Opinion
IMF and income inequality
Sri Lanka in the throes of the worst economic crisis since Independence has resorted to some desperate action; it has for the first time in its history declared bankruptcy, suspended debt repayment, secured an IMF bailout for the 17th time, and agreed to extremely stringent loan conditions, which have already caused social unrest with people getting on to the streets. Tax and tariff hikes and steep rises in bank rates have caused considerable apprehension among the vulnerable sections of the society. The affected people seem to be unrelenting in their demand that these IMF enforced conditions be immediately revoked. They are staging public demonstrations and resorting to trade union action in protest against the measures. It may be opportune to look at results of recent research on the causal relationship between IMF programmes and global income inequality.
It may be necessary to say by way of introduction that capital development at the expense of labour and environment has reached its zenith in the developed countries. The richest cannot accumulate more without causing abject poverty in their own countries, and worse, destroying the world. World Inequality Report, based on a worldwide study by 100 researchers, presented in Paris (Andrea Barolini 28 Jun 2018), reveals how the rich get richer at the expense of the poor. During 1993 to 2013, in Italy, the poorest 90% lost 15% of their wealth which was pocketed by the top 10% . In the developed countries, the richest 1% are twice as wealthy as the poorest 50%. In China, the top 10% own 41% of the wealth, in Russia 46%, in the US 47%. This increase in inequalities more or less parallels the decrease of public wealth, compared to private wealth. These facts and figures show how diligently these countries have followed neo-liberalist policies, dictated by the IMF.
There are leading economists who think that one of the driving forces of the present inequity ridden global economy is international debt (Forster, et al, 2019). The 2008 recession was overcome by the granting of huge amounts of debt. By 2018 the global debt volume had risen to USD 250 trillion which is three times the annual global output. The developing countries’ share of this debt had risen from 7% in 2007 to 26% in 2017. Several leading economists who have studied the impact of debt on economic growth have reported that increasing public debt has a negative effect on economic growth (Reinhart & Rogoff 2010). A 1% increase in public debt could result in a 0.012% slowing down of growth. The reasons for this could be 1) discouragement of private investment as government borrowing competes for funds in country’s capital markets, 2) higher long-term interest rates caused by an excess supply of government debt, 3) higher taxes to fund rising debt repayments and 4) increase in the rate of inflation. While the recipients of debt end up with negative growth the the system ensures that the flow of wealth is from the poor to the rich. This is how two thirds of the wealth created by the poor finds its way into the pockets of the billionaires.
To come to the research mentioned above Valentine Lang (2021) has studied the possible relationship between income inequality and IMF loans. He has analysed, using sophisticated statistical methods, data retreaved from the Standardised World Income Inequality Database, IMF Quota Reports, trends in global poverty, etc. to determine whether IMF loans and their conditionality has a causal relationship with income inequality.
As shown above the latter has been inordinately rising and the IMF apparently has not been able to do anything significant in that regard though they have been trying. Lang has reported that during the period of operation of an IMF programme, countries experience a significant increase in income inequality compared to similar periods without such programmes. His statistical methods appear to have eliminated other possible factors that could impact on income. Lang has found that in Argentina which was under one of the economically largest and the longest IMF programmes from 1983 to 2004 the Gini coefficient, which measures the inequality among values of a frequency distribution and could be used to measure income disparity, rose from 38 to 45 during that two decade period reflecting a significant rise in the gap between the rich and the poor. The Gini coefficient dropped back to 38 after the IMF programme had ended. The study had also found that the effect of an IMF programme of one-year duration on income distribution could last for five years indicating a slowness in recovery.
I cannot do better than to quote from the abstract of the publication. “Does the International Monetary Fund (IMF) increase inequality? To answer this question, this article introduces a new empirical strategy for determining the effects of IMF programmes that exploits the heterogeneous effect of IMF liquidity on loan allocation based on a difference-in-differences logic. The results show that IMF programmes increase income inequality. An analysis of decile-specific income data shows that this effect is driven by absolute income losses for the poor and not by income gains for the rich. The effect persists for up to five years, and is stronger for IMF programmes in democracies, and when policy conditions, particularly those that demand social-spending cuts and labour-market reforms, are more extensive. These results suggest that IMF programmes can constrain government responsiveness to domestic distributional preferences.”
Pressure that international lending organisations exert on the national policies are not as strong as under IMF programmes. Since its inception IMF has initiated more than 130 programmes and the recipient countries have undergone fundamental economic reforms that IMF usually enforces but unfortunately the initial problems that necessitated IMF intervention have remained unabated though it had assuaged the acute economic collapse. Keeping with their general stringent policies the IMF has installed a set of harsh conditions that could have political repercussions. However, there may not be an alternative and even if there was, the acuteness of the problem would rule out any measures that do not entail a bail out.
