Sri Lanka in sorry plight thanks to IMF, says FSP Education Secretary

By Rathindra Kuruwita

In the early 1990s, Sri Lanka had signed an international agreement undertaking to allocate six percent of its GDP for education, at a time when state revenue accounted for around 23 percent of GDP, Education Secretary of the Frontline Socialist Party (FSP) Pubudu Jayagoda said.

Jayagoda told The Island that in the 1970s, state revenue made up over 50 percent of the country’s GDP.

“Now, revenue has plummeted to around 12 percent, and a few years ago, it dropped to below 10 percent. The same individuals responsible for this decline are now lamenting the lack of funds for health and education,” Jayagoda remarked.

He attributed the decline in revenue to decisions made by successive governments to refrain from engaging in economic activities.

“In 1998, IMF representatives arrived in Sri Lanka and instructed the Chandrika Bandaranaike government to review taxes on foreign investors. This caused our state revenue to collapse. Ironically, the same IMF is now urging the government to increase state revenue to 15 percent of GDP. It’s absurd—the IMF’s advice reduced revenue to nine percent, and now they’re asking us to boost it,” he said.

Jayagoda added that the IMF had recently held a Zoom meeting on Sri Lanka.

“During the meeting, the IMF representatives insisted that international trade should face no barriers. They also advised against measures to protect domestic small and medium-sized enterprises, while advocating for the liberalisation of education, healthcare, and welfare programmes. Furthermore, they called for reforms to labour laws,” he explained.

The FSP Education Secretary warned that if Sri Lanka complied with these recommendations, its industries would collapse, leading to the loss of millions of jobs. Sri Lanka’s current crisis is a direct result of diligently following IMF recommendations, and that the country’s future looked bleak if it continues to heed IMF advice, Jayagoda added.