• This is the final article of a three-part series. Previous parts were published in earlier editions of ‘The Daily Morning’

Colonial economic structures were inherently abusive and undemocratic. Colonial structures were designed for extractive purposes – to appropriate our economic surplus for the benefit of imperial powers. They were not designed to promote economic development, social justice, or democratic governance in the colonised nation. 

Colonialism is inherently abusive, extractive, and undemocratic – a system built on exploitation and control rather than empowerment and equity. In the post-colonial period, several global financial and trade institutions, led by the IMF, have played a key role in perpetuating an economic framework reminiscent of colonial structures (neo-colonialism). By imposing their economic structures on us – structures rooted in colonial times – they continue to reproduce the cycle of debt and dependency, pushing us further into economic subjugation.

Failure of low-value export-driven model

This colonial debtor economic structure is marked by several key characteristics. These include the export of raw materials, the cultivation of commercial crops exclusively for export, and the establishment of assembly-type export industries (export-driven economic model). As a result, raw materials are exported in low-value, unprocessed form, while high-cost finished goods are imported, draining valuable foreign exchange. Therefore, the export of essential raw materials should be strictly prohibited, and the government must actively invest in providing the necessary technology and capital to process these materials domestically into finished products. Government involvement in such projects can also encourage countries that require these finished products to invest in our local production initiatives. Thus, with active State participation, new markets for these products are also likely to open up for the country.

The majority of export businesses in our country today belong to the assembly type. In such cases, all the raw materials used for export production are imported, with Sri Lanka contributing only labour to the process. A closer examination reveals that even the energy required for these operations is largely imported by the government using national foreign currency reserves. While the owners of these businesses may earn personal profits, the overall outcome for the country is a net loss in foreign exchange. Although these businesses appear to be huge job creators, they negatively impact the country's overall dollar reserves.

State-led reorganisation for dev. 

To be successful as a country, most of the raw materials needed for these businesses must be produced domestically. In short, export earnings thrive when a country increases the value it adds to its products – an effort that must go beyond merely providing labour. Such complex industrial systems will only be created through state planning, state investment, and state participation. Otherwise, such complex industrial systems cannot be established solely to serve the profit-driven interests of individual businessmen. These are merely the illusions of neoliberal free-market economic theory – promises that will never materialise.

Another detrimental aspect of this economic model is commercial crop cultivation aimed solely at export. Thus, farmers, farmland, and other vital natural resources that should support the country’s food self-sufficiency are instead devoted to non-essential commercial crop cultivation, undermining national food sovereignty. This is a major factor contributing to the shortage of essential food stocks in the country, as none of these commercial crops fall into the category of essential foods. Furthermore, due to continuing this process for over 100 years, we now have to rely on imports from other countries to meet our essential food needs.

Thus, indebted Third World countries are forced to cultivate commercial crops by institutions such as the IMF, World Bank, and World Trade Organisation, even as developed nations enforce strict laws such as import bans, trade quotas, and import taxes to safeguard their essential agricultural sectors. A wide range of subsidies for agricultural inputs – including subsidized loans for agriculture and tax concessions – are provided to essential agriculture. Thus, countries like the United States, Germany, France, England, Australia, Japan, and China continue to enforce various policies – up to date – including import restrictions, to maintain food sovereignty.

Washington Consensus

Yet, the rulers of our countries, as if unmindful of the consequences, persist in maintaining the colonial debtor economic structure. In truth, the rulers of our countries act as agents of the creditors. Consequently, this economic framework perpetually reinforces a strong dependency on the US dollar. This is because the country lacks self-sufficiency in essential food, basic goods, and energy. Our country is forced to continuously borrow dollars to import these essential foods, basic products, and energy.

Similarly, our country does not earn a significant amount of dollars from our exports of low-value raw materials, assembly-type exports, commercial crops, and aggregates. This is because the economic structure we operate under was designed not for the development of our country, but to serve the interests of creditor nations. This process was accelerated through the introduction of neoliberal free-market economic ideology from the late ’70s. Low-value exports were not sufficient to meet the ever-increasing demand for imports; hence, we continue to build a trade deficit against the rest of the world. What this means is, we continue to borrow foreign currencies to feed the population and to pay previous debts.

Mainly, these twin factors are causing the rupee to depreciate drastically. The rupee has collapsed from approximately Rs. 8 in 1975 to Rs. 300 in 2025 per US dollar, and it will continue to fall. Most of the industries from the ’70s have disappeared by now, and we see agriculture on its knees – to the extent that even basic food items such as rice, salt, and eggs are being imported into the country. Continuing this model over a prolonged period of time has put the economy on life support and has resulted in a dramatic rise in the cost of living, denying half of Sri Lanka’s population the essentials for survival.

Using this economic model results in continued indebtedness to the dollar and the continued implementation of the economic policies of those creditors by the governments we elect. As a result, Sri Lanka is functioning as a colony of creditors – selling off its economic assets, imposing a heavy tax burden on innocent citizens, slashing public welfare, and systematically exploiting both the country and its people.

Joining world to decolonise the nation

In conclusion, current US trade policies, such as the tariffs imposed under President Trump (‘Trump’s tariffs’), signal a fundamental shift in globalisation, particularly against the IMF-led neocolonial export-driven economic model. There is a clear policy conflict between two global institutions based in Washington, making the neocolonial extractive globalized economic model obsolete. There are clear signs that a new world order is emerging, led by Russia and China (‘multipolar world’), challenging Western dominance. Similarly, there are signs that the American empire is aging, along with its extractive, abusive, and undemocratic economic model.

Moreover, countries in the BRICS group are already successfully managing trade settlements and cross-border payments without relying on the hostile, uncertain US dollar. In this context, it is important to become part of the emerging multipolar world, led by Russia and China. Similarly, it is critical to offer a geopolitical footprint to Russia in order to de-dollarise and decolonise our economy. In this regard, it is high time for Sri Lanka to stop the US from weaponising its currency against our sovereignty.

Therefore, I believe the country’s economic policies should be crafted within a progressive, people-centered framework based on the ten principles I have developed in my book ‘Wikalpa Maga’, aimed at freeing our motherland from the neocolonial, debt-ridden economic model. This book explores the transitional process in political economy – from an undemocratic colonial economic structure, still present today, to a democratic economic framework capable of fostering economic development, social justice, and ecological sustainability in Sri Lanka.

(The writer is a graduate from Monash University Melbourne Australia, an entrepreneur and the author of the book ‘Wikalpa Maga – De-Dollarization’)

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The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication