Sri Lanka: Exit Harmful Debt Restructuring Agreements, Reform Laws to Align with UNDROP, MONLAR Tells Government

The Movement for Land and Agriculture Reform (MONLAR), representing over 5,000 peasant workers in Sri Lanka, recently made a submission to the government listing out several instances of the violation of the UN Declaration on the Rights of Peasants and Other People Working in Rural Areas, to which Sri Lanka is a signatory. They also called upon the UN Working Group on the Declaration to initiate an assessment of how the conditions of the IMF, other IFIs, and global debt architecture violate the human rights of peasants and workers. The submission, an excerpt of which is reproduced below, also reveals how global financial institutions have enforced economic reforms that transferred the burden of economic stabilization to the poorer sections of society through austerity measures.

1.65 million peasants and small-scale food producers in Sri Lanka work on less than 2 hectares each, yet produce 80% of the country’s food. But debt-driven economic policies advocated by the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) have wrecked peasants’ and fishers’ autonomy in food production and their ability to ensure food sovereignty.

Through various structural adjustment programs, the International Finance Institutions (IFIs) push Sri Lanka to prioritize cash crops for exports over food for domestic consumption. Export-oriented agricultural reforms that mainstreamed capital-intensive farming have favored agribusinesses and weakened peasants and small fishers by making them dependent on the market for inputs such as seeds, fertilizer, fishing nets, and boats. As a result of the increasing cost of food production, peasants and fishers are deeply in debt, dispossessed of their land, rendered agricultural laborers on their lands, and migrating to local industrial zones or abroad as indentured workers.

The current agriculture system’s failure to create dignified livelihoods for peasants and other workers in rural areas is evident in the extremely high levels of poverty concentration in rural and plantation areas, where more than 80% of Sri Lanka’s poor live.

Sri Lanka faced one of the worst economic crises in 2022 as it defaulted on its foreign debt payments in April 2022. The economic crisis had a devastating impact on rural communities, resulting in a doubling of poverty rates. The IMF, other IFIs, and private creditors have used the crisis and the debt default to push Sri Lanka into its 17th IMF program, a 48-month Extended Fund Facility worth around 3 billion dollars.

Violation of Article 2: State Responsibility
Two days before the September 2024 presidential election, Sri Lanka was forced to sign an agreement with international creditors to restructure its debt to private lenders. This agreement, which was neither disclosed nor discussed with the public or even in the Sri Lankan Parliament, forced the country to prioritize debt payment over the rights of people in Sri Lanka. It will severely impact the government’s ability to invest in food production, development of rural livelihoods, and social security of rural communities.

Violation of Article 4: No Discrimination Against Women
Despite their contribution being neither recognized nor reflected in national policy frameworks, the involvement of peasant women in Sri Lanka’s food production is critical. Peasant women face numerous barriers that inhibit them from reaching their full potential—the lack of access and control over natural resources, markets, financial services, technology, and care responsibilities. Yet, peasant women support food production as unpaid family members, agricultural workers, or through home gardens. However, they are neither acknowledged nor given any significance in government spending at the macro level. Hence, they are excluded at two levels—as women and as small-scale food producers.

Violation of Article 15: Right to Food and Food Sovereignty
Malnutrition and undernourishment have always been serious concerns in Sri Lanka, with 32.6% of women aged 15 to 49 years found to be anemic and 15.9% of infants handicapped by low weight at birth. The situation has been worse among agriculture worker families in the plantation sector. Despite being considered an ‘agricultural’ country, Sri Lanka depends heavily on food imports. Our food security’s vulnerability is evidenced during crises such as the pandemic, geopolitical conflicts like the Ukraine-Russia War, and scarce foreign exchange.

The economic crisis in 2022 has further worsened the situation. According to the World Food Program, by January 2023, 6.3 million people, or over 30 percent of Sri Lanka’s population, were “food insecure” and needed humanitarian assistance. Of these, around 5.3 million people were either reducing or skipping meals, and at least 65,600 people were severely food insecure. An increase in VAT also drove up food inflation.