This crisis should serve as a lesson to the leaders and also the people about the mistakes of the past that had caused it, mistakes of electing corrupt rulers who mismanaged, wasted, robbed and lived in clover while the poor became poorer and the country ended bankrupt. If at least we had tried and achieved self-sufficiency in food and other essentials that could be produced locally, as suggested by Joseph Stiglitz the former head of the IMF, we would not have been bankrupt, also perhaps it may have been possible to look for alternatives to IMF and moreover we would have been in a stronger position to negotiate with the IMF and other lenders to mitigate the effect of conditions. But that is a big IF given the corrupt political culture and the gullibility of the people.
N.A.de S. Amaratunga
Opinion
Thoughts for Unduvap Poya
Unduvap Poya, which falls today, has great historical significance for Sri Lanka, as several important events occurred on that day but before looking into these, as the occasion demands, our first thought should be about impermanence. One of the cornerstones of Buddha’s teachings is impermanence and there is no better time to ponder over it than now, as the unfolding events of the unprecedented natural disaster exemplify it. Who would have imagined, even a few days ago, the scenes of total devastation we are witnessing now; vast swathes of the country under floodwaters due to torrential rain, multitudes of earth slips burying alive entire families with their hard-built properties and closing multiple trunk roads bringing the country to a virtual standstill. The best of human kindness is also amply demonstrated as many risk their own lives to help those in distress.
In the struggle of life, we are attached and accumulate many things, wanted and unwanted, including wealth overlooking the fact that all this could disappear in a flash, as happened to an unfortunate few during this calamitous time. Even the survivors, though they are happy that they survived, are left with anxiety, apprehension, and sorrow, all of which is due to attachment. We are attached to things because we fail to realise the importance of impermanence. If we do, we would be less attached and less affected. Realisation of the impermanent nature of everything is the first step towards ultimate detachment.
It was on a day like this that Arahant Bhikkhuni Sanghamitta arrived in Lanka Deepa bringing with her a sapling of the Sri Maha Bodhi tree under which Prince Siddhartha attained Enlightenment. She was sent by her father Emperor Ashoka, at the request of Arahant Mahinda who had arrived earlier and established Buddhism formally under the royal patronage of King Devanampiyatissa. With the very successful establishment of Bhikkhu Sasana, as there was a strong clamour for the establishment of Bhikkhuni Sasana as well, Arahant Mahinda requested his father to send his sister which was agreed to by Emperor Ashoka, though reluctantly as he would be losing two of his children. In fact, both served Lanka Deepa till their death, never returning to the country of their birth. Though Arahant Sanghamitta’s main mission was otherwise, her bringing a sapling of the Bo tree has left an indelible imprint in the annals of our history.
According to chronicles, King Devanampiyatissa planted the Bo sapling in Mahamevnawa Park in Anuradhapura in 288 BCE, which continues to thrive, making it the oldest living human planted tree in the world with a known planting date. It is a treasure that needs to be respected and protected at all costs. However, not so long ago it was nearly destroyed by the idiocy of worshippers who poured milk on the roots. Devotion clouding reality, they overlooked the fact that a tree needs water, not milk!
A monk developed a new practice of Bodhi Puja, which even today attracts droves of devotees and has become a ritual. This would have been the last thing the Buddha wanted! He expressed gratitude by gazing at the tree, which gave him shelter during the most crucial of times, for a week but did not want his followers to go around worshipping similar trees growing all over. Instead of following the path the Buddha laid for us, we seem keen on inventing new rituals to indulge in!
Arahant Sanghamitta achieved her prime objective by establishing the Bhikkhuni Sasana which thrived for nearly 1200 years till it fell into decline with the fall of the Anuradhapura kingdom. Unfortunately, during the Polonnaruwa period that followed the influence of Hinduism over Buddhism increased and some of the Buddhist values like equality of sexes and anti-casteism were lost. Subsequently, even the Bhikkhu Sasana went into decline. Higher ordination for Bhikkhus was re-established in 1753 CE with the visit of Upali Maha Thera from Siam which formed the basis of Siam Maha Nikaya. Upali Maha Thero is also credited with reorganising Kandy Esala Perahera to be the annual Procession of the Temple of Tooth, which was previously centred around the worship of deities, by getting a royal decree: “Henceforth Gods and men are to follow the Buddha”
In 1764 CE, Siyam Nikaya imposed a ‘Govigama and Radala’ exclusivity, disregarding a fundamental tenet of the Buddha, apparently in response to an order from the King! Fortunately, Buddhism was saved from the idiocy of Siyam Nikaya by the formation of Amarapura Nikaya in 1800 CE and Ramanna Nikaya in 1864 CE, higher ordination for both obtained from Burma. None of these Niakya’s showed any interest in the re-establishment of Bhikkhuni Sasana which was left to a band of interested and determined ladies.
