-By LeN Political Editor
(Lanka-e-News -02.Aug.2025, 10.00 PM) It was an extraordinary moment in Sri Lanka’s post-independence history: in September 2024, a left-leaning alliance led by the National People's Power (NPP), with deep roots in the Janatha Vimukthi Peramuna (JVP), swept to power in a democratic election. For a movement long associated with insurgency, repression, and working-class struggle, the transition to national leadership marked both a vindication and a formidable challenge.
The rise of President Anura Kumara Dissanayake, once a firebrand youth leader in the 1980s, was greeted with cautious optimism by millions of ordinary Sri Lankans—rural farmers, urban labourers, young graduates, and forgotten communities in the deep interior. The victory was historic not merely because of electoral mathematics, but because it carried the collective memory of sacrifice: the JVP had paid in blood over four decades to reach this position, with thousands of its members killed or disappeared in the brutal crackdowns of the 1970s and 1980s. For these reasons alone, the NPP cannot afford to forget who they are, where they came from, and—most crucially—whom they represent.
It is now approaching one year since the NPP-led government assumed power. In that time, they have faced enormous structural challenges—most of them inherited. Chief among them is the controversial bailout programme agreed with the International Monetary Fund (IMF) in early 2023 by the previous government, under then-President Ranil Wickremesinghe and Finance Minister Ali Sabry.
The NPP did not design this deal. But, like a noose around its economic neck, the IMF agreement now binds the new administration to a fiscal straitjacket that leaves little room for manoeuvre.
The agreement stipulates rigorous tax collection, cuts in public spending, and curbs on subsidies. In theory, these are intended to stabilise the macroeconomy and restore investor confidence. In practice, they are draining the lifeblood of local industry, paralysing job creation, and—most worryingly—stifling large-scale foreign direct investment (FDI).
The Colombo Port City, once billed as the “financial capital of South Asia,” stands deserted. Not a single major investment has broken ground since the agreement was signed. Even more consequentially, the $4.5 billion Sinopec oil refinery in Hambantota—touted as one of the largest industrial projects in South Asia—remains in limbo, its future clouded by IMF-imposed objections to tax concessions promised under the previous administration.
Here lies the dilemma: should the NPP government honour investor agreements inked before it took office? Or must it yield to the IMF’s demands to standardise taxation and limit concessions?
The IMF is not a democratic institution. It does not represent JVP voters in Anuradhapura or Ampara. It is a multilateral lender, whose agenda—though wrapped in technocratic language—is often guided by the geopolitical interests of its biggest shareholders.
Sri Lanka's tragedy is that it entered into this agreement without a national debate. It was signed by Ali Sabry—a man with limited economic credentials, an inexperience Lawyer with no English knowledge, climed through political connections and no electoral mandate for such a seismic policy shift. The deal passed neither Parliament scrutiny nor public referendum. It was a fait accompli.
The NPP government now finds itself in an awkward position: forced to uphold an IMF agreement they neither negotiated nor endorsed—lest the economy collapse once again.
Yet, this doesn’t absolve them of political responsibility. They are now the stewards of a nation battered by hyperinflation, emigration, and economic contraction. And as the party of the ordinary people, their legitimacy rests not on IMF goodwill, but on the trust of voters who believed a JVP-rooted government would break from the past.
The heart of the crisis is not merely economic. It is emotional. For years, Sri Lankans suffered under political cronyism, opaque deals, and predatory corruption. When the NPP emerged victorious, it was with the promise of a clean break from the comprador politics of the Rajapaksas, Wickremesinghe, and the Chandrika-era oligarchs.
But for the average Sri Lankan today, not much has changed. There are still no major infrastructure projects. Rural schools remain underfunded. Hospitals lack staff. Most damningly, job creation is at a virtual standstill.
Emigration, particularly among the youth and professionals, continues unabated. In the past two years, over 600,000 Sri Lankans have left the country—some legally, others via perilous sea routes. They are voting with their feet.
What, then, is the NPP’s growth strategy?
