-By LeN Political Editor
(Lanka-e-News -07.June.2025, 9.50 PM) At a glance, it might seem like the Sri Lankan Finance Ministry is still calling the shots. But dig just a little deeper — past the parliamentary press conferences, donor-funded seminars, and carefully worded government gazettes — and one begins to wonder: is Sri Lanka still in charge of its own economy, or has it effectively been placed under administrative receivership by the International Monetary Fund?
This is no longer an economic question. It’s a political one. And a very fiery one at that.
Welcome to Lanka-e-News Political Debate 2: Is the IMF running the country — or just managing the receipts?
The IMF, in its now almost ritualistic role as Sri Lanka’s economic nanny, is not just auditing the national purse but also dictating how each rupee should (or should not) be spent. “You cannot grant tax relief here. You cannot subsidise that. You must increase this, remove that, and oh — we'll release the next tranche of funds only if you're obedient,” is the underlying tone now being heard loud and clear in the corridors of Sir Ernest de Silva Mawatha.
This isn’t a bailout. It’s more like financial probation.
Yes, the IMF did step in after Sri Lanka dramatically defaulted on its sovereign debt in 2022. International creditors — from Beijing’s Export-Import Bank to Wall Street’s bond vigilantes — were stunned. They lent with dreams of returns and got a postcard from Colombo saying, “Sorry, we're out of cash.” So the IMF came in with restructuring frameworks and institutional straightjackets.
They brought a small token of cash — crumbs really — just enough to keep Sri Lanka in the loop, dangling like a marionette. And behind this assistance? A formidable team of suit-wearing fiscal disciplinarians now reportedly embedded in the Finance Ministry itself. One senior Treasury official — requesting anonymity out of fear he’d be demoted to managing the canteen — told Lanka eNews: “Sometimes we feel like assistants in our own office. They’ve got the spreadsheets, the passwords, and the upper hand.”
But let’s be brutally honest: Sri Lanka’s fiscal mismanagement is legendary. For two decades, public funds have flowed like arrack at a political rally. Agricultural subsidies without accountability. Ceylon Petroleum hemorrhaging billions. SriLankan Airlines still trying to fly on taxpayer fumes. SOEs have become bottomless pits with golden chairs for political appointees.
Then there’s the ever-so-mysterious infrastructure budgets. Projects like the now-famous expressway to nowhere or ports with no ships — many of them costed at 60–70% above original estimates. When questioned, the standard answer is: “Ah, inflation. And some minor adjustments.” Adjustments, indeed.
In such a fiscal jungle, is it really any surprise the IMF has decided to step in with not just conditionality — but virtual occupation?
Here’s where things get political — properly political.
The IMF’s recent position that Sri Lanka cannot provide any tax relief to potential investors — even to strategic projects like Port City Colombo or Hambantota Free Trade Zones — has ignited a firestorm. Business leaders, trade chambers, and even the otherwise careful National People’s Power (NPP) government have privately bristled.
Because while the IMF may understand macroeconomics, it seems less enthusiastic about global competitiveness.
Dubai offers tax holidays. Singapore rolls out the red carpet for investors. Even Vietnam provides strategic tax exemptions. But Sri Lanka, under IMF rule, appears to be holding up a sign that says: “Welcome, but no discounts allowed.”
Economists like Dr. Nalaka Godahewa warn, “If the IMF micromanages Sri Lanka’s tax policy, we will lose our FDI edge. Investors will skip Colombo and go to Jakarta or Bangkok.” In essence, Sri Lanka is being told it must stabilise, but without the tools to attract capital.
So the million-dollar question — or more accurately, the $2.9 billion IMF question — is: who gets to decide how we use our tax policy?
Defenders of the IMF say they are merely trying to clean the Augean stables of Sri Lankan corruption and mismanagement. “Sri Lanka begged for help. Now the country must comply. Fiscal discipline is not optional,” an IMF insider reportedly told a major Western wire service.
But critics argue the Fund has overstepped.
“They came to help us stand up, not to sit in our chairs,” said a visibly frustrated MP during a closed-door committee meeting. “You can’t say you support economic recovery, then block every measure a sovereign country takes to attract investment.”
And then there’s the optics. The IMF team stationed at the Treasury, closely tracking daily decisions, has made it look like a parallel administration has quietly taken root. Some call it surveillance. Others call it necessary. Most just call it awkward.
President Anura Kumara Dissanayake and his NPP government have been praised for bringing fiscal discipline, ramping up revenue collection, and cracking down on wasteful expenditure. But they now face an inconvenient truth: to truly revive the economy, Sri Lanka needs foreign investment. And to attract that investment, the country must offer incentives — including tax relief.
But every time the Finance Ministry considers such a policy, they must look over their shoulder to see whether the IMF will stamp it “Unacceptable”.
One senior economic advisor put it bluntly: “We’re trying to get out of the ICU, but the doctors won’t let us take any medicine unless they prescribe it themselves. Meanwhile, the patient is fading.”
As this debate unfolds, Sri Lankans are beginning to ask a different question altogether — not just “Is the IMF managing the receipts?” but “Did we hand over the cash register entirely?”
Public anger is simmering. Social media is ablaze with hashtags like #IMFdictatorship and #SovereigntyMatters. And while most citizens agree Sri Lanka needs to clean up its economic mess, many are not ready to outsource sovereignty to a committee in Washington, D.C.
Because at the end of the day, what is a nation if it cannot decide its own tax policy?
So, dear reader, welcome to the political economy of dependency. In this game, there are no free lunches — only carefully portioned IMF instalments served with a generous side of austerity.
In this new Lanka-e-News Political Debate series, we’ll continue to ask the hard questions. Today it’s the IMF. Tomorrow, it could be the World Bank, the Chinese Exim Bank, or even our own Central Bank — if it continues printing rupees like it’s photocopying exam papers.
But for now, we leave you with this: if the IMF is holding the pen that signs off on our tax code, maybe it’s time we asked who’s really holding the cheque book.
Editor’s Note: The Lanka-e-News Political Debate is a daily series raising unfiltered questions about policy, power, and representation. Tomorrow’s topic: “Corruption in Sri Lanka: Why the Public Must Change for the Nation to Heal “? Stay tuned.
- By LeN Political Editor
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by (2025-06-07 16:18:38)
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