Treat the Cause, Not Symptoms

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Foreign media reported yesterday (7) that the “USA will support the restructuring of Sri Lanka’s debt and extend financing assurances, US Treasury Secretary Janet Yellen said in a letter.”

The USA is Sri Lanka’s largest merchandise export market, discounting the island’s IT and IT Enabled Services (ITES) exports to this market. IT and ITES exports, according to the Central Bank of Sri Lanka (CBSL) was the island’s fourth largest foreign exchange earner last year.

Previously, the UK in a statement issued on 16 August included Sri Lanka in its GSP+ equivalent duty-free import regime known as “Developing Countries Trading Scheme.” UK is Sri Lanka’s third largest merchandise export market and among its top two tourism services export market, traditionally.

And the EU in Sri Lanka in a twitter message on Friday (2) said, “Welcomes staff level agreement between IMF and Sri Lanka and looks forward to continue cooperation on public finance management and green economy, including export industries.”  EU was referring to last Thursday’s USD 2.9 billion staff level agreement with the IMF.  EU is Sri Lanka’s second largest merchandise export market.

The Office of the UN High Commissioner for Human Rights (OHCHR) in Geneva has also taken up this view. OHCHR in a statement issued on Tuesday (6) said, “A UN report acknowledges that Sri Lanka is at a critical juncture in its political life and is in the midst of a serious economic crisis which has severely impacted the human rights of all communities and people of all walks of life. This has spurred broad-based demands by Sri Lankans from all communities for deeper reforms and accountability and gives the Government a fresh opportunity to steer the country on a new path.

“For sustainable improvements to take place, however, it is vital to recognise and address the underlying factors which have contributed to the economic crisis, including embedded impunity for past and present human rights violations, economic crimes and endemic corruption.

“While the security forces recently showed considerable restraint in response to mass protests, the Government has since taken a harder line approach, arresting some student leaders under the Prevention of Terrorism Act and violently suppressing peaceful protests.”

These developments come in the backdrop that on coming Monday (12), the UNHRC sessions in Geneva held under the auspices of the Human Rights Commissioner will kick off with their debates on Sri Lanka and Myanmar. “Traditionally,” vis-à-vis Sri Lanka, these sessions focus on alleged HR violations by the country, especially during the closing stages of its war with the LTTE which ended on 18 May 2009.

But with Sri Lanka’s debt crisis and the political and socioeconomic debilitating effects that such a fall has on the country, the focus will probably shift to individuals responsible for that and Sri Lanka’s HR crises.

It’s easy to pinpoint who the culprits for both of these crises are, where, vis-à-vis from an economic viewpoint, historically Sri Lanka’s expensive and short-term foreign commercial debt as a percentage of total foreign debt  comprising both foreign commercial and foreign concessional debt which was under seven per cent up to 2005, shot up to 28 per cent in 2009 and passed the 50 per cent mark three years later in 2012 despite warnings by then IMF Resident Representative to Sri Lanka Dr. Koshy Mathai about the dangers to debt sustainability that such a development would cause.

Sri Lanka’s foreign concessional debt is still over 50 per cent and in April Sri Lanka declared bankruptcy. Therefore, the message by the UNHRC on Tuesday is to treat the cause, including HR and not the symptoms of the disease. Over to President Wickremesinghe and his Government to take necessary steps to avoid a greater catastrophe.