The IMF-World Bank Intervention in Sri Lankan Economic Policy : Historical Trends and Patterns
INTERVENTIONS of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), more commonly known as the World Bank (WB), in domestic policy in Sri Lanka has a history of about three decades, going back to the first WB economic mission to the country in 1951. This history was, however, not one of continuous intensification of this interventionism. The discontinuities here were related closely to the changes in the balance of power in domestic politics. In referring to these policy changes we refer in what follows, to the two main political parties in Sri Lanka which, often in coalition with others, alternated in forming governments, the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP). The most extensive as well as the most intensive presence of the IMF and the WB in domestic policy scene, admitted even by policy-makers themselves, both political and administrative, can be seen in the current phase of Sri Lankan development, beginning with the change of regime in 1977.
This paper examines the historical trends pertaining to IMF-WB inter-ventionism in Sri Lanka with the objective of understanding the economic and political background to the emergence of the current overwhelming position of these two institutions in the domestic policy scene. It attempts to identify the main ireas ofth^s intervention in the backdrop of the relevant historical trends. The quantitative analysis of the economic impact of the IMF-WB interventionist measures after 1977 is outside the scope of the present paper and has been discussed elsewhere.
In the following pages reference is often made to a distinctive combination of economic policy measures by the brief tide of either "IMF stabilisation package or prototype IMF policies". Broadly speaking, the so-called IMF stabilisation package, tried out in many Third Wolrd countries generally with the assistance of also the WB, intends promoting growth and stability within an essentially free market, private enterprise, capitalist system. Following Chervl Payer (1974^ the full INF stabilisation package may be regarded as being composed of the following elements :
* Professor and Head of the Department of Economics, University of Colombo, Sri Lanka.