President Ranil Wickremesinghe announced that the agreement with the International Monetary Fund (IMF) would be presented to Parliament for a vote on whether to support it. Following this, the key points of the agreement would be enacted into law. The President also indicated that the Prevention of Terrorism Bill, the Truth and Reconciliation Commission, and the Anti-Corruption Bill would be submitted to Parliament by June. He shared these updates with university professors and heads of economic departments as part of a discussion about the IMF program at the Ministry of Finance Auditorium yesterday (02).
During the same discussion, President Ranil Wickremesinghe also urged universities to send ten of their most talented economics students to engage with government officials and provide their opinions on the International Monetary Fund program. He also proposed that a group of students be awarded scholarships to attend recognized foreign universities.
The President highlighted the need for automation in production and services in order for the country to remain competitive with nations like India and Bangladesh. He emphasized that the education system must be reformed to achieve this goal. However, he made it clear that he did not intend to approach the International Monetary Fund for the 18th time.
At the meeting, the President was joined by State Ministers of Finance, the Governor of the Central Bank, the Secretary of the Ministry of Finance, Vice-Chancellors of universities, and lecturers from economic departments. They all shared their thoughts on the IMF program, and their opinions and responses are as follows;
President Ranil Wickremesinghe,
First and foremost, it is anticipated that the agreement with the International Monetary Fund (IMF) will be presented to Parliament for a vote on whether or not to support it. We encourage everyone to take a stance on this matter. We propose to support the program, but understand that some may wish to remain neutral. In addition, the main points of the IMF agreement will be enacted into law, and any necessary changes will be presented to Parliament. We aim to present the basic aspects of the agreement in May, with information about the program being disseminated to rural sectors after the New Year.
Secondly, we plan to introduce our programs, including the green economy. However, we first need to assess the response to these programs. The anti-corruption law will be out very soon, maybe by May. There are three important bills that are coming out, Anti-terrorism Bill, Truth and Reconciliation Commission and Anti-Corruption. The Minister of Justice and the Chief Justice has asked that all three bills not be brought together because it is difficult for the Supreme Court to go into it and there will be a shortage of lawyers. Therefore, one bill will come out towards the end of April, followed by the other two and somewhere by June all three bills will come.
The goal of our modernization program is to enhance production while maintaining competitiveness, which will require cooperation from all sectors. To this end, we are exploring the possibility of establishing an Agricultural Technical University by merging government research institutes and other institutions. Post-graduate courses could also be established if deemed necessary. This will strengthen the research process and facilitate the incorporation of technology. Let's unite all sectors and implement this program together.
The IMF agreement has been thoroughly reviewed, and those present are knowledgeable enough to provide further explanation. However, any proposed solutions must adhere to the framework established by the International Monetary Fund. We have been given six months to work within this framework, and it is crucial that we do so. The majority, including farmers and tourism business owners, believe that this is necessary. While trade unions argue against privatization, if one-third of the money spent on these loss-making institutions was directed towards universities and the education sector, there would be greater progress. Addressing salary issues could also be a part of this effort. Trade unions cannot dictate our policies. We cannot afford to fall behind Afghanistan again; reforms are necessary. Even the opposition acknowledges the need for reform in the country.
Despite bringing a bill and appointing a commission to create industries, we failed to advance industrialization. Our focus was on achieving peace after the war, but we still spent a significant amount of money on war efforts, especially the war from 1983-1987. Instead of industrialization, we pursued programs in the construction sector. If we had prioritized industrialization in 2009, we could have attracted a lot of investments. However, if we set conditions for foreign investors, they may not come. In fact, our local investors who have money in foreign bank accounts will be the first to invest if the situation is favourable.
During President JR Jayawardane's tenure, the Mahaweli scheme, which was supposed to be completed in 30 years, was finished in 10 years. All institutions involved in the project were brought to Sri Lanka at the same time, which established methods of obtaining money for the people of Sri Lanka. This has led to some groups improving and investing in other projects.
Currently, people are afraid that the economy will collapse and their businesses will fail, so they keep their money in London or Dubai. It's crucial for them to bring that money back to Sri Lanka.
We propose to select ten talented final year students studying economics in universities to participate in discussions with officials and ministers. In addition, we aim to provide four talented students with foreign scholarships to renowned universities such as Harvard, Cambridge, Oxford, and Stanford.
