- President Ranil Wickremasinghe says the IMF EFF will restore Sri Lanka’s international recognition, ensure the country is not bankrupt & help banks to regain international recognition: also says it will create opportunities for low interest credit, restore foreign investor confidence & lay the foundation for a strong new economy.
- President Ranil Wickremesinghe tables the IMF agreement in Parliament: urges Opposition to unite and disregard political differences to assist in carrying out the IMF agreement, which will aid in the development of Sri Lanka’s economy.
- President Ranil Wickremasinghe says the Govt has agreed with IMF to reduce the primary deficit to 2.3% of GDP by 2025 & increase revenue to 14% of GDP by 2026: standard corporate income tax rate to be raised to 30% & sectoral tax holidays to be eliminated: PAYE tax rate to be raised from 12% to 15% & the tax exemption limit to be reduced from Rs 300 mn to Rs 80 mn.
- SJB MP & Economic Guru Dr Harsha Silva says he is happy about the IMF EFF: asserts he is not hypocritical to not appreciate it: Silva had previously strongly supported the sovereign debt default as well.
- SJB MP and Financial expert Eran Wickremaratne says some are of the opinion that all problems will vanish into thin air just because the IMF loan is approved: asserts the IMF loan is like getting our necks into the noose first so that they would feed us thereafter: queries from where the social protection for the people is forthcoming.
- Epidemiology Acting Chief Dr Samitha Ginige reassures the public that there is no danger of a listeriosis spread in the island: urges the public to refrain from creating undue fear regarding the bacterial infection.
- IMF predicts that restructuring the public sector debt and bad loans in the private sector would cost around 6% of the 2022 GDP for Sri Lanka’s banking and finance sector: states this would require a capital infusion equal to that amount in order to cover the bad loans.
- Rupee appreciates against the USD: buying rate at Rs.312.61 & selling rate at Rs.330.16: Gold prices also reduce by around Rs.10,000 with a 22-karat sovereign being quoted at Rs.152,000.
- Colombo University Economics Senior Lecturer Dr Shanuka Senarath says SL is currently in an interval in hell: asserts this is just the tip of the iceberg and that all the problems are still under the carpet.
- Colombo Grand Mosque says the Muslims in Sri Lanka will begin the month of Ramadan fasting from dawn on Friday, March 24.
Sri Lanka Original Narrative Summary: 23/03
Strategic Study Tour to Sri Lanka by the 46th Higher Air Command Course
1. A delegation of 19 Indian Armed Forces officers led by Group Captain Yunus Syed Muzaffar from the 46th Indian Higher Air Command Course conducted at College of Air Warfare, Secunderabad arrived in Sri Lanka as part of Strategic Study Tour from 20-24 March 2023. The visit is focused on interactions with senior defence hierarchy as well as visits to military establishments and industrial organizations to broaden the vision of the trainees.
2. The delegation started their visit by paying homage to the martyrs of Indian Peace Keeping Force at the memorial in Battaramulla followed by interactions with High Commissioner of India, H.E Gopal Baglay, Chief of Defence Staff, General Shavendra Silva and Air Marshal S.K Pathirana, Commander of Sri Lanka Air Force. The delegation is also scheduled to visit Galle, Hambantota, Diyatalawa, Kandy and Katunayake and interact with various agencies to get deeper insights about Sri Lanka.
3. India’s ‘Neighbourhood First’ Policy seeks to promote institutional linkages between the Armed Forces of India and Sri Lanka. Such Study Tours help strengthen the existing bonds of camaraderie and enhance people to people connect to achieve regional peace, security and stability.
Colombo
21 March 2023
High Commissioner Moragoda presents a copy of the Sinhala translation of the Holy Quran to the Ambassador of Bahrain
Continuing his efforts to promote dialogue with Heads of Mission of Islamic countries concurrently accredited to Sri Lanka from New Delhi, High Commissioner of Sri Lanka to India Milinda Moragoda presented a copy of the Sinhala translation of the Holy Quran to the Ambassador of Bahrain to India Abdul Rahman bin Mohammed AlGaoud on 21 March 2023.
Earlier in February, High Commissioner Moragoda had presented copies of the Sinhala translation of the Holy Quran to the Ambassador of Morocco in India.
This Sinhala translation of the Holy Quran, published by the All Ceylon Jamiyyathul Ulama (ACJU) of Sri Lanka, was presented to the Bahraini Ambassador at the Embassy of Bahrain in New Delhi.
