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IMF-Pushed ‘Heavy Tax Burden’ Sparks Massive Protest in Sri Lanka
IMF-Pushed ‘Heavy Tax Burden’ Sparks Massive Protest in Sri Lanka
Sputnik India
Sri Lanka’s main opposition party Samagi Jana Balawegaya (SJB) spearheaded a massive protest in Colombo on Tuesday over the rising tax burden spurred by International Monetary Fund (IMF)-induced austerity measures.
2024-01-31T14:17+0530
2024-01-31T14:17+0530
2024-01-31T14:17+0530
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Sri Lanka’s main opposition party Samagi Jana Balawegaya (SJB) spearheaded a massive protest in Colombo on Tuesday over the rising tax burden and the country’s economic woes spurred by International Monetary Fund (IMF)-induced austerity measures.Ramadasa blamed the President Ranil Wickremesinghe’s administration for the current state of affairs, warning that the economic indicators would get worse in coming days.The demonstration, attended by thousands, witnessed police resorting to the use of water cannons and tear-gas in a bid to rein in angry demonstrators. The SJB claimed that almost 50,000 people attended the protest.IMF Conditionalities Unpopular in Sri Lanka, Analyst SaysThe demonstration took place days after Sri Lanka’s Department of Census and Statistics reported that the overall inflation in December 2023, as measured by the National Consumer Price Index (NCPI), had risen year-on-year (YoY) by 4.2 percent.Reports in Sri Lankan media claimed that besides the rising food costs, the inflation had been impacted by Colombo’s decision to raise value added tax (VAT) twice since 2022, when the authorities began negotiating an IMF bailout.Observers have cautioned that the inflation could rise further as Sri Lankan cabinet increased VAT again from 15 percent to 18 percent this month, in line with conditions imposed by the IMF.The analyst noted that the western lender has had a tendancy to trigger popular anger due to its austerity measures in other countries too, as is being witnessed in Sri Lankan case at present.Moorthy stated that not only the SJB, but the centre-left Janatha Vimukthi Peramuna (JVP) has also been seeking renegotiation of IMF terms to ease the economic burden.“This may be the main reason why the SJB has awakened to IMF conditionalities as compared to its earlier posturing which restricted itself to prices and taxes,” Moorthy went on to explain.The IMF approved a $2.9 billion EEF loan for Sri Lanka last March and has since released the first tranche of $330 million, with the remaining amount expected to be released in three instalments subjected to Colombo fulfilling the terms of US-headquartered lender.An IMF delegation visited Sri Lanka this month for studying the “progress in implementing economic and financial policies under the EEF arrangement”, according to a statement by IMF.
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IMF-Pushed ‘Heavy Tax Burden’ Sparks Massive Protest in Sri Lanka
Sri Lanka has been asked by the IMF to increase taxes, scrap energy and water subsidies, cut pensions and privatise state companies to avail a $2.9 billion loan from the western lender.
Sri Lanka’s main opposition party Samagi Jana Balawegaya (SJB) spearheaded a massive protest in Colombo on Tuesday over the rising tax burden and the country’s economic woes spurred by International Monetary Fund (IMF)-induced austerity measures.
SJB leader Sajith Premadasa told reporters at the demonstration that Sri Lanka’s 22 million-strong population has been pushed to the brink of poverty due to the dire economic conditions.
Ramadasa blamed the President Ranil Wickremesinghe’s administration for the current state of affairs, warning that the economic indicators would get worse in coming days.
The SJB told a visiting International Monetary Fund (IMF) delegation this month that it would “renegotiate” the terms of the $2.9 billion Extended Fund Facility (EEF) if it won the presidential election scheduled to take place later in the year.
The demonstration, attended by thousands, witnessed police resorting to the use of water cannons and tear-gas in a bid to rein in angry demonstrators. The SJB claimed that almost 50,000 people attended the protest.
IMF Conditionalities Unpopular in Sri Lanka, Analyst Says
The demonstration took place days after Sri Lanka’s Department of Census and Statistics reported that the overall inflation in December 2023, as measured by the National Consumer Price Index (NCPI), had risen year-on-year (YoY) by 4.2 percent.
Reports in Sri Lankan media claimed that besides the rising food costs, the inflation had been impacted by Colombo’s decision to raise value added tax (VAT) twice since 2022, when the authorities began negotiating an IMF bailout.
Observers have cautioned that the
inflation could rise further as Sri Lankan cabinet increased VAT again from 15 percent to 18 percent this month, in
line with conditions imposed by the IMF.
N. Sathiya Moorthy, a Chennai-based policy analyst and commentator, told Sputnik India that there was widespread “public perception” in Sri Lanka that the IMF conditionalities have “inflicted a heavy burden on the people in terms of higher prices and taxes”.
“This has become more pertinent in the context of the fact that individuals, families and businesses too are seeking help to manage their finances,” stated Moorthy.
The analyst noted that the western lender has had a tendancy to trigger popular anger due to its austerity measures in other countries too, as is being witnessed in Sri Lankan case at present.
Moorthy stated that not only the SJB, but the centre-left Janatha Vimukthi Peramuna (JVP) has also been seeking renegotiation of IMF terms to ease the economic burden.
“The JVP candidate, Anura Kumara Dissanayake, is seen as a frontrunner in the presidential election. He has opened up to the idea of engaging with the IMF but only under renegotiated conditions,” the Indian analyst remarked.
“This may be the main reason why the SJB has awakened to IMF conditionalities as compared to its earlier posturing which restricted itself to prices and taxes,” Moorthy went on to explain.
The IMF approved a $2.9 billion
EEF loan for Sri Lanka last March and has since released the first tranche of $330 million, with the remaining amount expected to be released in three instalments subjected to Colombo fulfilling the terms of US-headquartered lender.
An IMF delegation visited Sri Lanka this month for studying the “progress in implementing economic and financial policies under the EEF arrangement”, according to a statement by IMF.