Minister of State for Finance, Ranjith Siyambalapitiya;
Today, I am talking to economic experts along with the President, who also studied at a Sri Lankan university. Our country has had ministers who left the cabinet when they proposed going to the International Monetary Fund in the past. Due to inflation, we had to increase bank interest rates and control imports which affected people from all levels of society. Consequently, we had to seek help from the International Monetary Fund, a decision the President had warned about twenty years ago. At that time, we were on the opposing side and went with the popular stand, but we now realize that it was a mistake. The President has announced that we will not seek assistance from the International Monetary Fund for the 18th time. We need to take responsibility for our economy, and I expect the contribution of the economic experts to achieve this goal.
Central Bank Governor Dr. Nandalal Weerasinghe;
A professional-level discussion is taking place here that goes beyond the topic of trade unions. Despite having gone to the International Monetary Fund 16 times, success was not possible due to some improperly implemented conditions. Negotiations were used to increase taxes, and it is now impractical for the country to remove the agreements made. There are two ways to remove the tax package, but both require time: either collect more taxes from people or increase the government's income and salaries. The private sector has made some changes and if successful, could provide relief in the future. However, high-income earners are the ones criticizing the situation, saying they cannot afford it for six months.
The manufacturing economy is the economic advantage a country gains by producing goods. The production of goods and services increases income from gross domestic product. Value addition in the agricultural sector can lead to significant income, as has been shown during this discussion. However, for the younger generation to turn to agriculture, it must be made more efficient. Currently, young people going abroad are not working in agriculture but in the service sector.
Although agriculture contributes only seven per cent to the economy, it employs 27 per cent of the workforce. People working in the service sector can earn income by improving agricultural production. The development of both the manufacturing and service sectors is necessary for the country's growth.
Senior Professor Sampath Amaratunga, Chairman of the University Grants Commission
Inviting university professors to discuss the International Monetary Fund agreement is a great honour to the university system. Vice-chancellors, professors, lecturers, members of the University Grants Commission, and even young lecturers can benefit from participating in these discussions.
As a country, we are currently facing an economic crisis, and debt has been a topic of discussion for years. If there are alternative proposals or models, we should explore them. Those who oppose the current program in parliament should be asked to present an alternative model.
India recently privatized its airline, Air India, due to continuous losses. It begs the question, why should Sri Lanka keep an airline that is causing billions of losses, while India doesn't?
To overcome the current crisis, we should study the decisions made in the 1980s and how New Zealand managed to recover from a crisis. New Zealand implemented excellent policies to reduce the economic burden on the government and directed the private sector to do business. We should learn from their example.
Senior Professor Udith K Jayasinghe, Vice Chancellor of North West University
As a group of experts, we have prepared a policy on agri-food, using the correct scientific methods. If this policy can be implemented under a single program, a significant portion of the work can be accomplished. I believe that this will be crucial for the agreement made with the International Monetary Fund.
Professor Premakumar De Silva of the Department of Sociology at the University of Colombo -
There is a significant population of people living in rural areas of our country who are not connected to the global economy. I am interested in conducting research on these individuals. It is crucial to uplift the rural poor under the plan to develop the country. As a middle-class citizen, I am also impacted by the crisis, and we all must make some sacrifices.
Moreover, there is a substantial group of young people who are not involved in the economy, and they require professional knowledge and training. While there are several vocational training institutes in the country, their effectiveness is not widely known. We must continue on this journey with self-criticism and a willingness to improve.
Professor Shirantha Heenkenda –
It appears that the citizens of the country are still hesitant to proceed with taking out loans. As such, it is necessary to provide them with more information about the country's development plans. We need to create confidence among the people regarding the program of developing the country through loans. If we expect people to be patient for six months, we must have faith in the tax system and ensure that there is transparency in the process.
Moreover, there needs to be a discussion about transparency in the loan process to help build trust among the people. We need to provide clear explanations about how the loans will be used to benefit the country and its citizens, which will help alleviate any fears or doubts that people may have.
