What will the IMF rescue?

The IMF has just approved the long awaited loan and also agreed to release some 300 million of it immediately.

But what of the conditions? Earlier, reports indicated that the IMF was looking for concrete policy reforms in order to release the money. We are all aware of the Government’s apparent dislike of IMF interference or ‘conditions’ but in this case it would seem that they have caved to a certain extent.

Or have they?

The main opposers of the loan were the USA, Britain and France. The concerns raised were mainly the lack of confidence in the Government’s ability to carry out feasible reconstruction and ensure long term growth and also the human rights violation aspect of the post war era.

As for the human rights aspect of it, to my mind, they are fine ones to talk. Repeatedly, there have been atrocious abuses on human rights by these very governments that have been brushed aside as ‘necessary’ to ‘secure democracy’ etc. To me, the whole human rights issue is pure farce. It is merely a sign of power brokering going on behind the scenes. Of who our powerful allies are and of whom those allies are up against. In this respect, Sri Lanka is just a pawn.

As for the doubts in the government’s ability to reconstruct the nation and then assure a robust economy with long term growth prospects, i have to admit i share some of those views as well. The type of structural reforms required for such a measure like the liberation of markets, devolution of power, social reform etc with an intelligent vision with relevance to the future seems out of reach to a government used to bullishly hugging power and having its own way all the time.

But as we wait and see, all we see coming out of the bigwigs in the state in terms of what is going to happen are short term things like repairing the balance of payments etc. These are merely operational changes and will not really improve the chances of our economy to break out of its ‘third world’ or ‘developing’ status. For that to happen, like i’ve been harping on this blog for ages, a vision is needed. It sounds corny when i say ‘vision’ like that i know, but isn’t that how all the more ‘developed’ nations got to where they are today? If we continue to pay scant heed to events further than the next general election we will be stumbling in the dark as a nation forever.

The loan amount approved was $2.6 billion. $600mn more than what we originally asked for. Which is great. There is also the promised aid from China, India and i think Iran that is yet to materialize. Shit, i hope at least some of it will see the light of day in terms of actual benefit to the public.

On the bright side, we can probably expect a stock market rally again today, and this one may last for a while yet. Holders of high beta shares like JKH and others could probably make a good short term killing.


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