Summary of analysis:
The International Monetary Fund (IMF) has agreed to give Sri Lanka a $3 billion bailout over four years, but this is not enough to resolve the country’s economic crisis. Despite declaring bankruptcy, Sri Lanka has promised to pay back its debt, which amounts to over $35 billion. To secure the IMF deal, the government has implemented measures such as a wage freeze, tax increases, and the selling of assets, which have caused further hardship for the people. The IMF deal has also focused on geopolitical gain over China, but it is not clear what deal the government has made with China. The current government is unpopular, having been appointed through emergency measures and suppressing mass movements. The people are facing a reduction in living standards, and campaigns should be built to refuse to pay macro-debt and demand investment in essential industries.
On 20 March, the IMF announced a $3 billion bailout (over 4 years) for Sri Lanka. However, this deal is nowhere near enough to solve the deep crisis that Sri Lanka faces. Despite declaring bankruptcy, the Sri Lankan government continues to promise to pay back its massive debt (over $35 billion). Parts of the repayment have only been temporarily suspended by lenders. The government may need to spend much more than what the IMF had offered each year just to service its debt.
The IMF deal is presented in the country by the government, the right-wing opposition, and a section of the so-called left as the “ultimate solution.” This is particularly due to the so-called “structural reform” agreement that the government has made with the IMF. These measures, which had already started to be implemented, are creating enormous misery. A wage freeze and reductions, slashing of overtime payments, increasing interest rates for all borrowings, tax increases, etc., are in full swing already as “preparation” to secure the IMF deal. Plans have already been made to sell Lanka Hospital, Telecom, and other services. In effect, these measures will not only create more hardship but will also further deepen the crisis. IMF deals have a proven history of making conditions worse rather than actually solving anything. The IMF’s involvement in Argentina is an example of how it continues to wreck living conditions….