Previously, the High Commission had presented copies of the Sinhala Quran to the Jama Masjid of Delhi and the Jamiat Ulama-i-Hind (Council of Muslim Theologians of India).
In keeping with the “Integrated Country Strategy for Sri Lanka Diplomatic Missions in India”, the policy roadmap of High Commissioner Moragoda, the High Commission of Sri Lanka in New Delhi has been promoting dialogue with all major religions in India.
High Commission of Sri Lanka
New Delhi
22 March 2023
Sri Lanka’s IMF Agreement Will Not Alter the Trajectory of a Collapsing Economy
Without a major course correction in its economic trajectory and a significant “haircut” on its external debt, the country will likely be knocking on the door for another IMF pact. It could face another default in a few years.
Ahilan Kadirgamar, Devaka Gunawardena and Sinthuja Sritharan
The International Monetary Fund (IMF) executive board’s approval of loans is being celebrated in the elite quarters of Sri Lanka. The IMF’s recommendations have been implemented for close to a year, however, they have exacerbated the island nation’s economic depression.
The reality is that the IMF agreement and the limited funds that will be released in instalments will not alter the trajectory of a collapsing economy.
Given Sri Lanka’s default on its external debt in April 2022, the debt restructuring process, which is aimed at reducing its unsustainable debt levels, is likely to drag on for months, if not years.
Indeed, without a major course correction in Sri Lanka’s economic trajectory and a significant “haircut” – reduction of outstanding interest payments or a portion of a bond payable that will not be repaid – on its external debt, it will likely be knocking on the door for another IMF agreement. It could face another default in a few years.
The agreement is based on the same assumptions and projections rooted in the free market regime. But Sri Lanka’s challenge is not to return to the deep waters of a turbulent global economy. Instead, the country must identify avenues to increase domestic production of essential goods which its people need for survival. This includes strengthening the food system through local agricultural production.
Sri Lanka may find itself drowning in the dead weight of external debt if the process of achieving debt sustainability is predicated on integrating back into the global economy through more loans and hypothetical opportunities in the distant export markets.
Economic and political scenarios
At the heart of the problem is the conflation of the country’s two deficits: 1) the primary budget deficit, which consists of the government’s revenues versus expenditure, and 2) the current account deficit, which is the country’s foreign earnings versus expenditure.
The effects of the IMF-recommended austerity measures to meet a primary budget surplus target for 2024 can already be seen in the tremendous contraction of the economy in 2022.
Sri Lanka’s gross domestic product (GDP) contracted by 12.4% in the fourth quarter of 2022 alone. However, during the same quarter, the external balance had a surplus of $ 154 million. This happened mainly due to the prioritisation of imports, which for years the nation’s governments had avoided, because of the ideological “straitjacket“ of free trade.
Going forward, a focus on domestic investment and production, while managing the external sector, should be the strategy for reviving the country’s economy. But due to the IMF’s emphasis on a primary surplus and a free market regime, the opposite policies are being pursued. This strategy is inflicting tremendous suffering on the people.
The “straitjacket” approach of free trade attracts foreign capital, which includes a return to borrowings in the international capital markets. But wasn’t that one of the central causes of Sri Lanka’s economic crisis in the first place?
Sri Lanka’s high-interest loans and debt-financed capital inflows were repaid with the hard-earned foreign exchange of its working people. And that debt was invested in unproductive infrastructure and luxury real estate.
Therefore, there is little room for alternatives if Sri Lanka continues with the traditional crisis-fighting approach.
Furthermore, how will the state obtain taxes amid drastically declining real incomes? How can an already unpopular government politically afford to tax a shrinking pie?
The current approach to fiscal consolidation will inevitably hit a roadblock. In fact, the hidden agenda of the ruling elite seems to be a fire sale of public assets and tremendous wage repression. Significantly, the real incomes of people have drastically declined and millions have slipped into poverty. In addition, the privatisation of state assets to foreign entities will both fill the coffers of the treasury as well as bring in foreign capital that can be used to pay back external debt. However, this twinned strategy is bound to provoke a massive political backlash.
Sri Lanka has already witnessed the consequences of a destabilising economy last year. The country’s economic crisis, coupled with tremendous shortages of essential goods and price hikes, led to the overthrowing of President Gotabaya Rajapaksa. The current government led by Ranil Wickremesinghe has none of the advantages of its predecessor, in terms of a popular support base.
Wickremesinghe, and the elites he represents, however, appear content with repeating the process.
