UN picks holes in IMF prescription for SL


Neither the Sri Lankan government nor the International Monetary Fund (IMF) had conducted an ex ante human rights impact assessment of the economic reforms implemented or announced, United Nations Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, Juan Pablo Bohoslavsky said yesterday in a statement after his nine-day visit to Sri Lanka.

He said that he was extremely concerned about recent reforms by the government to reduce energy and farming subsidies, setting fuel price using an automatic market based mechanism and the attempts to deregulate price of electricity. These measures might have an adverse effect on the livelihood of fisher, farmers and rural communities’ households.

The present administration has chosen a strategy, as recommended by the International Monetary Fund (IMF), to stabilise the economy by strengthening the fiscal and external sectors. "Significant efforts have been deployed by the Government to maintain macroeconomic stability and a range of reforms were adopted to serve that goal. Besides fiscal consolidation measures, there were also reforms on its social safety net programmes. Sri Lanka’s vision 2025 programme (launched in 2017) lays out a series of announced measures for 2025 including deregulatory reforms impacting on land and the labour market," he said.

"The government must conduct an ex ante human rights impact assessment when it rationalises fuel subsidies and social security benefits or when a more profit-oriented logic is introduced into public services or state-owned corporations."

Bohoslavsky has also expressed concern about the lack of unionisation of the Sri Lankan work force as weak trade unions have the potential to entrench income inequality and stagnation of workers’ wages in the bottom half of the labour market and trade unions lose the power to fulfill their traditional role of contributing to redistribution.

"The government has expressed its intention of engaging in public-private partnerships in important social sectors such as health, education, etc. These efforts of public private partnerships should not replace the Government’s primary obligation of ensuring the economic, social and cultural rights equally among everyone and its obligation in allocating maximum available resources," he said.

Pointing to the fact that debt repayment has become the most important expenditure for Sri Lanka, Bohoslavsky recommends that debt sustainability analyses should be carried out by the Government and international financial institutions based on a more comprehensive understanding of debt sustainability, incorporating human rights and the social and environmental dimensions of sustainability.

"Social spending should not be cut in order to repay increasing debts if less harmful policy options are available. There are at least three –complementary- options that deserve to be considered. First, boosting domestic demand through various channels, including progressive tax reforms, expanding social benefits and increasing of minimum wages, among other measures; the resulting improvement in GDP growth would increase fiscal revenues. Second, opening the discussion on whether the military budget reflects the fundamental changes the country has undergone in the last years, in particular in the fields of peace and economic development. And third, renegotiating the debt with creditors in order to expand the fiscal space to boost the domestic demand and generate revenues to ensure that nobody is left behind. Fiscal, monetary, economic and social policies need to be fully consistent."

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