Professor Priyanga Dunusinghe of the Colombo University
I appreciate your decisions regarding the country's economy. As you rightly point out, restructuring the public sector and creating a competitive economy is crucial for our country's economic development. However, I agree that there are also serious issues with private sector service providers in our country, and that the prices they set can have a significant impact on the economy.
In light of this, I fully agree with your request to focus on maintaining the competitiveness of the private sector and preventing market collapse. Borrowing from the International Monetary Fund is a necessary step, but we must also pay attention to finding low-cost sources of credit to minimize the burden on our economy.
As for the green economy, I believe that it is an important area for our country to focus on. We must work towards creating sustainable and environmentally friendly industries and promoting clean energy. This will not only help to protect our environment but also create new opportunities for economic growth and development.
Kelaniya University Professor Ajith Dissanayake,
The implementation of the past economy requires self-criticism. In addition, people have a negative attitude towards borrowing from the International Monetary Fund due to past experiences. The public questions the benefits of previous loans and whether they were properly invested. To address this, it is necessary to focus on creating a positive attitude towards borrowing and demonstrating the effective use of the loans for the betterment of the country.
Dr. Indrajith Aponsu – University of Colombo
I approach the debate over the International Monetary Fund from two perspectives. First, the challenges that people face as a result of IMF policies, and second, whether the IMF's focus is on addressing our country's long-term problems. The trade deficit, which was a major component of the balance of payments deficit, increased by more than 90 billion between 2000 and 2020. It is critical to address this issue.
Our small and medium-scale enterprises are now of high quality. They can join the value chain if we can get them to innovate and focus on exports. Tourism and remittances are important as well.
Peradeniya University Vice Chancellor Professor M. D. Lamawansa
Recognizing the challenges we face, we have made a number of decisions at the university level to reduce waste and eliminate backlogs despite staff shortages. The support provided by the staff and students to cope with this difficult period should also be appreciated. Our current emphasis is on international relations and the recruitment of international students. Currently, we have approximately 50 international students. I am hopeful that we will be able to recruit more students in the coming months.
Anas Cader, South Eastern University –
This is the first time we've seen a bottom-up policy approach. It is a very good initiative. We've all got good ideas. A good first step is to establish an institution where economic experts can develop and implement their ideas and policies.
Professor A. Rameez, from the South Eastern University
The people of the Eastern Province are optimistic that the President will do something to revitalize the country. The government was able to earn Rs. 100 billion through Payee Tax. On the other hand, losses of SriLankan Airlines and CEB cost the government around Rs. 113-117 billion in eight months. Ceylon Petroleum Corporation's annual loss is close to Rs. 600 billion. As a result, there is an urgent need to reform all of the government's enterprises. So, Mr. President, you're on the right track, and I believe the people will back you up as you reform the state-owned enterprise.
Vice Chancellor of the Ruhuna University Senior Professor Sujeewa Amarasena –
I know that we are not going to have any tax concessions for the next six months and we are okay with that. But all the other academics are on trade union action believing that something will come with the trade union action. But, we know that it is not going to happen. When I asked our side, they have not had a written communication from trade union leaders that negotiations are unsuccessful. So, I think it’s good to be open and say we are not able to negotiate these proposals for six months, but we definitely promise to discuss these proposals in six months.
State Minister of Finance Shehan Semasinghe –
This was very clearly communicated that trade union actions will be discussed in six months and we have had different rounds of talks with officials and even the Presidential Secretariat. So, this has been communicated to the Trade Union Leaders but, it’s sad to see that they are just not willing to understand or they just pretend as if they don’t understand. I think that’s a sad situation. But, we will broaden the communication. Also, if these trade union leaders don’t communicate the proper message, can they be representatives of the trade unions?
Finance Ministry Secretary Mahinda Siriwardana –
I must admit that some parts of the country's economy have had a negative impact. Our state finances have suffered a severe collapse, and it's clear that decades of old habits cannot be changed overnight. To remedy this, we must adopt fiscal discipline and implement tax policies. Our President has advised us to use technology to expand the tax base, which may only have a temporary effect. However, as government revenue increases, the effect of these policies will gradually fade away.
Presidential Senior Adviser on National Security and Chief of Presidential Staff Sagala Ratnayake, Presidential Adviser on Economic Affairs Dr. R.H.S. Samaratunga, and a group of scholars representing the university field attended the event.