INTERVIEW – Sri Lanka’s new “painful” reforms won’t be reversed – State FinMin
ECONOMYNEXT – Sri Lanka’s ongoing IMF-prescribed reforms to come out of an unprecedented economic crisis will not be reversed in future unlike in the past as there is “somewhat consensus” among the current lawmakers for such reforms, State Finance Minister Shehan Semasinghe said.
Sri Lanka has seen many vicious reform cycles since the independence in 1948 with one center-right political parties in power have introduced reforms to boost revenue, liberalize economy, divest state assets, and encourage private investments while center-left political parties have reversed such reforms focusing on state-led economy and blanket subsidies.
However, President Ranil Wickremesinghe, the leader of center-right United National Party (UNP) has been voted in as the island nation’s leader backed by the legislators of the center-left and nationalist ruling Sri Lanka Podujana Peramuna (SLPP) after protests ousted former president Gotabaya Rajapaksa in July.
Wickremesinghe has been implementing fiscal reforms to boost the government revenue, reduce state spending, promote private sector investments, and reduce losses in state-owned enterprises with an aim to get the nation out of an unprecedented economic crisis. The president also has been aiming for a $2.9 billion, 4-year IMF loan with the implementation of reforms.
Shehan Semasinghe, State Finance Minister, a member from the center-left SLPP, which has been the main barrier of the current reforms, said the current reforms will not be reversed as in the past.
“Whatever the reforms we have had so far, the Parliament has given consensus. Unlike in the past, we will see these reforms (persist), the revenue collection to increase. The revenues should go up, if the subsidies to be given to most needy people,” Semasinghe told an interview with EconomyNext on Friday before leading Sri Lanka delegation to the IMF discussions in Washington DC.
“All these are being agreed upon, agreed by the government and the opposition.”
President Wickremesinghe’s administration is facing public anger because of high cost of living and some of the reforms like tariff hikes in electricity and water supply are expected make many lower income groups unaffordable to buy most essential foods.
However, the government has been steadfast on its reform agenda as they are mandatory for the IMF loan approval by the global lender’s executive board.
Sri Lanka’s fractured opposition parties have been largely not opposed the reforms, but has said the most vulnerable and poor people should be looked after by the government, a concern the IMF has also raised.
“Yes, the opposition present that argument. But in general, I can see a somewhat consensus taking place in the parliament,” Semasinghe said sitting at his office in the island nation’s finance ministry building located next to the presidential secretariat.
“The all party governments wonderful option, but unfortunately, we couldn’t make it the way want. But we will have a contribution from the opposition as they are in the parliament committees.” (Colombo/Oct10/2022)
