‘Government won the IMF war as well…’
The day when the government of Mahinda Rajapakse acquired the largest IMF facility of the history the news headline published in the Sri Lankan media.
One victory after another for, Mahinda’s government. Government wins the IMF war…’
The Sunday Times
This is how the Sunday Times newspaper reported the IMF concession which Sri Lanka got.
During the on-going war with the LTTE, Mahinda’s government requested IMF assistance. During the ferocious period of the war, British and French foreign ministers visited Sri Lanka and requested Mahinda to go for a cessation of hostility with the LTTE, which request Mahinda did not heed, and Mahinda also refused Sweden’s foreign minister to come to Sri Lanka.
In a statement to the ‘Guardian’ newspaper on May 1, 2009, the UN Security Council chairman, the Mexican envoy, stated that the UN Security Council will not object to Sri Lanka receiving an IMF facility.
‘Despite international pressure, the UN Security Council will not obstruct IMF loan relief to Sri Lanka…’
U.N. Security Council Chairman
The Sunday Times reported on July 31, 2009, that member countries of the IMF’s director board, which decides on loan approval for Sri Lanka, Britain, France, and Germany will not vote against Sri Lanka’s request but abstained from voting. The state minister of finance at the time, Sarath Amunugama, stated that the US would work to prevent Sri Lanka from obtaining the facility, but the US ambassador at the time, Blake, stated that this is not true. If the US had voted against Sri Lanka’s request, the facility would not have been granted. However, in order to appease international human rights organisations and the Tamil Diaspora, the United States walked out of the director board meeting without voting against Sri Lanka’s request.
Despite opposition from the United States and other Western countries, Mahinda’s government was able to obtain an IMF loan. During this time, Mahinda’s government was accused of human rights violations during the war, assassination of journalist Lasantha Wickramatunga, attack on journalist Keith Noyahr, and media repression. Furthermore, Mahinda’s supporters accused the British High Commission of plotting to rescue Prabakaran during the final stages of the war, and they pelted rotten tomatoes and stones at the British High Commission office. Despite the fact that the entire world was against Mahinda’s government, he was able to obtain IMF relief. Britten, who was subjected to rotten tomato and stone pelting, did not vote against Sri Lanka.
Ranil Wickramasinghe, the leader of the opposition in Sri Lanka at the time, was recognised by the international community. Mangala, International’s best friend, was also in the opposition. However, the IMF decided to give Sri Lanka loan relief.
As a result, Mahinda, who was despised by the international community, received the largest IMF loan ever granted to Sri Lanka. Then it’s not such a big deal for Ranil, who was said to be a friend of the international community, to get it.
Not only Mahinda or Ranil, but the world’s worst dictator, who oppresses people with his boot, has received IMF loans. Pinochet, a dictator to the outside world, was also granted an IMF loan while he was torturing and killing people. This implies that if IMF conditions are met, obtaining an IMF loan is not difficult; even the devil could get one.
Even if Ranil’s current seat was occupied by Gotabaya, Basil, or Mahinda this IMF loan would have been granted. Basil Rajapakse, the finance minister, was the first to negotiate for this IMF loan. Ranil questioned Basil about the agreed-upon IMF conditions because he had initiated talks with the IMF. Following the declaration of Sri Lanka as a bankrupt state, Gotabaya removed Basi as finance minister and replaced him with Ali Sabry, who was then sent to the IMF for negotiations. Nirmala, the Indian Foreign Minister, negotiated on behalf of Sri Lanka and assisted Ali Sabry in the negotiations. Basil initiated the task, which was continued by Ali Sabry and completed by Ranil.
IMF staff level agreement was to be signed in July but due to ‘aragalaya’ that got crippled. .’
Ranil said this after signing the IMF staff level agreement. This meant that the IMF staff level agreement was ready to be signed during President Gotabaya’s tenure. He appointed three knowledgeable individuals to negotiate and obtain IMF facilities. Former CB governor Kumarasamy was one of them. Shantha Devarajan and Gamini Coorey are the other two. In addition, the world-renowned leading financial and legal advisory firms Lazard and Clifford Chance LLP were hired to resolve Sri Lankan debts with creditors. Ranil worked with the IMF via these companies. This denotes, obtaining the IMF facility is not a herculean task.
America, India, and Japan worked tirelessly to secure the IMF loan for Sri Lanka. They were concerned that Sri Lanka would receive a loan from China. When Mahinda, and Rajapakses were at odds with the international community in 2009, the IMF granted the loan out of fear that Mahinda would obtain loans subject to Chinese conditions. America, Japan, and India are well-known influencers for the IMF loan to Sri Lanka. America vehemently accused China of obstructing Sri Lanka’s ability to obtain a loan in order to corner China.
When Ranil stated that he had fulfilled all IMF conditions, IMF Director Christine stated that the loan could not be sanctioned until the Chinese letter was received. This indicated that China would be forced to accept IMF conditions through Sri Lanka.
China does not agree to restructure their loans given to other countries through IMF. Zambia is a country which obtained loans from China similar to Sri Lanka. Zambia received the first instalment of the IMF loan as Sri Lanka did. However due to it is not been possible to restructure the credit with China the IMF deal in Zambian has been stalled at present.
‘ does this mean that IMF sanctioned Sri Lanka’s loan to corner China..?’
That is the reality. Ranil received US$ 2.9 billion from the IMF. Despite widespread opposition, Mahinda did not sign the IMF agreement despite receiving 2.5 billion from the IMF. Mahinda was supposed to sign the agreement as finance minister, but he went to Egypt instead. Siyabalapitiya, the state minister of finance, signed the agreement. Signing the agreement, according to Mahinda, is considered a disgrace to his political career. Ranil and his supporters believe it is a victory. As a result, fireworks were set off at Siri kotha.