on crayons. That is how statesmen served the national interest.

Today’s economic meltdown, with foreign debt amounting to $56 billion, did not come without warning. In 1990, I began a series of lectures on Third World Studies at the Westminster Adult Education Institute, where I discussed how Sri Lanka’s foreign debt was increasing. By 1989, the foreign debt had increased to $5 billion. In 1992, the South Asian Forum of the University of London invited me to speak on Sri Lanka, and I commented that foreign aid could serve as an engine of growth if handled prudently. However, foreign aid could lead to chronic debt, poverty, high unemployment, and even uprisings if accepted in a non-developmental manner. I also mentioned that the healthy balance of payments achieved during the period of 1970-1976 turned into a nightmare of adverse deficits due to the governments that came into power since 1977 (From How the IMF Ruined Sri Lanka & Alternative Programmes of Success, Godage, 2006).

The foreign debt ballooned to $9.5 billion by the end of the UNP rule, $11.5 billion by 2005, $42.9 billion at the end of 2014, and $56 billion by 2019. Initially, the IMF gave loans, but it later backed out, and the country had to raise funds through other sources on less attractive terms. International sovereign bonds were obtained at high interest, as much as $4 billion during the Rajapaksa Regime of 2008-2015 and $10 billion ISB loans during 2015-2019. It is important to note that President Gotabhaya did not create the foreign debt. However, he made wrong decisions, such as providing a massive tax break to large enterprises and his infamous agricultural extension programme of using compost and banning the use of inorganic fertilisers, which led to massive crop failure. It is difficult to imagine a successful military commander failing to act forcefully in the interests of the country, but it did happen. The cause of Sri Lanka’s total economic meltdown lies in the salient features of the Structural Adjustment Programme imposed on Sri Lanka since the end of 1977. We have not used the loans for any purpose in development but lived extravagantly on loans, as dictated by the IMF. Corruption and politics in decision-making also aggravated distress, but the salient factor is that Sri Lanka started living on loans and abandoned development programmes. The IMF even disbanded the Planning Department and confined all development workers to the barracks.

It is unfortunate to note that the IMF’s $3 billion loan provisions for Sri Lanka do not include any measures to increase the country’s productivity and boost people’s incomes. The IMF’s focus is primarily on increasing the tax base, restoring price stability, restructuring debt, rebuilding reserves, and enabling the country to purchase essential goods from abroad in order to put it on a growth path. The Central Bank is expected to purchase foreign exchange worth $1.4 billion to rebuild reserves. According to the Financial Times, the reforms also involve addressing corruption and inefficiency at state-owned enterprises, combating inflation, recapitalising the banking sector, and overhauling the tax system, which currently sees half of the country’s taxpayers paying less than 5% of their income to the state.

However, the IMF seems to overlook the fact that taxes are collected in local currency and do not have any direct impact on the repayment of foreign debts. Therefore, Sri Lanka’s only viable option is to implement import substitution programmes that will reduce the country’s dependence on imports and simultaneously generate incomes for the people. The IMF has not prohibited such productivity-enhancing measures, and it is up to Sri Lanka’s leaders to devise programmes that can increase production.

Sri Lanka has previous experience with successful development programmes such as the Divisional Development Councils Program (DDCP) implemented by the government from 1970-1977. The DDCP provided employment training to 33,200 youths, established agricultural farms, and set up small industries. Many Districts also established small agricultural farms and industries, such as the Mechanised Boatyard at Matara, which produced 35 seaworthy fishing inboard motor boats a year and a Cooperative Crayon Factory, which had country-wide sales. These were established in a short period, within two to three and a half months, respectively.

Employment creation programmes that can also boost production have proven successful, such as the Youth Self Employment Programme established by the author in Bangladesh, which has created three million entrepreneurs and is now recognised as the world’s most successful employment creation programme.

It is worth noting that since Sri Lanka started following the IMF’s policies in 1977, no new development programmes have been implemented to reduce poverty, develop the country’s resources, or train people to make what is imported. The author highlights the work of previous statesmen in implementing successful development programmes, which can serve as a model for current leaders.

