Sri Lanka president seeks broader consensus for IMF deal
ECONOMYNEXT – Facing a tough job to lead a crisis-hit economy with empty coffers, Sri Lanka President Ranil Wickremesinghe sought broader consensus to agree for an International Monetary Fund deal from all the law makers and political parties to ensure rapid economic recovery and sustain debts.
Sri Lanka has a long history reversing IMF deals when there is a government change. Ruling Nationalist Sri Lanka Podujana Peramuna (SLPP) and Center-left Sri Lanka Freedom Party (SLFP) along with other leftist parties have been against the IMF reforms, while center-right parties have been in favour for a global lender’s loan programme.
Soon after former president Gotabaya Rajapaksa won the presidency in November 2019, the SLPP scrapped a $1.5 billion IMF deal signed under the government in which Wickremesinghe was the prime minister from 2015-2019.
“Whether we like it or not, we have to deal with the IMF. First and foremost, we have to enter into the standby agreement with the staff level agreement with the IMF,” Wickremesinghe, delivering the key note address, told ‘ReformNow’ forum organized by Advocata Institute, an independent think tank on the economic policies.
“If any member of parliament or any party says we are not for it, then we have the right to ask what is your solution”. what is your alternative”. All parties must abide by this agreement.”
“When we are negotiating with the IMF, one of the biggest issues we have to face is the government change and policies change. Are we prepared to stand by, to support the agreement?
Sri Lanka has already declared sovereign debt default on April 12 this year and failed to pay its first sovereign debt in May amid deepening economic crisis which later turned into a political crisis and led to the change in the president, cabinet, and and government.
Wickremesinghe warned if the country is not prepared to deal with the IMF, then “the parliament should take the consequence”.
“BITE THE BULLET”
“We can’t say we are for the half and not for the other half. .We have to take the whole thing in full. So this is matter for not only members of the parliament, people outside parliament must also bring their influence to bare on those who have to take decisions inside parliament,” the new president said in his first speech at an economic forum,.
“It may be bitter. But any medicine for recovery is bitter. You have to take injections. So we know the path we have to take. First we have to have the staff level agreement. Secondly and more importantly is the sustainable debt.”
He said the country should focus on the foreign debt first and navigate through without getting caught into the geopolitics of the Asian region. His comments come as the country is facing a cold war due to geopolitical differences between India and China, the regional powers.
He also said the country is unable to seek assistance from London Club in facing the current economic crisis. The London Club is an informal group of private creditors on the international stage. similar to the Paris Club of public lenders.
He also said after the foreign the debts, the key issue is second to look at the local debt.
“Now that has far reaching consonances. Lazards, the financial advisors are looking at both debt,” he said referring to the France-based Lazard which has been chosen to provide financial advisory services in Sri Lanka’s debt restructuring.
“It’s certainly going to be a difficult time. In won’t say no. The first six months going to be difficult. it will be a period we have not seen before. but we all have to go through it,” he said.
“If anyone has a formula, proposals, that will make it easier. certainly I think we should hear it and the parliament could decide between these two sets of proposals. Otherwise, we have no other way, except to bite the bullet.” (Colombo/Aug 05/2022)