Violation of Article 16: Right to Decent Income and Livelihoods and the Means of Production
The economic reforms enforced through the 17th IMF program have transferred the burden of economic stabilization to the poorer sections of society through austerity measures. Implementation of the IMF-recommended cost-recovery energy pricing has almost tripled fuel and electricity prices, having devastating effects on the livelihoods of peasant farmers and fisheries. Taxes on equipment, seeds, and chemical inputs have increased production costs, throwing peasant farmers into poverty and indebtedness.

Indebtedness among peasants and fishers is mainly linked to expansions in capital-intensive agriculture and the proliferation of pro-profit lending by banks and finance companies such as microfinance loans. With the withdrawal of the State from the provision of agrarian credit, indebtedness has become a permanent feature in the lives of peasants, peasant women, and fishers. Suicides among the peasant farmers in the 1990s and among the peasant women after 2015 illustrate the protracted nature of indebtedness in the agrarian sector. According to national statistics in 2019, indebtedness is more prevalent in the rural and estate sectors than in the urban sector. 60.9% and 64.4% of households in the rural and estate sectors, respectively, are in debt. Vavuniya and Polonnaruwa, predominantly agricultural areas, also located near the biggest rice mills owned by private individuals, recorded the highest incidences of indebtedness, with 76.1% and 70.3% of households in debt.

Violation of Article 17: Right to Land
IFIs like the IMF and World Bank have long advocated privatizing land markets in Sri Lanka. Freehold land titles are distributed to farmers by lifting restrictions for peasants to sell their land provided by the State to outsiders, which has been a long-standing demand from these IFIs. With the ongoing IMF program, this demand has returned to the fore, with the government introducing a new program to provide freehold land titles to peasants. With the ongoing economic crisis and indebtedness among peasants, MONLAR and many other organizations fear that this move will lead to large-scale dispossession of peasants’ land.

Currently, the State does not recognize the customary right to land; hence, many peasants have lost land they have been cultivating and living on for generations. Due to the absence of tenure recognition, many communities are displaced when large-scale projects and developments come to their villages.

Even though it has been 15 years since the end of the war, large portions of land in the North are still under the occupation of the military. Minoritized communities have used these lands for generations before and during the war and hold a key place in their livelihood and culture. Some of the residents of these lands are internally displaced, while some are still living in IDP camps.

Violation of Article 24: Right to Housing
Even after 200 years, the descendants of people brought to Sri Lanka from South India as indentured workers (Malaiyaga community) in tea and rubber plantations in Sri Lanka do not own their housing and land. They were forced to live on plantation land (owned by the State and privately owned companies) in extremely low-quality housing. They lack access to land for their food production and remain vulnerable to evictions by the landowners—the plantation companies.

Recommendations to the Government of Sri Lanka

1. Immediately exit the ongoing IMF and debt restructuring agreements, as they are unfavorable and harmful. The government should negotiate new agreements that ensure the country’s sustainable economic development and the socio-economic rights of peasants, workers, and other poor and vulnerable communities.
2. Introduce the necessary reforms to the local legal and policy framework to enforce the rights enshrined in the UNDROP. Some immediate actions can include:
   1. Revise the current laws regarding land, seeds, water, biodiversity, and other natural resources to ensure the rights of peasants and other workers in rural areas.
   2. Codification of a new Constitution that integrates the social, economic, and cultural rights of peasants, workers, and others as fundamental human rights.
3. Recognize food sovereignty and the rights of peasants and rural workers as key priorities in its agriculture, development, and economic policy formulation.
4. Conduct an agrarian debt audit and provide debt relief, including debt cancellation.
5. Recognize women as key actors in agriculture, food production, and the rural economy. Allocate resources through national and local budgets to ensure women have access to accessible and just financial resources. The government should support the collective actions of peasant women in food production, processing, marketing, and saving systems.
6. Release all the land occupied by the military in the North and East to their original owners, and support peasants and other food producers in restarting their livelihoods in those lands.
7. Recognize and fulfill the demand by the Malaiyaga community to allocate land for their housing and food production.

MONLAR also called upon the UN Working Group on the Declaration on the Rights of Peasants and Other People Working in Rural Areas to initiate an assessment of how the conditions of the IMF, other IFIs, and global debt architecture violate the human rights of peasants and workers, and also initiate a cross-country study to examine the impact of microfinance on women and rural development.

This post is also available in Français.