In conclusion, it is crucial for Sri Lanka’s leaders to establish programmes that will produce what is currently imported and create incomes for the people while simultaneously reducing the country’s foreign exchange expenditure on imports.

(Dr. Karunaratne is a former Government Agent and Commonwealth Fund Advisor to the Ministry of Labour and Manpower, Bangladesh 1981-1983.)



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People set example for politicians to follow

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Disaster relief (AFP picture)

Some opposition political parties have striven hard to turn the disaster of Cyclone Ditwah to their advantage. A calamity of such unanticipated proportions ought to have enabled all political parties to come together to deal with this tragedy. Failure to do so would indicate both political and moral bankruptcy. The main issue they have forcefully brought up is the government’s failure to take early action on the Meteorological Department’s warnings. The Opposition even convened a meeting of their own with former President Ranil Wickremesinghe and other senior politicians who shared their experience of dealing with natural and man-made disasters of the past, and the present government’s failures to match them.

The difficulty to anticipate the havoc caused by the cyclone was compounded by the neglect of the disaster management system, which includes previous governments that failed to utilise the allocated funds in an open, transparent and corruption free manner. Land designated as “Red Zones” by the National Building Research Organisation (NBRO), a government research and development institute, were built upon by people and ignored by successive governments, civil society and the media alike. NBRO was established in 1984. According to NBRO records, the decision to launch a formal “Landslide Hazard Zonation Mapping Project (LHMP)” dates from 1986. The institutional process of identifying landslide-prone slopes, classifying zones (including what we today call “Red Zones”), and producing hazard maps, started roughly 35 to 40 years ago.

Indonesia, Thailand and the Philippines which were lashed by cyclones at around the same time as Sri Lanka experienced Cyclone Ditwah were also unprepared and also suffered enormously. The devastation caused by cyclones in the larger southeast Asian region is due to global climate change. During Cyclone Ditwah some parts of the central highlands received more than 500 mm of rainfall. Official climatological data cite the average annual rainfall for Sri Lanka as roughly 1850 mm though this varies widely by region: from around 900 mm in the dry zones up to 5,000 mm in wet zones. The torrential rains triggered by Ditwah were so heavy that for some communities they represented a rainfall surge comparable to a major part of their typical annual rainfall.

Inclusive Approach

Climate change now joins the pantheon of Sri Lanka’s challenges that are beyond the ability of a single political party or government to resolve. It is like the economic bankruptcy, ethnic conflict and corruption in governance that requires an inclusive approach in which the Opposition, civil society, religious society and the business community need to join rather than merely criticise the government. It will be in their self-interest to do so. A younger generation (Gen Z), with more energy and familiarity with digital technologies filled, the gaps that the government was unable to fill and, in a sense, made both the Opposition and traditional civil society redundant.

Within hours of news coming in that floods and landslides were causing havoc to hundreds of thousands of people, a people’s movement for relief measures was underway. There was no one organiser or leader. There were hundreds who catalysed volunteers to mobilise to collect resources and to cook meals for the victims in community kitchens they set up. These community kitchens sprang up in schools, temples, mosques, garages and even roadside stalls. Volunteers used social media to crowdsource supplies, match donors with delivery vehicles, and coordinate routes that had become impassable due to fallen trees or mudslides. It was a level of commitment and coordination rarely achieved by formal institutions.

The spontaneous outpouring of support was not only a youth phenomenon. The larger population, too, contributed to the relief effort. The Galle District Secretariat sent 23 tons of rice to the cyclone affected areas from donations brought by the people. The Matara District Secretariat made arrangements to send teams of volunteers to the worst affected areas. Just as in the Aragalaya protest movement of 2022, those who joined the relief effort were from all ethnic and religious communities. They gave their assistance to anyone in need, regardless of community. This showed that in times of crisis, Sri Lankans treat others without discrimination as human beings, not as members of specific communities.

