IMF only option available to Sri Lanka to overcome economic crisis, says Wickremesinghe

Sri Lankan President Ranil Wickremesinghe said the IMF had assigned Sri Lanka 15 tasks to complete

February 21, 2023 06:03 pm | Updated February 23, 2023 08:14 am IST - Colombo

Sri Lanka’s President Ranil Wickremesinghe. File.

Sri Lanka’s President Ranil Wickremesinghe. File. | Photo Credit: Reuters

Sri Lankan President Ranil Wickremesinghe on February 21 emphasised that seeking the IMF bailout package was the only option available to the debt-ridden country to overcome the ongoing economic crisis.

"When a country goes bankrupt, it has to go to the International Monetary Fund. Apart from that, there is no other organisation in the world that provides aid when a country goes bankrupt," Mr. Wickremesinghe said.

Addressing a gathering in the central town of Kandy, he said that each nation that experienced an economic catastrophe recovered after engaging in talks with the IMF and cited the example of Greece which took 13 years to recover from the collapsed economy.

"I have no hope of being President for 13 years," Mr. Wickremesinghe said, amidst opposition to his hard economic reforms which had triggered utility rate hikes and increased personal taxes.

“There is only one way to rebuild this collapsed economy. That is the International Monetary Fund. Different political parties are presenting different stories. I suggested to them to let me know if there is another way to resurrect the collapsed economy.”

"The IMF indicates that our tax revenue should be 15 per cent of the GDP as it was in 2019. So far it has gone down to 09 per cent," he added.

He said the IMF had assigned Sri Lanka 15 tasks to complete.

"The IMF gave us until December 31 to implement it. But we couldn't do it on that particular day. Then we made plans to get time until January 31. Even at that time, we were unable to complete those 15 points. Finally, the deadline was pushed back to February 15... All 15 tasks assigned to us have been completed. Now it is up to the IMF," he added.

Mr. Wickremesinghe acknowledged that delays over Chinese willingness to restructure Sri Lanka debt had caused problems.

"This is being discussed further. The IMF also suggested that everyone should get on one platform and discuss. However as China is a world power, their procedure is different," he said.

He said he would meet the Chinese Finance Minister on February 23 in Bengaluru at the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting this week.

"There, I hope to discuss the debt restructuring method of Sri Lanka with the Chinese Finance Minister," he added.

Mr. Wickremesinghe said if the IMF did not provide assistance, the island nation would have to return to its last year situation of unavailability of fuel and 12-hour power cuts.

Sri Lanka was hit by an unprecedented financial crisis in 2022, the worst since its independence from Britain in 1948, due to a severe paucity of foreign exchange reserves, sparking political turmoil in the country which led to the ouster of the all-powerful Rajapaksa family.

The IMF in September last year approved Sri Lanka a 2.9 billion dollar bailout package over 4 years pending Sri Lanka’s ability to restructure its debt with creditors—both bilateral and sovereign bond holders.

With assurances from creditors, the 2.9 billion dollar facility could get the IMF board approval in March.

The IMF facility would enable the island nation to obtain bridging finance from markets and other lending institutions such as the ADB and the World Bank.

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