The party cannot rely on IMF-prescribed austerity to spark a recovery. Nor can it hope that Western investment will come pouring in without policy autonomy. The truth, however inconvenient, is that only countries like China are presently willing to undertake large-scale investments in Sri Lanka's industrial and port infrastructure. That is not a matter of ideology—it is a matter of realpolitik.
If the IMF blocks tax concessions to Chinese firms—because of a so-called “level playing field”—then the NPP must make a clear and courageous choice: either renegotiate the IMF deal in favour of national development, or accept political irrelevance.
There is no greater symbol of Sri Lanka’s arrested development than the Colombo Port City.
What was once envisioned as a futuristic, self-contained economic zone is now eerily empty. The offshore sandbanks have been reclaimed. Roads and boulevards are laid. But the skyscrapers never came. Nor did the hedge funds, the stock exchanges, or the global multinationals.
Why?
Because the IMF will not permit tax exemptions that were promised to investors under the original Port City Act. Investors want predictability. If agreements are revised after every government change—or worse, under pressure from foreign lenders—they will go elsewhere.
And the price of that uncertainty is being paid not by politicians in Colombo, but by unemployed graduates in Moneragala, fishermen in Kalpitiya, and seamstresses in Ratnapura.
Even more concerning is the fate of the Sinopec refinery in Hambantota—a project that could have redefined Sri Lanka's industrial base.
The deal was sealed, the land allocated, the funding arranged. But the project is now stuck, again due to the IMF’s opposition to the generous tax holidays offered by the previous government.
Should the NPP scrap a $4.5 billion project that could employ thousands and catalyse downstream industries—just because the IMF says so?
To do so would be an act of economic suicide.
The same holds for other Chinese-led projects across the Southern Province: agricultural zones, logistics parks, and green energy corridors. If these too fall victim to technocratic interference, then the NPP’s promise of equitable development will ring hollow.
The NPP must be careful. They were elected not because the public believed they could follow IMF spreadsheets better than Ranil Wickremesinghe. They were elected because they promised something radically different: a people-first, sovereignty-centred, employment-led economic revival.
That vision is now imperilled. The party’s rural base remains strong—but it is not unconditional. Patience is finite. Already, some media outlets—bankrolled by India, Western embassies, and Colombo’s elite—have begun whispering that the NPP is “failing.”
That narrative is premature. But if jobs don’t materialise, if investment dries up, and if IMF diktats continue to shape economic policy more than Parliament, then the murmurs of discontent will grow louder.
And history will not be kind. The next generation will ask: why did we let Port City become a ghost town? Why did we let the oil refinery slip away? Why did we allow bureaucrats and unelected lenders to sabotage national development?
The NPP must reclaim its original mandate. That means:
Renegotiating the IMF deal — not to default, but to reassert fiscal sovereignty in investment policies.
Defending investor confidence — by upholding previous agreements unless they were corrupt or illegal.
Jumpstarting FDI — particularly in infrastructure, energy, and manufacturing.
Prioritising employment — through public works, rural cooperatives, and SME credit schemes.
Removing bureaucratic sabotage — many senior civil servants remain loyal to the old regime and act as spoilers.
Above all, the NPP must remember its roots. The JVP didn’t lose thousands of lives fighting for a foreign-imposed economic model. It fought for equality, dignity, and sovereignty. The flame of that struggle must not be extinguished in the technocratic boardrooms of Washington D.C.
This is not a call for populism. It is a call for courage.
Sri Lanka cannot afford another lost decade. It cannot afford to remain stuck between global lenders and domestic inertia. And the NPP cannot afford to become another chapter in the long book of broken promises.
Now is the time for the NPP government to act—not as caretakers of a crisis, but as architects of a recovery. Not as disciples of austerity, but as champions of growth. Not as IMF envoys, but as servants of the people.
The next election will not be won in think tanks or Zoom briefings with donors. It will be won in the paddy fields, the bus stops, the factory floors, and the fishing harbours.
And there, among the people, the verdict is still open.
-By LeN Political Editor
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by (2025-08-02 16:27:25)
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