Turning Point

The challenge to the government will be to ensure that the unity among the people that the cyclone disaster has brought will outlive the immediate relief phase and continue into the longer term task of national reconstruction. There will be a need to rethink the course of economic development to ensure human security. President Anura Kumara Dissanayake has spoken about the need to resettle all people who live above 5000 feet and to reforest those areas. This will require finding land for resettlement elsewhere. The resettlement of people in the hill country will require that the government address the issue of land rights for the Malaiyaha Tamils.

Since independence the Malaiyaha Tamils have been collectively denied ownership to land due first to citizenship issues and now due to poverty and unwillingness of plantation managements to deal with these issues in a just and humanitarian manner beneficial to the workers. Their resettlement raises complex social, economic and political questions. It demands careful planning to avoid repeating past mistakes where displaced communities were moved to areas lacking water, infrastructure or livelihoods. It also requires political consensus, as land is one of the most contentious issues in Sri Lanka, tied closely to identity, ethnicity and historical grievances. Any sustainable solution must go beyond temporary relocation and confront the historical exclusion of the Malaiyaha Tamil community, whose labour sustains the plantation economy but who remain among the poorest groups in the country.

Cyclone Ditwah has thus become a turning point. It has highlighted the need to strengthen governance and disaster preparedness, but it has also revealed a different possibility for Sri Lanka, one in which the people lead with humanity and aspire for the wellbeing of all, and the political leadership emulates their example. The people have shown through their collective response to Cyclone Ditwah that unity and compassion remain strong, which a sincere, moral and hardworking government can tap into. The challenge to the government will be to ensure that the unity among the people that the cyclone disaster has brought will outlive the immediate relief phase and continue into the longer term task of national reconstruction with political reconciliation.

by Jehan Perera

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An awakening: Revisiting education policy after Cyclone Ditwah

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One of the schools flooded during the recent disasters. (Image courtesy Sri Lanka Navy)

In the short span of two or three days, Cyclone Ditwah, has caused a disaster of unprecedented proportions in our midst. Lashing away at almost the entirety of the country, it has broken through the ramparts of centuries old structures and eroded into areas, once considered safe and secure.

The rains may have passed us by. The waters will recede, shops will reopen, water will be in our taps, and we can resume the daily grind of life. But it will not be the same anymore; it should not be. It should not be business as usual for any of us, nor for the government. Within the past few years, Sri Lankan communities have found themselves in the middle of a crisis after crisis, both natural and man-made, but always made acute by the myopic policies of successive governments, and fuelled by the deeply hierarchical, gendered and ethnicised divides that exist within our societies. The need of the hour for the government today is to reassess its policies and rethink the directions the country, as a whole, has been pushed into.

Neoliberal disaster

In the aftermath of the devastation caused by the natural disaster, fundamental questions have been raised about our existence. Our disaster is, in whole or in part, the result of a badly and cruelly managed environment of the planet. Questions have been raised about the nature of our economy. We need to rethink the way land is used. Livelihoods may have to be built anew, promoting people’s welfare, and by deveoloping a policy on climate change. Mega construction projects is a major culprit as commentators have noted. Landslides in the upcountry are not merely a result of Ditwah lashing at our shores and hills, but are far more structural and points to centuries of mismanagement of land. (https://island.lk/weather-disasters-sri-lanka-flooded-by-policy-blunders-weak-enforcement-and-environmental-crime-climate-expert/). It is also about the way people have been shunted into lands, voluntarily or involuntarily, that are precarious, in their pursuit of a viable livelihood, within the limited opportunities available to them.

Neo liberal policies that demand unfettered land appropriation and built on the premise of economic growth at any expense, leading to growing rural-urban divides, need to be scrutinised for their short and long term consequences. And it is not that any of these economic drives have brought any measure of relief and rejuvenation of the economy. We have been under the tyrannical hold of the IMF, camouflaged as aid and recovery, but sinking us deeper into the debt trap. In October 2025, Ahilan Kadirgamar writes, that the IMF programme by the end of 2027, “will set up Sri Lanka for the next crisis.” He also lambasts the Central Bank and the government’s fiscal policy for their punishing interest rates in the context of disinflation and rising poverty levels. We have had to devalue the rupee last month, and continue to rely on the workforce of domestic workers in West Asia as the major source of foreign exchange. The government’s negotiations with the IMF have focused largely on relief and infrastructure rebuilding, despite calls from civil society, demanding debt justice.

