Sri Lanka: IMF deal is not a solution – restart decisive struggle against government attacks!

March 23 -2023

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.

Six months of negotiations with the IMF were also centered on another key aspect, i.e. the geopolitical gain over China. Though the government now claims that they have obtained support from China for the deal, it is still not clear to anyone what ‘deal’ they have made with China. Lack of transparency is not something new in Sri Lanka and is another trait that the current president, Ranil Wickramasinge, inherited from the Rajapaksa family. Based on the brief statement the president made to parliament (https://www.colombotelegraph.com/index.php/president-ranil-wickremesinghes-special-statement-full-text/), it is clear that these deals are only temporary postponements rather than any concrete improvements. Extending the repayment period is presented as a solution with the view of “growth” without mentioning where this imaginary growth is going to come from. None of the economic problems that led to the country’s bankruptcy last year are resolved. The economy continues to survive only on the basis of ‘handouts’ and further borrowing from any country that is willing to offer anything. The developing world economic crisis and the sharpening geopolitical tension in the Asia-Pacific region further add to the complications.

Worsening conditions

As a consequence of these policies, tens of thousands of workers face a reduction in living standards which the country has never faced before. There are reports of starvation and of families forced to choose which children will receive an education, etc. “When I cook rice in an electric cooker, my heat becomes noodles,” commented Abdul Raheem, a worker following the enormous electricity price hike that took place in mid-February this year. It has gone up further by 65% (an increase of 300% in a year). Many simply do not have any choice but to switch off electricity completely as they cannot afford to pay. This is in addition to further price hikes of fuel and other key commodities (https://www.numbeo.com/cost-of-living/country_result.jsp?country=Sri+Lanka). Consumer price inflation remains at about 50% since June last year (https://www.cbsl.gov.lk/en/measures-of-consumer-price-inflation). Workers, farmers and the poor must accept the hardship if they have to feel better sometime in the distant future, is what the government continues to preach. “I am aware of the hardships that the people of this country have had to suffer. As a Government, we apologize for that,” said Ranil recently in parliament, as though this bogus apology will bring comfort to those starving. The government has made no effort so far to curtail the enormous profits still being made by the capitalists. While asking workers to tighten their belts, the government is making all efforts to maximize profit and fatten the capitalists’ stomachs.

Workers must refuse to pay massively inflated electricity bills. Poor farmers and small traders should refuse to pay the macro-debt they have. Campaigns should be built to organise such non-payment. We must demand that the government refuse to pay debt and invest that money into essential industries producing essential commodities, including food items, and establish an adequate, democratically controlled distribution mechanism. We must reject the conditions imposed by the IMF deal.

Political instability

The current government is extremely unpopular. The president was not elected but rather appointed through emergency measures. He lost his seat in the last election and his party could not even win a single parliamentary constituency. But he managed to obtain a single seat for his United National Party (UNP) through the national list mechanism. In a statement, the president made to parliament, on 22 March, he admits that he has no support but claims self-belief is enough! The UNP has no support in parliament but relies on the disgraced Rajapaksa clan to carry through policies to attack the masses. A mammoth mass movement forced out the Rajapaksa clan and the whole cabinet during the July uprising last year. However, the current president used emergency powers and the military to suppress the mass movement and bring the old regime back into power through the backdoor. Not even ‘formal democracy’ exists anymore.

The president’s attempt to hold a provincial election recently backfired. Ranil, trapped in his small Colombo bubble, assumed that somehow the people had ‘bought’ into what he was doing and the possibility of winning the election before the IMF deal, bringing some sort of ‘mandate’ to the deal as demanded by the West. However, soon after calling the election, when the election rallies started, it was clear how unpopular the Rajapaksas, including Ranil, are in the country. They could not get any decent turnout at the election rallies. As soon as it became clear that the ruling party was likely to lose the election massively, the election was called off. The attempt to promote the ex-president’s son, Namal Rajapaksa, as a ‘new leader” was a spectacular failure. Even his former ally, Wimal Weerawmasa, called him a “premature boiler chicken” as he went around empty stadiums speaking to empty chairs.