Worse, they refuse to even hold elections, in which they are bound to be hammered. They are instead pinning their hopes on more promises of external aid and investment, believing that such pronouncements would placate the citizenry.
Also read: Can Sri Lanka Implement Unpopular Decisions to Secure an IMF Bailout Package?
Wealth taxes, haircuts, and redistribution
The path laid out above is no doubt a recipe for disaster, but identifying alternatives requires understanding Sri Lanka in its historical and global setting.
When Sri Lanka defaulted on debt for the first time in its history last year, many analysts had spoken about drawing lessons for debt restructuring from other countries.
For instance, the case of the Latin American debt crisis of the 1980s. It may appear that Sri Lanka could bear the same process of structural adjustment. But the Latin American countries experiencing debt distress were incorporated into the expansion of global trade with the decade of hyper-globalisation in the early 1990s, albeit at great social cost and with long-term ramifications for inequality in their own societies.
However, Sri Lanka’s economic crisis has happened at a time when global growth has been slowing.
While there was a temporary recovery of trade in the aftermath of the COVID-19 pandemic, the long-term trend of slowing trade growth continues, aggravated by geopolitical tensions. Therefore, factoring in export-oriented growth opportunities, along with solutions for debt sustainability, must be looked at as per the prevailing global situation.
The Wickremesinghe-Rajapaksa government argue that the tax cuts by the then government in 2019 led to the economic crisis in the country. They further argue that this must be rescinded.
Amid declining income flows, the government is hiking taxes.
The problem, however, is that it is hard to generate revenues from a contracting economy with declining wages. Therefore, only a wealth tax on the stock of existing property and assets is realistic.
Of course, a wealth tax would also encounter fierce resistance from the elites who benefited from Sri Lanka’s neoliberal economic model. Indeed, they have long enjoyed the conspicuous consumption that drained the country’s external finances. There needs to be a redistributive approach focused on stabilising public finances by taxing the property and assets that the elite accumulated over the many decades since economic liberalisation began in the late 1970s.
In addition, amid tremendous price hikes and price volatility, there needs to be a public distribution system that prioritises the essential needs of the people who are on the brink of starvation.
Meanwhile, the lion’s share of Sri Lanka’s external debt is commercial borrowings, particularly international sovereign bonds. These bonds have high interest rates.
Sri Lanka’s bond holders earned high returns over the last decade. Their returns almost equalled their capital, particularly for the 10-year term sovereign bond. On the other hand, its own people have been paying these loans off for years now, by earning the country’s foreign exchange in sectors with little to no social protection. Meanwhile, the state cut back on social welfare spending and productive investment.
Also read: Debt Default Now Hangs Over Pakistan Like the Sword of Damocles
Future of development financing
So what is the way forward? The debt restructuring process will likely take time.
The existing debt restructuring frameworks – such as the G20 Common Framework and the Debt Service Suspension Initiative (DSSI), which was agreed upon by Western countries as well as China and India to handle the debt distress of lower-income countries – have proven to be slow and limited.
Moreover, Sri Lanka’s profile is complicated by its categorisation as a “lower middle-income” country. It also has much higher level of foreign commercial borrowings than other countries that have obtained debt relief through similar initiatives.
A just mechanism must be developed for resolving sovereign debt crises, especially for the countries in the Global South.
A new and fairer global regime of trade and investment is necessary. There is a need to build on the work of the Sri Lankan economist Gamani Corea and many others, who, for example, came up with the proposal for the New International Economic Order in the 1970s, which the major powers led by the US refused to consider.
Countries, such as Sri Lanka, that have sunk into an economic crisis cannot wait for a new global financial architecture. Instead, this is the moment when alternative development financing arrangements must be considered, even as hegemonic powers are challenged to move away from demanding austerity measures for developing countries.
Moreover, for countries such as Sri Lanka, their long-term prospects lie in eventual engagement through new forms of South-South cooperation. However, the existing political alignments within regional powers and the nature of their elites, who continue to benefit from and are committed to free markets, block this path. Overcoming these obstacles and building solidarity within the Global South will take time.
Currently, there is a growing international focus on the ongoing wave of debt distress affecting over 50 countries and the absence of a credible mechanism to solve these issues. The discussions on these issues by progressive thinkers, trying to tackle the emerging debt crisis in their own countries, provide a glimmer of hope.
Can we do without the dogmatic economic ideologies that have been part of the capital’s strategy of economic repression and dispossession in the Global South?