My thoughts and admiration, on the day Bhikkhuni Sasana was originally established, go to these pioneers whose determination knew no bounds. They overcame enormous difficulties and obtained higher ordination from South Korea initially. Fortunately, Ven. Inamaluwe Sri Sumangala Thero, Maha Nayaka of Rangiri Dambulla Chapter of Siyam Maha Nikaya started offering higher ordination to Bhikkhunis in 1998 but state recognition became a sore point. When Venerable Welimada Dhammadinna Bhikkhuni was denied official recognition as a Bhikkhuni on her national identity card she filed action, with the support of Ven. Inamaluwe Sri Sumangala Thero. In a landmark majority judgement delivered on 16 June, the Supreme Court ruled that the fundamental rights of Ven. Dhammadinna were breached and also Bhikkhuni Sasana was re-established in Sri Lanka. As this judgement did not receive wide publicity, I wrote a piece titled “Buddhism, Bhikkhus and Bhikkhunis” (The Island, 10 July 2025) and my wish for this Unduvap Poya is what I stated therein:
“The landmark legal battle won by Bhikkhunis is a victory for common sense more than anything else. I hope it will help Bhikkhuni Sasana flourish in Sri Lanka. The number of devotees inviting Bhikkhunis to religious functions is increasing. May Bhikkhunis receive the recognition they richly deserve.” May there be a rapid return to normalcy from the current tragic situation.”
by Dr Upul Wijayawardhana
Opinion
Royal Over Eighties
The gathering was actually of ‘Over Seventies’ but those of my generation present were mostly of the late eighties.
Even of them I shall mention only those whom I know at least by name. But, first, to those few of my years and older with whom speech was possible.
First among them, in more sense than one, was Nihal Seneviratne, at ninety-one probably the oldest present. There is no truth to the story that his state of crisp well-being is attributable to the consumption of gul-bunis in his school days. It is traceable rather to a life well lived. His practice of regular walks around the house and along the lane on which he lives may have contributed to his erect posture. As also to the total absence of a walking stick, a helper, or any other form of assistance as he walked into the Janaki hotel where this gathering took place.
Referencing the published accounts of his several decades-long service in Parliament as head of its administration, it would be moot to recall that his close friend and fellow lawyer, J E D Gooneratne, teased him in the following terms: “You will be a bloody clerk all your life”. He did join service as Second Assistant to the Clerk to the House and moved up, but the Clerk became the Secretary General. Regardless of such matters of nomenclature, it could be said that Nihal Seneviratne ran the show.
Others present included Dr. Ranjith de Silva, Surgeon, who was our cricket Captain and, to the best of my knowledge, has the distinction of never engaging in private practice.
The range of Dr. K L (Lochana) Gunaratne’s interests and his accomplishments within each are indeed remarkable. I would think that somebody who’d received his initial training at the AA School of Architecture in London would continue to have architecture as the foundation of his likes /dislikes. Such would also provide a road map to other pursuits whether immediately related to that field or not. That is evident in the leadership roles he has played in the National Academy of Sciences and the Institute of Town Planners among others. As I recall he has also addressed issues related to the Panadura Vadaya.
My memories of D L Seneviratne at school were associated with tennis. As happens, D L had launched his gift for writing over three decades ago with a history of tennis in Sri Lanka (1991). That is a game with which my acquaintance is limited to sending a couple of serves past his ear (not ‘tossing the ball across’ as he asked me to) while Jothilingam, long much missed, waited for his team mates to come for practices. It is a game at which my father spent much time both at the Railway sports club and at our home-town club. (By some kind of chance, I recovered just a week ago the ‘Fred de Saram Challenge Cup’ which, on his winning the Singles for the third time, Koo de Saram came over to the Kandana Club to hand over to him for keeps. They played an exhibition match which father won). D L would know whether or not, as I have heard, in an exhibition match in Colombo, Koo defeated Frank Sedgman, who was on his triumphant return home to Oz after he had won the Wimbledon tournament in London.
I had no idea that D L has written any books till my son brought home the one on the early history of Royal under Marsh and Boake, (both long-bearded young men in their twenties).
It includes a rich assortment of photographs of great value to those who are interested in the history of the Anglican segment of Christian missionary activity here in the context of its contribution to secondary school education. Among them is one of the school as it appeared on moving to Thurstan road from Mutwal. It has been extracted from the History of Royal, 1931, done by students (among whom a relative, Palitha Weeraman, had played a significant role).
