South Asian Outlook : An Independent e-Monthly | South Asia: Sri Lanka - Lanka's Debt Crisis and the World Bank's Role

(Afghanistan and Myanmar in the
map are not members of SAARC)

Lanka’s Debt Crisis and the World Bank’s Role

Amid the increasingly repulsive political rhetoric of most parties and the damn reprehensible lies which are often referred to as statistics, the stark reality as we learnt this week is that while the annual national income is around 705 billion rupees, the national debt with interest is a staggering 825 billion rupees. Whether we know it or not, we are all in a collective debt crisis or more bluntly an economic death crisis. For the past few decades Sri Lanka swallowed or was forced to swallow wholesale the globalised, capitalist, market economic policy orchestrated mainly by the World Bank and the international Monetary Fund.

Now in the aftermath of this shocking disclosure of the magnitude of our debt crisis, we need to go to the roots of this and be aware that to many economists engaged in the effort to mitigate the effects of poverty in Sri Lanka and around the globe, the World Bank is a black box.

Is the World Bank a financial institution requiring appropriate confidentiality and the discretion of a bank or is it a development agency whose mission requires openness, participation and widely shared results? David Shaman, a former employee of the Bank and the author of the book “The World Bank Unveiled”, leans towards the latter .

“The World Bank Unveiled” is a fascinating and frightening exposé of the World Bank’s operations and how this powerful but monolithic organization thinks, works and acts, an insider’s intimate view of how an organization meant to help the developing world actively hinders progress. The insight offers an unparalleled account of the inner workings of the Knowledge Bank experiment under James Wolfensohn. As the leader of one of the innovative projects – B-SPAN – that were part of the attempts to transform the Bank into a more transparent and humble partner for development, Mr. Shaman provides a fascinating case study of the way this vision withered in the face of the powerful existing culture of the Bank. While there have been many books this decade from ex-bank staff questioning the Bank’s role in poverty reduction and development in countries like Sri Lanka, Mr. Shaman’s is by far the most significant account of the Knowledge Bank experiment, its potential and its ultimate demise.

Mr. Shaman outlines his experiences inside the World Bank seeking to reform the institution into one that is more open, transparent and accountable to its stakeholders.

The Bank has critical systemic flaws that mitigate its impact on development and poverty reduction. Donor countries worry that the Bank’s lending has not been effective. Borrower countries like Sri Lanka feel strangled by conditions the Bank sets for its loans. Civil society representatives believe the institution is not transparent enough and is not held accountable for its mistakes.

The vast majority of foreign aid is spent on fighting terrorism rather than reducing poverty. For all intents and purposes, the Bank’s ability to promote development and reduce poverty has been marginalized since the 9/11 tragedy and the Bank has been relegated to the sidelines in a secondary role while the war on terrorism took precedence over the war on global poverty. The sad irony is that most experts believe that the underlying cases of terrorism is poverty.

If the World Bank becomes a more open and accountable institution and is given an opportunity to overcome an internal culture that promotes information hoarding than knowledge sharing the ultimate winners will be those millions including those in Sri Lanka who now live in poverty because they will then have a more effective and responsive advocate working on their behalf.

[Source: Daily Mirror]

News Briefs

TNA highlights Sinhalese influx into North: Tamil National Alliance (TNA) highlighted the "dangers" arising from the post-war influx of Sinhalese into the predominantly Tamil Jaffna peninsula and the Wanni by drawing attention to the construction of permanent Sri Lankan Army camps in the region. Parliamentarian Suresh Premachandran, who is contesting the April 8 General Election from Jaffna District, said that the construction of permanent camps meant the transformation of the existing camps into family stations, which in turn would mean a great increase in the population of the Sinhalese. This fear stems from the fact that the Sri Lankan Army is almost exclusively Sinhalese. Express Buzz, March 25, 2010.

TNA reiterates demand on right to self-determination of Tamils: Contrary to claims by a section of the media that the Sri Lanka's pro-Liberation Tigers of Tamil Eelam (LTTE) political party, the Tamil National Alliance (TNA), has given up its stance on Eelam; the alliance has reiterated the demand on the right to self-determination of Tamils. In its manifesto for the April 8 general election, the TNA has sought federal solution based on shared sovereignty while reiterating its position on the right to self-determination. The stated position of the TNA on Eelam has been that it has never articulated the demand. In its election manifesto, the TNA also demanded re-merger of northern and eastern provinces.

Under the amended Constitution of the nation, any party advocating secession would be disqualified from Parliament. The Hindu, March 15, 2010.

[South Asia Intelligent Review]