The deal should be signed next Friday. Initially the IMF should provide US$ 313 million to help Sri Lanka cope with a plunge in foreign currency reserves, capital flight and systemic government deficit.
“This opens huge opportunities for Sri Lanka,” central bank Governor Nivard Cabraal said. “It will also make borrowing costs cheaper and is likely to have a very significant impact on our ratings.”
But many ordinary islanders are less sanguine about it, more concerned that export-driven economic policies will negatively impact domestic production and badly affect the poorest segments of society, especially women and small-scale fishermen.
Geetha Lakmini Fernando, executive secretary of the National Fisheries Solidarity Movement (NAFSO), told AsiaNews that the country needs something more than IMF loans; it needs a different economic policy.
In order to overcome the crisis, fund the war and end the country’s balance of payment deficit, the government “has increased direct taxes on the general public” on items such as “fuel, machinery, and vehicles” as well as basic food items like “rice, sugar and dhal,” she said.
“The decision to issue treasury bills worth 20.2 billion rupees” (about US$ 175 million) and “print more money [. . .] will increase the price of goods” as well as “interest rates and loans”. People living in rural areas will be most affected.
A family that could live on a thousand rupees a week, now will need 1,500 rupees.
The most affected segment of the population will be women who lost their husbands during the war or as a result of the tsunami. About 89,000 household are in fact headed by women, especially in “the north and the east of the country”.
The consequences are visible to all. In “Trincomalee alone the malnutrition rate is 24 per cent among the children under the age of 5,” Fernando said.
The economic crisis and government policy have been especially bad for small businesses and subsistence producers.
“In the past few years fuel prices have gone sky high” and “small fishermen have had to pay prices that have gone up 300 per cent in 2008 compared to 2007,” Fernando explained.
Making matters worse, imports of canned, raw and dry fish are up, and “this badly affects small food producers”.
At the same time, even though small-scale fishermen “contribute more than 65 per cent of total fish catch, the Sri Lankan government is promoting the deep sea fishery rather than traditional fishing,” which is essential for the survival of entire families.
For NAFSO’s executive secretary the existing “liberalised economic system” is leading the country “towards disaster”, not only because “it affects disproportionately the weakest segments of the population” but also because “it undermines its traditions.”