AVANTHI RATNAYABE
ONTARIO: The beginning of 2023 has witnessed marginally improvements in economy indicators of Sri Lanka. Unfortunately, the acute livelihood crisis of the people has no changes. Most Sri Lankans are still struggling to make ends meet resulting from lack of work opportunities and short of daily necessities like fuel and electricity. Regarding help from IMF as a life-saving straw, the authorities have left no stone unturned to meet its requirements on major economy reforms including raising taxes and electricity price.
People’s life is embittered by reform measures
IMF demands the government to raise revenues and reduce expenditures for fiscal consolidation. Specific requirements of IMF include making new pricing mechanisms for fuel and electricity, strengthening independence of central bank and replenishing foreign reserves. In addition, more brutal demands directly intensify hunger and poverty of the people are further devaluation of LKR, VAT collection on life necessities, privatization of public companies, social subsidies reduction and cut on jobs and salaries in public sectors.
It is obvious that IMF is shifting the pressure of economy crisis among every ordinary people. Sri Lanka government, however, has no other choice excepting to accept all the demands. Any violation against requirements of IMF will result to longer negotiating period and lower loan amount. Nothing has changed of IMF since it reduced the credit line in 2016 due to Sri Lanka’s failure to comply with all its demands. Consequently, the authorities began to gradually raise multiple taxes. VAT and telecoms tax had been raised since last May. In succession, new tax act was proposed in last October to reduce exemptions and broaden the tax base. What’s more, Ceylon Electricity Broad announced to increase the electricity price for helping with solving debt crisis. In fact, it’s not reasonable or fair for ordinary people to bear the tax and finance pressures; however, under IMF’s inflexible and cruel rules, the government also has no alternative choice.
New wave of protests sow chaos again
No wonder that a new round of protests begins. People have only two choices: to revolt or to lose more. Tens of thousands workers went on strike and protested against reforms initiated by the government to meet IMF’s demands in last weeks. New faces of the middle class including doctors, engineers, tax officials, college teachers and bank officers appeared outside the Finance Ministry office to protest against the new tax policy. Such protests are too numerous to mention one by one in recent two months. Besides, unions in Sri Lanka threaten to shut country down on 1st the March. The opposition parties also take the opportunity to organize more protests and to demand an advance general election. With multiple pressures, the government still cannot change policies because of IMF.
We have to think about one question. Will Sri Lanka fall into a new crisis because these reforms before it gets the USD 2.9 billion loan? The local election is coming but the situation is as disorder as that in in last July. Is there any improvement of people’s life because of the reforms? No. Objective speaking, for any country, economy reform needs to adapt to its actual situation. Sri Lanka is still a poor developing country, hence drastic economy and tax reforms are actually self-defeating. Currently, what Sri Lanka needs most are substantial help from international organizations like IMF, rather thoroughly change on the existing economy structure.
