Sri Lanka to enter into an agreement with IMF by July end - PM | Daily News

Sri Lanka to enter into an agreement with IMF by July end - PM

Credit aid conference led by India, Japan and China mooted

Sri Lanka intends to enter into an official level agreement with the International Monetary Fund (IMF) by the end of July, Prime Minister Ranil Wickremesinghe making a special statement in Parliament said yesterday (22).

Prime Minister Wickremesinghe noted that the only safe option before the country now to get out of the dire situation it is facing, is to hold discussions with the International Monetary Fund.

“In fact, this is our only option. We must take this path. Our aim is to hold discussions with the IMF and arrive at an agreement to obtain an additional credit facility. As the next step, we hope to form a foundation to stabilize the economy and implement an immediate programme to increase our export revenue.”

The Prime Minister furthered, “Here the most important is our debt restructuring plan. We will together with the teams from Lazard and Clifford Chance do our utmost to complete the framework for this plan before the end of July.

Considering this planned framework and the official level agreement it is expected that the Executive Board of the IMF will then arrive at its final decision.

Wickremesinghe observed, “Parallel to this, we will organise a credit aid conference which will be led by India, Japan and China, our main lending countries. However, there have been some conflicts and disagreements between us in the recent past. We are working towards resolving these and fostering friendly relations once again. Each country has different processes for granting loans. Through the credit aid conference, we hope to arrive at a general consensus on the lending processes. If we receive the IMF seal of approval, the world will once again trust us. It will help us to secure loan assistance as well as low-interest loans from other countries in the world. We are also currently holding discussions with the World Bank, Asian Development Bank, the United States, other friendly nations and heads of state to secure interim short-term loans till we receive IMF support. We will be able to lay the foundation to ensure economic stability following the successful completion of these tasks. But this by no means will be the end.In fact, it will be the beginning of our journey. A new journey toward a stronger economy.”

Explaining the importance of resolving the foreign reserves crisis faced by the country, Wickremesinghe pointed out, “It is no easy task to revive a country with a completely collapsed economy, especially one that is dangerously low on foreign reserves. If steps had at least been taken to slow down the collapse of the economy at the beginning, we would not be facing this difficult situation today. But we lost out on this opportunity. We are now seeing signs of a possible fall into the very bottom. However, we must come out of this situation. If not, we will be unable to seek solutions to any other issue in the country. Following discussions with the Central Bank, Treasury, relevant government officials, professionals and experts this plan has already been formulated. I urge you to inform us of a better solution if available. In fact, if you are in possession of a practical and more favourable plan for the country we call on you to put it forward. If political parties wish we can take up any solutions presented by them in parliament. We are prepared to provide them with the necessary space and opportunity.

Explaining the steps taken by the present government on managing the crisis Wickremesinghe observed, “The majority of the cabinet was appointed by May 20. We began our programme from then onwards. First, we decided to revert back to the tax system we had in place in 2019. We then agreed to ensure a primary surplus in the National budget by 2025. Next, an IMF team on revenue and taxation visited Sri Lanka for discussions. They presented us with the relevant report. On Monday, the main IMF team arrived in Sri Lanka and the talks with the group will continue for the next several days. We have concluded the initial discussions and we have exchanged ideas on various sectors such as public finance, finance, debt sustainability, stability of the banking sector and the social security network. Representatives of the financial and legal advisory firms Lazard and Clifford Chance are now in Sri Lanka to assist us in our debt restructuring efforts. The framework for debt repayment restructuring is being formulated. Meanwhile, next Monday, a team of representatives from the U.S. Department of the Treasury will also arrive in Sri Lanka. We ensured that we created the background necessary for the immediate arrival of these three teams in Sri Lanka. We will conduct lengthy discussions with them. Their presence in the country will now allow us to hold meetings together with all three teams. It will only further assist us in expediting our programme.”

Prime Minister Wickremesinghe also said that in order to create the foundation of successfully managing the crisis, the government will put forward an interim budget in August 2022 for the remainder of the period. Accordingly, the budget for 2023 will be presented in November. In addition to this, the government will also present several new legislations in parliament that are necessary to strengthen the economy, the Premier continued. “We have already commenced discussions on these with all parties represented in parliament. I extend my gratitude to all political parties and intellectuals taking part in these discussions to support our nation-building efforts.”


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