Inner City Press -- Investigative Reporting From the Inner City to Wall Street to the United Nations

IMF Confirms, in its Fashion, Sri Lanka Defense Spending Increase

By Matthew Russell Lee

UNITED NATIONS, February 23 -- When the International Monetary Fund establishing a lending program with Sri Lanka in 2009, the year in which according even to a UN report the government killed tens of thousands of civilians, the IMF stated that

"This, together with savings on military spending ... should help finance the considerable reconstruction spending needs... Cuts in military and other expenditures will help make room for post-conflict reconstruction and relief spending."

  The IMF has since been ducking questions about its program in Sri Lanka, declining to answer questions submitted during and after its biweekly media briefings, most recently this year on January 12 and January 26, by email in February and at the February 9 briefing.

   This has been an ongoing pattern. Inner City Press first asked the IMF about Sri Lanka in March 2009, when spokesman David Hawley saying the IMF would support the government's priority. Since then, despite some answer on other countries, the IMF has stonewalled on Sri Lanka.

  The IMF's reasoning has belatedly become clear in a table of data the Fund sent out on January 31 in response to inquiries by the Sri Lanka Campaign to Managing Director Christine Lagarde.

  First, the IMF's "head of mission" to Sri Lanka Brian Aitkins sent a response claiming that in Sri Lanka "overall security-related spending has declined both as a share of GDP and of total government spending."

  When asked for the data behind this claim, the IMF produced a chart, about which Inner City Press has asked the IMF for comment -- so far, there has been none -- and which is now being placed online here.

  Contrary to the IMF's table, according to the SLC,

"much of the so called 'reconstruction' work the Government is conducting in the north and the east – no doubt under non military budget headings – is actually a form of militarization by stealth. Our contacts in the north talk of the creeping infiltration of the military into every aspect of civilian life – and that in the Vanni area soldiers now form one third of the population.

A non exhaustive list of industries the military is involved in would include: construction, fruit production, whale watching, fishing, hotels, management of the three largest cricket stadiums, pedalo hire, and transport. This militarization is doing untold damage to Sri Lankan society and rapidly undermining the primacy of the civilian state. The IMF demanded a cut in the defense budget and instead the Government of Sri Lanka increased defense spending by 30%. This demands firm action."

   On February 23, Inner City Press submitted the question for the third time just as Lagarde's spokesperson Gerry Rice began his biweekly briefing:

"On Sri Lanka, please explain Mr. Aitken's numbers downplaying Sri Lanka defense spending increase of 30%, asked earlier this month with reference to IMF correspondence, and now the UN Senior Advisory Group barring Sri Lanka's Deputy Permanent Representative to the UN due to war crimes allegations?"

  Rice did not read out and answer the question, but one minute before the 10:30 am embargo deadline, this answer was provided, from "the" IMF spokesperson -- that is, Mr. Rice:

"Please attribute to the IMF spokesperson:

"There’s no dispute over numbers. Mr. Mortimer acknowledged Mr. Aitken’s central point that defense spending had fallen as a share of GDP and of total spending.  Mr. Mortimer’s central point was that despite this being the case, defense spending had increased in absolute terms.  This is not in dispute either (although we can’t quite replicate the 30 percent quoted by Mr. Mortimer).  We would note that the bulk of the increase in defense spending appears to be on wages and salaries—non wage spending has declined in absolute terms—which has increased with public sector pay awards over the past 3 years.  Further progress in reducing defense spending, in absolute terms, would likely require a comprehensive demobilization program.  While we would be supportive in principle of such a move, this is not an area that the Fund has expertise. We would say though that international experience suggests that such programs need to be very carefully designed and executed to be successful."

  Ah, increased military spending using an IMF lending program -- click here for IMF not answering at all on February 23 Inner City Press' question about criticism of the IMF dealing with the military SCAF government of Egypt. We'll have more on this.