The government has unabashedly repledged its support for the big business class. The cruelest cut of them all is the appointment of a set of high level corporate personalities to the post-disaster recovery committee, with the grand name, “Rebuilding Sri Lanka.” The message is loud and clear, and is clearly a slap in the face of the working people of the country, whose needs run counter to the excessive greed of extractive corporate freeloaders. Economic growth has to be understood in terms that are radically different from what we have been forced to think of it as, till now. For instance, instead of investment for high profits, and the business of buy and sell in the market, rechannel investment and labour into overall welfare. Even catch phrases like sustainable development have missed their mark. We need to think of the economy more holistically and see it as the sustainability of life, livelihood and the wellbeing of the planet.

The disaster has brought on an urgency for rethinking our policies. One of the areas where this is critical is education. There are two fundamental challenges facing education: Budget allocation and priorities. In an address at a gathering of the Chamber of Commerce, on 02 December, speaking on rebuilding efforts, the Prime Minister and Minister of Education Dr. Harini Amarasuriya restated her commitment to the budget that has been passed, a budget that has a meagre 2.4% of the GDP allocated for education. This allocation for education comes in a year that educational reforms are being rolled out, when heavy expenses will likely be incurred. In the aftermath of the disaster, this has become more urgent than ever.

Reforms in Education

The Government has announced a set of amendments to educational policy and implementation, with little warning and almost no consultation with the public, found in the document, Transforming General Education in Sri Lanka 2025 published by the Ministry of Education. Though hailed as transformative by the Prime Minister (https://www.news.lk/current-affairs/in-the-prevailing-situation-it-is-necessary-to-act-strategically-while-creating-the-proper-investments-ensuring-that-actions-are-discharged-on-proper-policies-pm), the policy is no more than a regurgitation of what is already there, made worse. There are a few welcome moves, like the importance placed on vocational training. Here, I want to raise three points relating to vital areas of the curriculum that are of concern: 1) streamlining at an early age; relatedly 2) prioritising and privileging what is seen as STEM education; and 3) introducing a credit-based modular education.

1. A study of the policy document will demonstrate very clearly that streamlining begins with Junior Secondary Education via a career interest test, that encourages students to pursue a particular stream in higher studies. Further Learning Modules at both “Junior Secondary Education” and “Senior Secondary Education Phase I,” entrench this tendency. Psychometric testing, that furthers this goal, as already written about in our column (https://kuppicollective.lk/psychometrics-and-the-curriculum-for-general-education/) points to the bizarre.

2. The kernel of the curriculum of the qualifying examination of Senior Secondary Education Phase I, has five mandatory subjects, including First Language, Math, and Science. There is no mandatory social science or humanities related subject. One can choose two subjects from a set of electives that has history and geography as separate subjects, but a Humanities/Social Science subject is not in the list of mandatory subjects. .

3. A credit-based, modular education: Even in universities, at the level of an advanced study of a discipline, many of us are struggling with module-based education. The credit system promotes a fragmented learning process, where, depth is sacrificed for quick learning, evaluated numerically, in credit values.

Units of learning, assessed, piece meal, are emphasised over fundamentals and the detailing of fundamentals. Introducing a module based curriculum in secondary education can have an adverse impact on developing the capacity of a student to learn a subject in a sustained manner at deeper levels.

