UNP MP Dr. Harsha de Silva yesterday said that the UPFA government has no clear foreign policy, and they also do not have a clear economic policy for the country.
He said with the government of Sri Lanka and the IMF agreeing on 2 April on the way forward on the currently suspended standby agreement, the government has had to admit that it took certain steps in the last few weeks in order to ensure, the suspension of the bailout package was removed.
Addressing the press in Colombo Dr. Silva said the country will recall the recent depreciation of the country the increase of interest rates and the upward revision of energy prices both in fuel and electricity, all of those were in order to satisfy the IMF conditions.
“The government vehemently rejected that, and said it had nothing to do with the IMF. However now based on the letter to the IMF signed by Central Bank Governor Ajith Nivad Cabraal and deputy Minister of Finance Geethanjana Gunawardena, they have admitted that they did three things to fall back in line with the IMF’s conditions, so that they could request the IMF to release the suspended tranches totaling $ 800 million”, he said.
He stated that according to a letter sent to the IMF by the government, it says the depreciation of the currency, increasing of interest rates and the increase in domestic petroleum and electricity prices were done to satisfy the IMF, which the government has admitted in the letter. “What we are saying is be truthful to the people of this country, because you can’t hide these things forever. People are bound to find out in a really nasty way. When prices escalate people are unable to survive. We don’t want to advocate bad policies. The UNP has been the party that always rescued Sri Lanka from trouble”, added Dr. De Silva.
In 1977 when people were eating off garbage cans, or whether it is in 2001 when the economy was in negative territory, he said it was always the UNP that rescued this country. “We know what the economic policies that needs to be implemented. We don’t tell people otherwise and have been truthful to the people. What we need in this country is a market economy. Therefore, we continue to warn the government that by trying to artificially control the macro economic variables, such as interest rates and exchange rates, that they were creating a huge problem for themselves and for the people of this country”.
However, he added that those warnings were dismissed. But some months later people realized that obviously the policies of the government were absolutely incorrect. “Now the government is saying that the increase in duties has nothing to do with the IMF. They are increased because there is congestion on the roads. That too is a fabrication, because the objective of the government is to somehow reduce imports. In order to reduce imports increasing interest rates depreciating the currency increasing fuel and electricity prices and obviously increasing import duties, will all contribute towards reducing imports, so that the net internal reserve position of the central bank, which is a technical term, which is the condition the IMF has laid down on Sri Lanka can be met. So to summarize just like the government of Sri Lanka does not have a proper policy on its international affairs as we’ve seen over the last few weeks it does not have a policy of its own its domestic economic affairs either. Whatever the IMF says they will do as they do not have a proper policy. Thereafter after sometime they will try to renege on the agreement … then when they hit a brick wall, they will go begging to the IMF again, and then when the IMF says do something else they will do, and this cycle continues endlessly”.
Dr. de Silva added that the country is only going sideways, and not moving forward. “8% growth is peanuts, because if you look at the studies done by IBS and others, they said that 2% growth was removed because of the war. If there was no war you should anyway have a 2% growth. Therefore, 6% normal growth and the 2% make up the 8%. Hence UBS and others have indicated that the growth will fall to 6%. So if you remove the 2% from the 6% you are down to 4%, which is going back to the pre 1977 era”, he said.
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