The IMF has been transformed into a “Goni Billa / Grease Yaka” by these ministers and the governor, and described as an international institution awaiting an opportunity to strike, to aid regime change, to kill and to swallow sovereignty, the independence and resources of the people in favor of the rich and powerful western nations


In this difficult period for Sri Lanka, economically and socially, with far-reaching risks of precipitating a crisis

which can easily destabilize the whole country, impoverish it and lead to starvation of poor and vulnerable segments and even lead to national calamity as a result of social unrest, are some ministers and the governor misleading citizens and even their superiors in terms of governance? If so, do they not realize the looming risks, the most recent examples of Lebanon and yet continue to mislead and lead the country down a dangerous path, where one misstep can spell disaster for the majority of citizens and those who are not yet born?

The IMF has been transformed into a “Goni Billa / Grease Yaka” by these ministers and the governor, and described as an international institution awaiting an opportunity to strike, to aid regime change, to kill and to swallow sovereignty, the independence and the resources of the people in favor of the rich and powerful Western nations! This plan they are developing will be achieved through “IMF conditionality”, described more or less as a suicide note and a last will in favor of the IMF.

Rather, this is how the IMF describes “conditionality” 1 – “When a country borrows from the IMF, its government agrees to adjust its economic policies to overcome the problems that led it to seek financial assistance. These policy adjustments are conditions for IMF loans and serve to ensure that the country will be able to repay the IMF. This conditionality system is designed to promote national ownership of strong and effective policies.

“Conditionality covers the design of programs supported by the IMF, ie macroeconomic and structural policies, and the specific tools used to monitor progress towards the objectives defined by the country in cooperation with the IMF. Conditionality helps countries resolve balance-of-payments problems without resorting to measures detrimental to national or international prosperity. At the same time, the measures aim to preserve IMF resources by ensuring that the country’s balance of payments will be strong enough to allow it to repay the loan.

“The member country has primary responsibility for selecting, designing and implementing policies to ensure the success of the IMF-supported program. The program is described in a letter of intent, which is often accompanied by a memorandum of economic and financial policies. The objectives and policies of the program depend on the country situation. But the overriding objective is still to restore or maintain balance of payments viability and macroeconomic stability while paving the way for sustained and high-quality growth and, in low-income countries, reduction of the economy. poverty. “

In addition, the “Guidance Note on the IMF’s Commitment to Social Safeguards in Low Income Countries2” of June 14, 2018 refers to;

“The role of social safeguards in protecting vulnerable groups is an important part of the Fund’s engagement with Low Income Countries (LICs).

Reducing poverty, and more broadly promoting inclusive growth, helps support economic and political stability. For these reasons, achieving strong and sustainable poverty reduction has been established as a key objective for Fund programs supported by the Poverty Reduction and Growth Trust Fund (PRGT) and the Support Instrument. policies (ISP).

Social safeguards represent a key policy tool to achieve this goal, and therefore have an important role both in the design of LIC programs and in policy discussions with LICs in monitoring the Fund.

For the purposes of this note, social guarantees include the following:

  • Commitments to social spending and other priority spending. Minimum floors for social and other priority spending should be included, to the extent possible, in programs supported by PRGT facilities. Social spending is defined as spending on education, health and social protection, social protection including social safety nets (or social assistance) and social insurance. Other priority spending typically includes high priority projects that support national poverty reduction and growth strategies.
  • Specific reforms designed to protect poor and vulnerable groups, for example by strengthening social safety nets and improving monitoring and control of spending on these groups.

The key concepts described above are amplified as follows:

  • Inclusive growth versus pro-poor growth. While there is no universally accepted definition of the concept of inclusive growth, it generally refers to circumstances where growth is robust and widely distributed across all sectors, and the benefits are widely shared. Growth is said to be pro-poor in relative terms if and only if the incomes of the poor increase faster than that of the population as a whole. Pro-poor growth can be the result of direct income redistribution programs, while promoting inclusive growth requires efforts to boost productivity and measures to mitigate growth-inequality trade-offs.
  • Social protection consists of social safety nets and social insurance policies:
  • Social safety nets (or social assistance) are defined as “non-contributory measures designed to provide regular and predictable support to poor and vulnerable people”. They can include measures such as cash transfers, school meals, in-kind transfers (such as targeted food assistance), public works programs and fee waivers (The State of Social Safety Nets, World Bank 2018) .
  • Social insurance policies are generally funded by contributions and can include old age and disability pensions, maternity, unemployment and health insurance.
  • Other priority spending typically includes some infrastructure spending that may be a development priority but may bring little or no benefits to vulnerable people in the short term. Due to the country-specific nature of this spending, this note focuses more on social spending. Country teams, in close consultation with authorities, should use judgment in deciding whether or not to incorporate other priority expenditures into program design.

The Brookings Institute article titled “Managing the Sovereign Debt of Developing Countries” 3 states: “The IMF determined in early 2020 that 29 of its most vulnerable members will be exempt from amortization and interest on their debts. towards the organization, for an initial period of six months. which was then extended to 24 months (until April 13, 2022).

In turn, the G-20 proposed a suspension of the debt service of the countries of the International Development Association (IDA) for the year 2020. This initiative of suspension of the service of the debt (DSSI) has potentially benefited to 73 countries, but did not cancel the debt, which also continued to earn interest.

The corresponding decision was adopted by the Paris Club and other major creditors, notably China. However, private creditors have not adopted it, as demanded by the G-20, and some debtor countries have not used it for fear that their sovereign ratings will be negatively affected.

The IMF’s proposals stressed the need to improve the existing institutional arrangement – the so-called “contractual arrangement” based on collective action clauses included in bond contracts – which was redesigned in 2014, and at the same time stressing time the growing problems associated with non-bond and guaranteed debt, and the lack of transparency in this area.

It should be noted that the other possibility that has been on the table for the past two decades is the creation of a new institution that would support sovereign debt renegotiations. An additional possibility is to do so within the framework of the IMF, as was attempted at the turn of the century, if the debt panel in charge is independent of the institution’s board of directors. The need for such a reform, described as “statutory” in the debates, was once again defended by UNCTAD during the current crisis.

The above evidence supports the claim that some ministers and the governor created the IMF’s “Goni Billa / Grease Yaka” image, is just a figment of their imagination or a picture painted with personal interests or policies.

Footnotes

1https: //www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/28/IMF-Conditionality

2file: /// C: /Users/User/Downloads/pp061418social-safeguards-guidance-note.pdf

March 3, 2021 – Jose Antonio Ocampo – Chair – United Nations Development Policy Committee


Professor and Director, Economic and Political Development Concentration, School for International and Public Affairs – Columbia University



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