This political column continues the island’s long tradition of insider political journalism, from the 19th century Ceylon Examiner to today’s Sunday Times Political Column, and, of course, the inimitable Suranimala. We’re still crafting the genre’s 21st century incarnation, so please send us feedback on what works, and what doesn’t.
Since the economic crisis, Sri Lanka's economic policy has largely been set by the IMF. Though presidents Ranil Wickremesinghe and Anura Kumara Dissanayake had their own priorities and styles, on the fundamental questions of how much to tax and how much to spend, they had little choice but to work within the IMF’s red lines.
When the IMF programme currently in force ends in March next year, the government has decided to take economic policy-making more fully into its own hands. It won’t sign-up for another Extended Fund Facility, or EFF, programme.
But this isn't the end of the government’s tango with the IMF, just a change of tempo. The government knows the value of the IMF's stamp of approval. Despite the conclusion of the IMF programme, it understands the country requires some support to transform economic stability into growth and development, said a senior government source involved in economic policy-making. According to him, the government isn’t planning to fully cut ties just yet.
There are other ways for the government to engage with the fund other than EFFs. EFFs are three to four year programmes built around structural reform. Most of the IMF's other programmes, such as Stand-by Arrangements, are shorter and less demanding. Countries often move onto one of these programmes after completing an EFF programme.
“The focus from post-March 2027 would be on building reserves, stabilising the currency, and attracting more investments to the country,” the source added.
The final decision on exactly how the government works with the IMF after the current programme ends will be made in the coming months — after talking to businesses, economists, and civil servants.
The first to say any of this publicly was Bimal Rathnayake, the leader of the house, who made an appearance at a Swarnavahini political talk show. The government wouldn’t seek another programme "like the current one", he told the audience. He was careful to add that this didn’t mean leaving early.
His remarks came as AKD was personally overseeing a counter-proposal to the IMF to get the programme through its seventh review. The sticking point is the usual one: he needs to find the revenue to pay for the fuel subsidy and upcoming tax cuts.
Saffron red
In announcing the visit of Tilvin Silva, the JVP’s general secretary, and four other party members, the BJP described the JVP as Sri Lanka's "ruling party". A mere slip of the tongue, or more precisely of the pen? Unlikely. The words appeared in a written statement signed by Vijay Chauthaiwale, who heads the BJP's foreign affairs department. Formally, Sri Lanka is governed by the NPP, the JVP-led electoral alliance through which the government won its mandate. The BJP’s choice of words leaves little doubt about where it thinks power actually lies.
The visit itself was telling. The JVP delegation was in India from September 27th to October 1st at the invitation of the BJP, not the Indian government. The party said the trip was meant to strengthen ties between the two parties and “exchange of organisational experience”.
There were official calls: a visit to the Indian parliament and meetings with S. Jaishankar, the external affairs minister, and Rekha Gupta, Delhi's chief minister. But most of the delegation's time was spent with the party. It toured the BJP's national headquarters and its Delhi office, and met a succession of party wings and departments.
