REJECTING mounting calls from local and international economists to seek an International Monetary Fund (IMF) bailout and debt restructure, Sri Lanka, on Wednesday, vowed not to knock the doors of the IMF and instead decided to seek loans from donors including China.
Central Bank Governor Ajith Nivard Cabraal said IMF was not a magic wand adding other alternatives were better than going to the IMF.
Sri Lanka is facing serious troubles these days as the island´s tourism-dependent economy has been battered by the pandemic, with supermarkets rationing goods and rolling blackouts imposed by power utilities unable to fund oil imports.
However, Colombo has acted wisely by not seeking help from the IMF at this critical juncture as the track record of the donor proves it exploits vulnerabilities of the recipients of aid.
No doubt, refusal also has a price as immediately after the announcement, the S and P Global downgraded the economic outlook of the country but the hardworking people of Sri Lanka have the potential to overcome the crisis.
As the tourism industry was widely hit by world-wide restrictions on travel, people of Sri Lanka are experiencing economic difficulties and these might increase further if the country enters into talks with the IMF which puts stringent conditions for release of funds as we have witnessed in the case of Pakistan.
The decision to acquire loans from China and other sources is understandable as these especially Beijing does not believe in economic coercion of the aid recipients.
China is investing over $60 billion in Pakistan’s economy but has not imposed any conditions that could be interpreted as infringement upon political sovereignty of the country or a burden on the common man.
