‘Import duty cuts for vehicles, electrical goods IMF conditions’


One-time UPFA MP Wijedasa R says IMF wants to spur imports from those who fund the lending agency

By Shamindra Ferdinando


Wijedasa Rajapakshe, MP says the government gave in to two key IMF conditions in the run-up to presentation of the Budget 2010.

Rajapakshe insists that the IMF’s approval for the Budget as well as the release of the third tranche of $ 2.6 billion stand-in facility was subject to Sri Lanka lowering duties on vehicles and electrical goods.

In an interview with The Island, the former UPFA National List MP, said that the government economists had deceived not only the masses but the top political leadership as well. Rajapakshe said that the government could not have presented the Budget without having prior approval from the IMF, though some ministers painted a rosy picture of the economy.

Participating at the Budget debate last Saturday, Rajapakshe attacked the government for giving in to conditions detrimental to the national economy. He explained that the IMF had forced Sri Lanka to sharply reduce import duties on vehicles and electrical items to spur imports. "No one disputed me because they knew I was telling the truth," he said.

Rajapakshe said: "The Chinese, Japanese and Indians will be the main beneficiaries. We must not forget that they have invested heavily in the IMF and the leading agency will promote the interests of its investors. The bottom line is that we’ll be wasting our foreign reserves to import vehicles and other items, which we don’t need."

He accused the government of deceiving the country with regard to the much touted $ 6 billion in foreign reserves. The MP said that the government talked as if the entire sum belonged to Sri Lanka, whereas the actual situation was different. Challenging the government to provide a breakdown of the country’s foreign reserves, Rajapakshe said that most of the funds were either from the IMF or other investors. He said that the government had not revealed the exact amount that belonged to the country.

The government, he said, did not respond to his criticism during the Budget debate with regard to what he called a great lie perpetrated on the people. He said: "When I pointed out that Sri Lanka’s $ 6 billion foreign reserves were made of investments by various players, UPFA MP Vasudeva Nanayakkara shot back demanding to know whether it was not the way other countries, too, built their foreign reserves."

Rajapakshe said that he had told MP Nanayakkara that the only difference was that other governments were able to explain the composition of their respective foreign reserves.

He urged the government to take the people into confidence and explain the actual situation. He said that President Rajapaksa should demand an explanation from the officials concerned without any further delay and take measures to rectify what he called a rapidly deteriorating economy. The government would not be able to pull out of the IMF’s ‘embrace’ overnight, though a gradual recovery was possible. But it would be a very difficult road and the political leadership would have to go for strict measures to gradually turn around the economy, he said.

He asserted that the conclusion of the war in May last year would give the country an opportunity to save foreign exchange and that should give a mega boost to economic recovery. The post-LTTE era should be fully exploited for the greater good, he said urging the Rajapaksa administration to review the economy and take corrective measures.

Rajapakshe severely criticised those who praised the government for winning the confidence of the IMF. He claimed that Sri Lanka’s heavy dependence on the IMF could lead to a catastrophic situation and it ran the risk of ending up in a debt trap like Greece.



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