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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2341

How the IMF Ruined SriLanka

[b]How the IMF Ruined SriLanka[/b]

By Garvin Karunaratne - International Consultant

In the early Seventies, the IMF and its sister organization the World Bank had invented the Structural Adjustment Programme to exploit the Third World. They brought the Third World countries to their knees by liberally showering on them credit, that inevitably turned into debts that they could not repay. Those countries that accepted the new teachings of these prestigious organizations- the IMF and the World Bank never thought of the sinister motives of these two organizations that went on advocating free trade and liberalization.

In the words of Mr Ronnie de Mel, the Minister of Finance of the J.R. Jayawardena Government of Sri Lanka, that embraced the new teachings of the IMF, "We cannot go round the world begging for aid like international beggars for ever. We must get out of this vicious circle of no growth, stagnation and mounting internal and external debt"(Budget Speech). Instead what happened was that Sri Lanka slumped further and further into debt, unemployment, its currency devalued, inflation and a cost of living that caused poverty and destitution to over half the population.

Earlier, the Third World countries had to balance their foreign exchange budgets. They had to contain their expenditure on foreign exchange- cut their coat according to the cloth they had. Down came the IMF with liberal credit to spend as they wished and countries like Sri Lanka, Ghana, Tanzania were all caught in this net. It is documented that in the case of Tanzania, in 1977, the IMF persuaded the Government to abolish the foreign exchange budgeting system and lift controls on imports; by 1978 Tanzania had reserves for only ten days' imports. Then the IMF imposed its Structural Adjustment reforms. Tanzania which had a stable self reliant economy was broken down and brought to its knees.(CherylPayer, Lent & Lost,1991)

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