Committee for the Abolition of Illegitimate Debt

In this column, I analyse the recent Budget Speech and the dangers inherent in it for access to university education for future generations. The allocations for next year continue the trajectory of underfunding state universities. Furthermore, it concretises the Government’s intention to completely change the governance of universities, recognise ‘private higher educational institutions’ on par with state universities and to expand their role in higher education.

Defunding and commercialising

Over the last few years, state funding for universities have more than halved from close to 0.6% of GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. in 2020 to 0.25% of GDP. When it comes to capital expenditure, which is the commitment of the Government towards the future development of universities, it has come down from 0.14% to 0.02% of GDP, amounting to a seventh of the allocation from four years ago.

While the allocations for 2024 are drastically low, even this meagre amount may not be spent, because such expenditure depends on meeting the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org ’s revenue targets. On the other hand, student intake has risen by 50% from 29,000 students per year in 2016 to 44,000 students per year in 2023. This dangerous decline in spending despite increasing student intake, betrays the Government’s intention to wilfully engineer a failure of state universities even as it feigns support for expanding access to higher education.

This trajectory of underfunding state universities is not new and has been accompanied by efforts to initiate and promote private universities by successive governments. Sri Lanka today is one of the few countries with free education at the university level, which has been a great boon for economically marginalized students. Contradicting, this legacy of free education going back to the 1940s, international financial institutions, in particular the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, have pushed for the creation of private universities for decades. Most recently, the World Bank Country Partnership Framework for 2024 to 2027 explicitly calls for commercialising universities in Sri Lanka. The World Bank has consistently sought to shed the state of social welfare programmes and to make higher education a business.

The current crisis is thus an opportunity for global capital and the national elite to push through commercial interests. In the Budget Speech, the President has openly said that the Government is moving now on 60 new laws and amendments, ranging from land ordinances, public finance acts and banking laws. Indeed, Wickremesinghe is trying to use the illegitimate Parliament, with the Rajapaksa majority, to completely change the law books before parliamentary elections. And such legal changes include new laws to overhaul the university system, particularly a National Higher Education Commission that will replace the University Grants Commission, which will recognise private universities on par with the state universities.

Universities like supermarkets

“We will allow any recognized educational institution in the world to establish universities in Sri Lanka once a set of powerful rules and regulations for the regulation of non-state universities are put in place. This will create opportunities for every student, who passes the G.C.E (Advanced Level), to obtain a university education and earn foreign exchange through the admission of foreign students. Loan facilities will be provided to students studying in these non-state universities.”

This is from the Budget Speech on the imminent proliferation of private universities. In the late 1970s, J.R. Jayewardene, initiating the open economy reforms, famously said, let the robber barons come! And now Wickremesinghe seems to be calling the robber barons to come start universities. He is also inviting international students to earn a degree in return for dollar payments. If liberalisation in the 1970s was epitomised by the proliferation of supermarkets, the neoliberal education policies today are symptomatic of a vision of supermarket like universities.

The Government plans for four private institutions to be upgraded to universities (NSBM, SLIIT, Horizon Campus and the Royal Institute) and to create at least six new universities, including for technology, climate change and education. Even Provincial Councils will be able to establish universities.

Then under the pretext of modernisation, every catch word under the sun is brought to the Budget Speech; an allocation of Rs 3 billion towards starting a National Centre for Artificial Intelligence and Rs 8 billion for the creation of a national research policy, belying the steady cuts to research that universities have seen over the years. It is unclear from where the Government will get this funding when it can hardly keep existing universities afloat.

The Budget also allocates funds for interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. -free and subsidized loans for students entering non-state universities as a way of luring them into private fee levying institutions. It fails to mention that this model of higher education has failed in many countries, leading to spiralling and unsustainable student debt as discussed recently by Farzana Haniffa in her Kuppi column on 23/10/2023.

Clarity and resistance

There are the elite in the country who say that the private universities are the way to go to ensure that children who cannot enter state universities can pay their way into any university degree. And they are of course the staunchest supporters of getting rid of the state university system. Then there are those who are confused and claim that while they want the Government to adequately support the state university system, they are per se not against private educational institutions. They do not recognise that there is a necessary trade off. Once private universities are established, the state universities will rapidly decline with the state abandoning them and enabling the siphoning off of resources, including lecturers who will be poached by private universities.

The so-called people-centred argument of the Government is that without private universities, a large section of our youth will not be able to access university education. The reality is that, for example in 2022 about 91,000 qualified students applied for universities and 44,000 of those students, or about half of them, were enrolled at state universities. Indeed, if we could quadruple the current low allocations of 0.25% of GDP to even a mere 1% of GDP, we could accommodate all those who applied to universities. Thus, there are alternatives for ensuring equitable access to state universities, provided there is the political will towards redistribution by levying for example a wealth tax on the elite. After all, the 0.5% of GDP per year that has been extracted from the retirement funds of working people for domestic debt restructuring itself could have more or less funded this revamped state university system

The urgency now, given the government’s aggressive attack on state universities, is for the student movements, the university teachers associations and broader society to come together and defeat the Budget proposals for higher education. Else, there will be little left of meaningful university education, and future generations of our youth will be looking at a dismembered university system that will look like a strewn set of supermarkets with low-quality degrees for sale at cash counters.