Did Parliament Ever Fully See the IMF Deal?
When Ravi Karunanayake says Sri Lanka’s IMF debt restructuring may have been unconstitutional, he is not merely making a political complaint. He is raising a constitutional and democratic question: did the executive branch commit the country to one of the most sweeping economic restructurings in its modern history without proper parliamentary scrutiny?
That question matters because the IMF programme was not a narrow technical agreement. It affected taxation, pensions, state spending, subsidies, interest rates, debt repayments, public sector hiring, energy pricing and the day-to-day survival of households and businesses. Small and medium enterprises collapsed. Thousands lost property, land, vehicles and family savings. The austerity programme, while presented as unavoidable, came with profound social consequences.
At the centre of the controversy is Ali Sabry, who negotiated with the IMF during the height of the financial crisis. Critics argue that while Parliament later voted on elements of the debt restructuring framework, many MPs were never given full visibility into the detailed terms, side agreements, legal commitments and fiscal obligations before Sri Lanka effectively entered the programme.
Sri Lanka’s domestic debt restructuring plan was eventually reviewed by the Committee on Public Finance and later approved with amendments. However, critics maintain that approval came after the framework had already been negotiated and politically locked in, leaving Parliament to ratify rather than genuinely debate the substance.
This is where the constitutional argument becomes more serious. Under a parliamentary democracy, sovereignty ultimately lies with Parliament. Governments may negotiate with lenders, but major economic commitments that reshape taxation, borrowing, spending and public liabilities should arguably be debated in full before being signed. If MPs only received partial information, or if the public was denied access to key terms, then there is a legitimate argument that democratic oversight was weakened.
There is also the issue of transparency. The IMF has repeatedly called on Sri Lanka to improve governance, strengthen anti-corruption frameworks, modernise tax collection and ensure better public financial reporting. Yet many Sri Lankans still do not know the complete details of the assumptions, legal opinions and debt sustainability models that were used to justify the restructuring. The IMF itself has acknowledged that debt restructuring involved unusually complex negotiations, novel instruments and extensive behind-the-scenes coordination with creditors.
The IMF programme approved in March 2023 tied Sri Lanka to a four-year reform agenda with strict fiscal targets, debt sustainability benchmarks and policy conditions. Subsequent IMF reviews repeatedly stressed that Sri Lanka had to keep budgets, taxes and spending aligned with programme conditions in order to continue receiving funding.
To many critics, that creates an uncomfortable democratic reality. Voters elect governments to decide tax policy, welfare spending and industrial priorities. Yet under IMF conditionality, those decisions become constrained by external targets and approval mechanisms. A government may technically remain in office, but its room for manoeuvre becomes narrow. This is why some argue that the IMF, though not formally governing Sri Lanka, has become an indirect force shaping domestic economic policy.
If Ravi Karunanayake genuinely believes the process was unconstitutional, the logical next step would be a parliamentary motion or select committee inquiry. Such an inquiry could examine:
- What exact documents were shown to Parliament before the IMF agreement was signed.
- Whether Cabinet or Parliament gave explicit prior authority to proceed.
- What legal advice was obtained by the government.
- Which foreign legal firms advised on restructuring.
- Whether MPs and the public were given adequate information.
- Whether any constitutional provisions regarding public finance and parliamentary sovereignty were bypassed.
If it were proven that constitutional procedures were ignored, the consequences for Ali Sabry could be severe politically, though legal liability would be harder to establish unless there was evidence of deliberate misconduct, concealment or acting beyond lawful authority.
There is another difficult question: could Sri Lankans sue the IMF or the foreign advisers involved in the restructuring? In practice, that would be extremely difficult. The IMF enjoys extensive legal immunities under international law, and foreign law firms advising sovereign governments are generally protected unless they can be shown to have committed negligence, fraud or breached a specific duty of care. That said, demands for greater transparency, publication of legal opinions and disclosure of restructuring documents are entirely legitimate in a democracy.
Sri Lanka may have needed the IMF. By 2022, the country had defaulted, reserves had collapsed and the economy was on the edge of total paralysis. But even a necessary rescue can still be subject to scrutiny. The deeper issue raised by Ravi Karunanayake is not whether Sri Lanka needed help. It is whether that help was obtained in a manner that respected Parliament, respected the public and respected the constitutional limits of executive power.