This week, for example, a three-day consultation on debt restructuring in Colombo, mainly for economists from the Global South, will be organised by the International Development Economics Associates and the Law and Society Trust. This is one such initiative that is taking up the challenge of conceiving alternatives to the current austerity framework of debt restructuring, and the ongoing devastation it is causing.
If Sri Lanka cannot expect the same growth rates, and if it must make do with a much smaller economic pie, then the question of redistribution becomes even more urgent to ensure that its people can survive, and avoid any danger of starvation.
In addition, policies guiding investment into critical sectors such as agricultural production and the food system may not yield high returns, but they can help ensure survival.
There is an opportunity for a critical shift towards lower but sustainable growth, along with the resistance needed to push back against the dogmas of free trade and capital account convertibility.
By pursuing such a strategy, Sri Lanka can hopefully bring its current account deficit under control and avoid the market fluctuations and repeated crises that have been the hallmark of the neoliberal project around the world. In addition, Sri Lanka must sustain enough public expenditure to prevent its economy from going into a tailspin. That will require considerable redistribution, including measures like a wealth tax.
For Sri Lanka’s elites, along with its international partners, who continue to push the same failed neoliberal growth model, these ideas may seem too radical, or a step too far.
However, for those concerned with a just resolution of a widespread debt crisis and dispossession in the Global South, considering the paths taken and not taken in Sri Lanka may offer a preview of alternatives. That includes reconfiguring the basis on which debt restructuring occurs, along with the possibility of different arrangements for development financing. As the Global South faces another period of great turmoil, its progressive intellectuals should begin debating and promoting these alternatives.
Ahilan Kadirgamar is a political economist and a senior lecturer at the University of Jaffna. Devaka Gunawardena is a political economist and an independent researcher. Sinthuja Sritharan is an economist and an independent researcher.
High Commissioner Moragoda meets Finance Minister Sitharaman to discuss the way forward in bilateral economic cooperation
Sri Lanka’s High Commissioner to India Milinda Moragoda met with the Minister of Finance and Corporate Affairs of India Smt. Nirmala Sitharaman in New Delhi on 22 March 2023.
This was the latest of a series of meetings High Commissioner Moragoda has had with Minister Sitharaman since November 2021 on Indian economic cooperation and assistance to Sri Lanka in the context of the present economic crisis.
At the outset, High Commissioner Moragoda thanked Minister Sitharaman for the leadership that the government of India took towards the realization of the International Monetary Fund’s Extended Fund Facility (EFF) Arrangement for Sri Lanka. He particularly thanked Minister Sitharaman for her personal involvement in taking up Sri Lanka’s case with bilateral development partners as well as multilateral financial agencies including the IMF in this context.
Minister Sitharaman and High Commissioner Moragoda also discussed the way forward in bilateral economic cooperation. The ways and means to attract Indian investments to Sri Lanka, enhance bilateral trade particularly through Indian Rupee trade expansion and increasing the inflow of Indian tourists to Sri Lanka were explored and discussed. The Minister and the High Commissioner agreed that these measures could form part of Sri Lanka’s economic recovery.
High Commissioner Moragoda also presented Minister Sitharaman with a copy of the publication “Geoffrey Bawa; Drawing from the Archives”, which contains the drawings of Sri Lanka’s iconic architect the late Geoffrey Bawa. The publication was presented to her as a memento to mark the opening of the two month- long exhibition “Geoffrey Bawa: It Is Essential To Be There” which was inaugurated by the External Affairs Minister of India Dr. S. Jaishankar on 17 March 2023 at the National Gallery of Modern Art in New Delhi.
High Commission of Sri Lanka
New Delhi
22 March 2023
Presentation of Letters of Credence – Australia
The High Commissioner to the Commonwealth of Australia, Chitranganee Wagiswara presented her Letters of Credence to the Governor General AC DSC (Retd.) David Hurley on 16 March 2023 at the Government House, Canberra.
The formal ceremony included a guard of honour and a luncheon hosted by the Governor General to the three High Commissioners/Ambassadors who presented credential on that day.
The High Commissioner had a separate audience with the Governor General joined by the First Assistant Secretary of the Department of Foreign Affairs & Trade of Australia and the Senior Representative of the Government House.
During the discussion the High Commissioner conveyed the greetings of the Sri Lanka President, Ranil Wicremesinghe to the Governor General. While expressing his good wishes to the Sri Lanka President, he congratulated the High Commissioner on her appointment and conveyed his best wishes for a successful tenure in Australia.
