ජාත්‍යන්තර සමාජවාදී විකල්පය – ශ්‍රී ලංකාව

The IMF (International Monetary Fund) and the World Bank were set up to ensure the stability of capitalism worldwide. Both were established after World War II as part of the new order with the US as the main capitalist power. The IMF is an instrument of US imperialism that helped ensure that the formal independence of former colonies after World War II did not lead to real independence but neo-colonial domination. From the early 1970s, the IMF serves mainly as a credit fund. In exchange for loans, policy changes are imposed. Neoliberal austerity, for instance, is imposed. There are currently loans to 94 countries.

‘Structural adjustment programmes’

Credits are usually linked to obligations, such as the ‘structural adjustment programmes’ imposed on the people of the neo-colonial world. These are programmes to deregulate and ‘open’ the economy by reducing subsidies to the population and small local entrepreneurs, phasing out customs tariffs, privatising public services, reducing public spending on healthcare and education … It amounts to opening the economy to multinationals, with profits not staying in the country itself.

The IMF can impose this as a result of the huge debt trap. The poorest countries have to spend a large part of their national income to pay off debt and interest. This amounts to a major transfer of resources from the poorest to the richest countries. Public debt is one of the main weapons the major powers use to dominate the poorest countries. This comes at the expense of the majority of the population in Latin America, Africa and Asia. The IMF is not limited to the neo-colonial world. In the debt crisis in Greece from late 2009, the IMF formed a troika with the European Central Bank and the European Commission to block popular opposition to austerity. They made the leftist Syriza government bend to the laws of the market.

By early 2024, there were $149 billion in loans to 94 countries. Two thirds of these are credits to 10 countries: Argentina ($42.9 billion), Egypt ($14.9 billion), Ukraine ($12 billion), Pakistan ($7.72 billion), Ecuador ($7.7 billion), Colombia ($4.3 billion), Angola ($4.07 billion), Kenya ($3.34 billion), South Africa ($3.02 billion) and Ghana ($2.74 billion).

Harsh attacks on working class and oppressed

The IMF always demands harsh attacks on the working class and oppressed. It praises Argentine far-right President Milei’s policies as ‘much more ambitious’ than previous governments. The Argentine government sacked 25,000 civil servants, the construction of public works was suspended, healthcare and education are being cut hard, while inflation is close to 300% wages for many civil servants are not being adjusted, pensioners lost 32% of their purchasing power in one year … At the beginning of 2023, 41.7% of the population was officially living in poverty, by mid-2024 the shock policy will has raised it to 52.9%. In the first three months of this year, 3.2 million people became officially poor. That’s what the IMF calls ‘ambitious’!

Pakistan’s debt crisis led to massive layoffs, with an estimated 7 million workers losing their jobs.  The loss in value of the Pakistani rupee and inflation further eroded purchasing power. In six months, 800,000 people left the country, mostly for the Gulf states. IMF loans to Pakistan led, among other things, to a sharp increase in electricity prices. The country is sinking further into a hopeless morass of misery for the majority of the population. The IMF looks on with satisfaction.

Resistance

Everywhere that cuts are imposed at the behest of the IMF, there is also resistance. Last summer this was the case with mass protests in Kenya, now there are student protest in Argentina. Nowhere is there broad popular support for the policies imposed. Yet local politicians continue to fall in line. After all, it is that or break with the entire system.

When the leftist Syriza government in Greece was elected on the basis of a rejection of austerity policies, the IMF, the European Union and the European Central Bank intervened to stop it. The 2008 recession hit Greece hard and led to a sharp increase in public debt. Greece was under fire from the financial markets, making it more expensive to borrow. The government could no longer pay its debts, upon which the IMF, among others, intervened with credits linked to cuts in public sector wages and jobs, pensions, a reduction in the minimum wage, privatisations … This led to massive resistance from the working class with successive general strikes, large demonstrations and the election of a government led by the left-wing Syriza party in 2015. This party thought it was possible to get rid of the cuts with good arguments, which was an illusion. Despite a referendum in which a large majority opposed new cuts, Syriza conceded in the summer of 2015 after which attacks such as raising the retirement age came.

The alternative is the non-payment of public debts. However, this requires a struggle by the working and poor at the national and international level. Soon, non-payment of debts will have to be accompanied by the nationalisation of banks and financial institutions to avoid capital flight. Solidarity by working people in other countries is crucial in this regard, both to spread non-payment in other countries and to combat reprisals by creditor countries and institutions.  

Lessons for Sri Lanka

New President Anura Kumara Dissanayake and his government immediately engaged in negotiations with the IMF. They hope for adjustments to the set conditions. This risks turning into an illusion, reminiscent of the Syriza government in Greece in 2015. With good arguments, including about the dramatic impact of austerity on the majority of the population, the IMF cannot be persuaded. It is an institution that defends the interests of capitalism, not those of the workers and oppressed.

IMF credits go hand in hand with austerity and privatisations. Examples from other countries show how disastrous these are for the majority of the population. It is a tsunami of anti-social attacks on social gains and public services. Opposition to it must be organised immediately. If the labour movement does not do this and through struggle stands up for a socialist alternative, other forces can grow on the basis of popular despair. That would be a recipe for more division and right-wing populism, which hits the most oppressed the hardest and is ultimately not in the interest of the entire working class.

Resistance is needed for an end to IMF bailouts, non-payment of public debts, nationalisation of the financial sector and key sectors of the economy and democratic deployment of available wealth in the interest of the majority of the population. Such a break with capitalism may start at the national level, but will only continue if it is followed internationally.