Education wise, and pedagogically, we need to be concerned about rigidly compartmentalising science oriented, including technological subjects, separately from Humanities and Social Studies. This cleavage is what has led to the idea of calling science related subjects, STEM, automatically devaluing humanities and social sciences. Ironically, universities, today, have attempted, in some instances, to mix both streams in their curriculums, but with little success; for the overall paradigm of education has been less about educational goals and pedagogical imperatives, than about technocratic priorities, namely, compartmentalisation, fragmentation, and piecemeal consumerism. A holistic response to development needs to rethink such priorities, categorisations and specialisations. A social and sociological approach has to be built into all our educational and development programmes.

National Disasters and Rebuilding Community

In the aftermath of the disaster, the role of education has to be rethought radically. We need a curriculum that is not trapped in the dichotomy of STEM and Humanities, and be overly streamlined and fragmented. The introduction of climate change as a discipline, or attention to environmental destruction cannot be a STEM subject, a Social Science/Humanities subject or even a blend of the two. It is about the vision of an economic-cum-educational policy that sees the environment and the economy as a function of the welfare of the people. Educational reforms must be built on those fundamentals and not on real or imagined short term goals, promoted at the economic end by neo liberal policies and the profiteering capitalist class.

As I write this, the sky brightens with its first streaks of light, after days of incessant rain and gloom, bringing hope into our hearts, and some cheer into the hearts of those hundreds of thousands of massively affected people, anxiously waiting for a change in the weather every second of their lives. The sense of hope that allows us to forge ahead is collective and social. The response by Lankan communities, to the disaster, has been tremendously heartwarming, infusing hope into what still is a situation without hope for many. This spirit of collective endeavour holds the promise for what should be the foundation for recovery. People’s demands and needs should shape the re-envisioning of policy, particularly in the vital areas of education and economy.

(Sivamohan Sumathy was formerly attached to the Department of English, University of Peradeniya)

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.

By Sivamohan Sumathy

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ABBA scene in Doha … Ishini in the spotlight

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The group ABBA, from Sweden, officially disbanded in 1982, and that made room for several ABBA imitators to come into the scene.

What’s more, ABBA tribute concerts are also turning out to be popular with music lovers who still appreciate, and enjoy, the music of ABBA.

With this in mind, Treffen House Hotel, in Doha, decided to put together a series of ABBA Tribute Concerts which were held, in the hotel itself, on 27th, 28th and 29th November, 2025.

To do the needful, on stage, they selected our very own Ishini Fonseka and her participation certainly did highlight the global appeal of ABBA’s music and the talent of Sri Lankan artistes.

The tribute shows brought the magic of ABBA’s hits to the audience,

On stage belting out the ABBA hits

Backed by a Sri Lankan band, the Vibes, based in Qatar, Ishini was in the spotlight for one hour, each night, belting out the hits of ABBA.

She also obliged the audience, from various nationalities, with a few hit songs in Hindi, Tamil and Sinhala.

Her repertoire included the best of ABBA hits, such as ‘Mamma Mia’, ‘Dancing Queen’, ‘Chiquitita’ and many more.

Being a multi-instrumentalist, she also played the piano, and guitar, as well, while singing some of the beautiful ABBA songs.

The three-day concert was a part of a Sri Lankan food festival, held at the hotel, in which several unique Sri Lankan cuisines were promoted internationally.

The event’s main sponsor was Prime Lands, and the event focused on the importance of investing on Real Estate, especially since the foreign currency sent to Sri Lanka benefits the country’s economy vastly.

Kumudu Fonseka, the General Manager of Treffen House Hotel, the main man behind the spectacular three-day Sri Lankan Food Festival, I’m told, is very keen to highlight the uniqueness of Sri Lanka.

He also has plans to put together a charity concert to raise funds for the people in Sri Lanka, affected by Cyclone Ditwah.

The Chief Guest, on the second day, was the Ambassador of Sri Lanka, who personally appreciated and admired Ishini Fonseka for bringing back her childhood memories of ABBA.

Ishini was involved in three other events, at the hotel, as a guest star, before returning home.

Her next foreign assignment is to the Maldives, on 22nd December, with her band Ishini & The Branch.

She will be doing the Christmas and New Year’s Eve scene in the Maldives and will be back, in Sri Lanka, on 02nd January 2026.

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