The High Commissioner spoke briefly on the political, economic and social developments in Sri Lanka and the challenges and priorities of the government. In this context, the High Commissioner thanked the Australian Government for the assistance granted to Sri Lanka in the form of medicine and food to tide over the difficult period last year.
It was noted that Sri Lanka and Australia have maintained close and cordial bilateral ties over the years and both sides were of the view that the friendship and cooperation that exists between the two counties could achieve greater heights in the years to come.
The High Commissioner was accompanied by Deputy High Commissioner Chamari Rodrigo, Minister U.G.C Abeyrathna, and Counsellor (Defence) Capt. Sanjeewa Kathriarachchi.
High Commission of Sri Lanka
Canberra
20 March 2023
Let us stand against suppression against ‘Siyata’ media network and harassing Journalist Lal Hemanta Mavalage: FMETU
The Federation of Media Employees Trade Unions strongly condemns the ongoing attempts to abuse parliamentary privileges to suppress the popular TV program ‘Televakiya’ and to intimidate its editor Lal Hemantha Mawalage, a veteran journalist attached to the Siyata Media Network. The Televakiya is a current affairs program that has become massively popular among TV audiences in recent times for its unafraid stance in criticizing the wrongdoings of the government. In return, the government is now trying to make use of the provisions in the Parliament Powers and Privileges Act to muzzle the media by summoning the journalists before Parliament Privileges Committee to question and institute legal actions against them. This highhanded action amounts to a serious threat against the freedom of expression.
Lal Hemantha Mawalage is a senior journalist who started his career in broadcasting at the Sri Lanka Rupavahini Corporation. Since his inception there on Dec 28, 2008 he worked hard to stand against unjust and corruption. Because of his work, he had once come under a brutal attack from Mervyn Silva, a cabinet minister of the Mahinda Rajapaksa government. Mawalage had to flee the country to save his life in that instance. Up until now, there is no formal investigation into this to bring the culprits before justice.
We urge President Ranil Wickremesinghe to stop immediately the suppression of the media and journalists and remind him and his government that it is their duty to bring justice to the journalists who had been killed, maimed and became victims of enforced disappearances in the recent years. We, the Federation of Media Employees Trade Unions, emphasize that freedom of speech is a foundation of a democratic society, is a powerful value to social, economic, and political freedom.
The FMETU is a member organization of the International Federation of Journalists is the world’s most powerful media organization with a membership of more than 600,000 journalists from 146 countries, and 167 media organizations, and we jointly urge the government to stop immediately the attempts to make use of powers to parliament to gag journalists. We also call on people’s representatives in Parliament to oppose the government’s plans to punish the Siyata Televakiya, which stands for the traditional characteristics of Public Service Journalism.
Dharmasiri Lankapeli
General Secretary
Federation of Media Employees’ Trade Unions
Foreign Minister visits the United Kingdom for Commonwealth Foreign Affairs Ministers’ Meeting
Minister of Foreign Affairs Ali Sabry participated in the 22nd Commonwealth Foreign Affairs Ministers Meeting (CFAMM) in London on 15 March 2023. During the visit, he also attended the Commonwealth Day ceremonies celebrating 10 years of signing the Commonwealth Charter by Her Majesty the late Queen symbolizing the shared values and principles of member nations.
Addressing the CFAMM at Commonwealth headquarters, Minister Sabry reaffirmed Sri Lanka’s active engagement and spoke on the themes of climate financing for environmental sustainability; the need to leverage intra commonwealth trade for food & energy security and support the twin transition to a digital and greener future; and building resilient societies through democracy. He articulated the need for setting up a central body to enable regulations on digitization & digital assets expressing that Commonwealth can play an important role. He also drew attention to setting up of a climate change university in Sri Lanka, which was first mooted by President Ranil Wickremasinghe. In his meeting with Commonwealth Secretary General, Patricia Scotland KC, both sides discussed engaging the Commonwealth to accelerate Sri Lanka’s sustainable development.
Minister Sabry during this visit, attended a series of events to mark the Commonwealth Day on 13 March, including a wreath – laying ceremony in memory of fallen Commonwealth servicemen and women, followed by a special service at Westminster Abbey in celebrating the diversity of cultures which featured a performance by Sri Lankan youth. The Commonwealth Flag for Peace was raised along with members’ flags to recognize 2023, as Commonwealth Year of Peace. The events concluded with a reception for visiting dignitaries hosted at Buckingham Palace by King Charles III, addressing the Commonwealth as its Head for the first time.