As D L shows, (in contra-distinction to the Catholic schools) the CMS had engaged in a largely secular practice. Royal remained so through our time – when one could walk into the examination room and answer questions framed to test one’s knowledge of Christianity, Buddhism, Hinduism and Islam; a knowledge derived mostly from the lectures delivered by an Old Boy at general assembly on Friday plus readings from the Dhammapada, the Bhagavad Gita, the St. John’s version of the Bible or the Koran recited by a student at senior assembly on Tuesday / Thursday.
D L’s history of Royal College had followed in 2006.
His writing is so rich in detail, so precise in formulation, that I would consider this brief note a simple prompt towards a publisher bringing out new editions at different levels of cost.
It was also a pleasure to meet Senaka Amarasinghe, as yet flaunting his Emperor profile, and among the principal organisers of this event.
The encounter with I S de Silva, distinguished attorney, who was on Galle road close to Janaki lane, where I lived then was indeed welcome. As was that with Upali Mendis, who carried out cataract surgery on my mother oh so long ago when he was head of the Eye Hospital. His older brother, L P, was probably the most gifted student in chemistry in our time.
Most serendipitous perhaps was meeting a son of one of our most popular teachers from the 1950s, – Connor Rajaratnam. His cons were a caution.
by Gamini Seneviratne
Opinion
“Regulatory Impact Assessment – Not a bureaucratic formality but essentially an advocacy tool for smarter governance”: A response
Having meticulously read and re-read the above article published in the opinion page of The Island on the 27 Nov, I hasten to make a critical review on the far-reaching proposal made by the co-authors, namely Professor Theekshana Suraweera, Chairman of the Sri Lanka Standards Institution and Dr. Prabath.C.Abeysiriwardana, Director of Ministry of Science and Technology
The aforesaid article provides a timely and compelling critique of Sri Lanka’s long-standing gaps in evidence-based policymaking and argues persuasively for the institutional adoption of Regulatory Impact Assessment (RIA). In a context where policy missteps have led to severe economic and social consequences, the article functions as an essential wake-up call—highlighting RIA not as a bureaucratic formality but as a foundational tool for smarter governance.
One of the article’s strongest contributions is its clear explanation of how regulatory processes currently function in Sri Lanka: legislation is drafted with narrow legal scrutiny focused mainly on constitutional compliance, with little or no structured assessment of economic, social, cultural, or environmental impacts. The author strengthens this argument with well-chosen examples—the sudden ban on chemical fertilizer imports and the consequences of the 1956 Official Language Act—demonstrating how untested regulation can have far-reaching negative outcomes. These cases effectively illustrate the dangers of ad hoc policymaking and underscore the need for a formal review mechanism.
The article also succeeds in demystifying RIA by outlining its core steps—problem definition, option analysis, impact assessment, stakeholder consultation, and post-implementation review. This breakdown makes it clear that RIA is not merely a Western ideal but a practical, structured, and replicable process that could greatly improve policymaking in Sri Lanka. The references to international best practices (such as the role of OIRA in the United States) lend credibility and global context, showing that RIA is not experimental but an established standard in advanced governance systems.
However, the article could have further strengthened its critique by addressing the political economy of reform: the structural incentives, institutional resistance, and political culture that have historically obstructed such tools in Sri Lanka. While the challenges of data availability, quantification, and political pressure are briefly mentioned, a deeper analysis of why evidence-based policymaking has not taken root—and how to overcome these systemic barriers—would have offered greater practical value.
Another potential enhancement would be the inclusion of local micro-level examples where smaller-scale regulations backfired due to insufficient appraisal. This would help illustrate that the problem is not limited to headline-making policy failures but affects governance at every level.
Despite these minor limitations, the article is highly effective as an advocacy piece. It makes a strong case that RIA could transform Sri Lanka’s regulatory landscape by institutionalizing foresight, transparency, and accountability. Its emphasis on aligning RIA with ongoing national initiatives—particularly the strengthening of the National Quality Infrastructure—demonstrates both pragmatism and strategic vision.
At a time, when Chairmen of statutory bodies appointed by the NPP government play a passive voice, the candid opinion expressed by the CEO of SLSI on the necessity of a Regulatory Impact Assessment is an important and insightful contribution. It highlights a critical missing link in Sri Lanka’s policy environment and provides a clear call to action. If widely circulated and taken seriously by policymakers, academics, and civil society, it could indeed become the eye-opener needed to push Sri Lanka toward more rational, responsible, and future-ready governance.
J. A. A. S. Ranasinghe,
Productivity Specialty and Management Consultant
(rathula49@gmail.com)
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