The opposition Samagi Jana Balawegaya (SJB – United People’s Power) was also not able to fully benefit from the enormous unpopularity of the ruling party because they do not have a clear alternative to Ranil’s policies. Their slightly increased popularity was linked to lesser evilism rather than proactive support for them. In this vacuum, the Janatha Vimukthi Peramuna (JVP – people’s liberation front) and its coalition, the NPP, were the main force that gained significant support. Although the NPP also does not have a clear alternative and offers indirect support to the IMF deal, it is gaining popularity due to its left rhetoric and anti-corruption position (see the article by Siritunga Jayusiriya for more details on the NPP’s stance on various issues).

Although the JVP-led NPP has adopted more right-wing policies, including openly supporting the privatisation of education, their gains will still be regarded as a blow to capitalist interests, which is something the West, India, and capitalism are not prepared to tolerate. However, the JVP has not presented a decisive challenge to any of the policies. Their position now revolves completely around calling for a new election. The establishment’s position is now to call the election only when they can win. Everyone, including the JVP, knows how unpopular this government is. Recently, JVP leader Anura Kumara Dissanayake even challenged President Ranil to organize a meeting of at least one hundred people to demonstrate support. It is not an exaggeration to say that Ranil could not even pull such a small, genuine mobilization. Despite knowing this weakness and the mood of a mass uprising and anger that exists, the JVP continues to be a barrier to mounting a decisive fightback. The JVP used its (strong) influence in its union recently to put a stop to developing strikes.

Mood for struggle emerging

Various unions came together to call for a 24-hour general strike on 15 March, with the aim of continuing the strike if their demands for a wage raise are not met. The Government Medical Officers’ Association (GMOA), the Ceylon Bank Employees Union, along with teachers and various other small unions, have joined forces to push back against massive wage cuts that the government is carrying out. Sections of the unions willing to further escalate the struggle faced obstacles as JVP-influenced unions were keen on calling off the strike by midnight on the 15th. Despite such setbacks, militancy among the unions is on the increase, and further strike actions, including a general strike, are possible in the coming days or months. Workers have no other option but to escalate the fightback.

University students and youth continue to hold various protests regularly, despite non-stop brutal attacks and arrests by government forces. It is this brutal repressive measure that has so far held back further movements from developing. However, the anger and frustration against the regime are reaching somewhat of a tipping point.

Need to build an alternative

The United Socialist Party in Sri Lanka is calling for a one-day general strike and mass mobilisation with the aim of restarting the decisive struggle against the ongoing attacks by the government. A generalised fightback must be built not just by demanding improvements in conditions but also with the aim of building a clear workers’ alternative. Demands such as non-payment of debt, capital control, the establishment of democratically controlled distribution of essentials, workers’-controlled nationalisation, etc., must be implemented. In effect, an emergency economic policy needs to be implemented that will benefit the workers and poor in opposition to the punishing policies protecting big profits. But unless a viable mass workers’ alternative is built, such policies will not be implemented.

The call for Aragalaya-2.0 (Struggle) should be linked to clear demands and organisational proposals to build people’s assemblies across the country. The existing people’s assemblies and various organizations that emerged during the last Aragalaya should adopt such a strategy and call for establishing a democratically elected constituent assembly to reorganize society. The slogan “Go home Ranil and take 225 MPs with you” is gaining popularity and gives an indication of how capitalist institutions have become very unpopular. Instead of rebuilding trust back in these outdated institutions, we must work to build a new, real alternative for workers, farmers, youth, and the poor. That can help to defend living standards and organise the election of a constituent assembly. Hence, what should follow such slogans should be proposals for an alternative. The collective action of unions and mass mobilisations can expose the outright lie of the capitalists that there is no alternative to misery.