On the sidelines of the Commonwealth events, Minister Sabry met with Anne-Marie Trevelyan, the Minister of State for Indo – Pacific at the Foreign Commonwealth Development Office of the UK. Lord Mervyn Davies of Abersoch, UK Prime Minister’s Trade Envoy to Sri Lanka had a meeting with Foreign Minister Sabry, particularly concentrating on the economy and developing further the trade and investment links between the two countries.
At both these meetings, Minister Sabry apprised the UK side of the advanced stages in the debt restructuring process and thanked the bilateral creditors and Paris Club members for the support and cooperation extended towards Sri Lanka in accelerating the process.
In addition, on the margins of CFAMM, Minister Sabry met with James Cleverly, Secretary of Foreign, Commonwealth and Development Office of the UK and with Foreign Ministers of Malaysia, Rwanda and the State Minister of Foreign Affairs of Pakistan.
Minister Sabry, had an interactive session in the UK Parliament with a cross-section of the British Parliamentarians over ‘Ceylon Tea’ which was organized by the High Commission of Sri Lanka in London together with Sri Lanka Tea Board. The session included remarks by the Foreign Minister and UK’s Minister of State for International Trade, Nigel Huddleston.
The visit concluded with a discussion the Foreign Minister had with the British – Sri Lankan community on ways and means of contributing to Sri Lanka’s development process.
Ministry of Foreign Affairs
Colombo
20 March 2023
Our gratitude to the President for his excellent leadership in bringing the agreement with the IMF- Minister Jeevan Thondaman
Jeevan Thondaman, general secretary of the Ceylon Workers’ Congress and minister, expressed his gratitude to the President for his excellent leadership in bringing the agreement with the IMF to a successful conclusion despite the concerns and criticism of the political opposition.
He made this statement in response to the International Monetary Fund Executive Committee’s acceptance of the provision of loan facilities to Sri Lanka.
He added the following in this regard:
“Within days after entering bankruptcy, our nation had no choice but to turn to the International Monetary Fund for assistance. Economic reforms were also made for this reason.
16 times, Sri Lanka has requested assistance from the International Monetary Fund. The promises, however, were not kept. This made it extremely difficult to this time receive loan approval. International financial organizations also placed Sri Lanka lower on the data list than other countries.
In light of this, the President has successfully negotiated diplomatically with India, China, Japan, the Paris Club, and other nations to secure approval for a loan from the International Monetary Fund.Now Sri Lanka can sustain itself and move forward, Institutions of finance will also loosen their limits on Sri Lanka..
In that regard, I would like to express my gratitude to the President, the IMF chiefs, and the nations, including India, for their cooperation.
G.Krishanthan – 0779166581, 0779775719
Media Secretary
Ministry of Water Supply and Estate Infrastructure Development
Sri Lanka to start next round of talks with creditors in April
COLOMBO, March 22 (Reuters) – Sri Lanka will kick off the next round of talks with creditors in the third week of April, President Ranil Wickremesinghe said on Wednesday, adding that the debt-stricken nation has started to receive funds from the International Monetary Fund.
The IMF has released the first tranche of about $330 million, part of a nearly $3 billion bailout approved by it on Monday, Wickremesinghe told parliament.
“This will create opportunities for low-interest credit, restore foreign investors’ confidence and lay the foundation for a strong new economy,” he sa
The IMF bailout is expected to catalyse additional support to the tune of $3.75 billion from the likes of the World Bank, the Asian Development Bank and other lenders. It also clears the way for Sri Lanka to restructure a substantial part of its $84 billion worth total public debt.
Sri Lankan officials will start the next round of talks with bondholders and bilateral creditors in the third week of April, Wickremesinghe said, adding that a fully transparent process will be followed.
Sri Lanka also aims to reduce inflation to a single digit by mid-2023 and later to 4%-6%, Wickremesinghe said. The country’s National Consumer Price Index (LKNCPI=ECI) rose an annual 53.6% in February.
This was the 17th IMF bailout for Sri Lanka and the third since the country’s decades-long civil war ended in 2009.
Economic mismanagement coupled with the impact of the COVID-19 pandemic left Sri Lanka severely short of dollars for essential imports at the beginning of last year, tipping the island nation into its worst financial crisis in seven decades.
Unlike previous bailouts, which were mainly used to bolster foreign exchange reserves, the funds from the current programme can also be used for government spending, senior IMF official Masahiro Nozaki said on Tuesday.