Stresses Sri Lanka has no other active option but to sign an agreement with IMF
Suggests that the entire Parliament be made a Govt. to implement the IMF program
Stresses restructuring of local debt would not harm members of EPF
President Ranil Wickremesinghe yesterday made what transpired as a frantic appeal to Parliament to back the critical $ 2.9 billion Extended Fund Facility from the International Monetary Fund (IMF) as critical for the future stability and prosperity of Sri Lanka.
In a special statement delivered to Parliament President Wickremesinghe announced that Sri Lanka is on the path of renaissance and is re-emerging as a success story, with the expectation of support from the entire nation to carry it forward.
Wickremesinghe also spoke about the IMF agreement, which he presented to Parliament. He acknowledged that the country had failed to implement previous agreements with the International Monetary Fund, despite entering into 16 such agreements. However, he emphasised that there is no other active option for Sri Lanka but to sign an agreement with the IMF. President Wickremesinghe reassured the public that the restructuring of local debt would not harm members of the Employees’ Provident Fund. Furthermore, he stated that a social safety net has been implemented to protect low-income people and create financial stability in the country.
“We have entered into agreements with the IMF 16 times in the past, but we have not fully implemented them. On the 17th occasion, when we achieve stability, we must address our long-term weaknesses and move forward with a new program,” the President said during the debate on the latest bailout by the multilateral funding organisation.
“One of the points to address is debt restructuring talks with our bilateral countries and private creditors. We want to restructure these loans, as failure to do so will result in a loss of liquidity. In order for the Government to move forward, the restructuring must be done in rupees or dollars. The Government wants to obtain funds for this service.
“Therefore, we must first negotiate with foreign creditors. We hope to initiate these discussions soon, with domestic debt restructuring also being considered. A final decision has not yet been made, but it is important to discuss this issue. Negotiations cannot be held with terms and conditions already in place. It is easier for us to join negotiations without conditions,” the President said.
He said every aspect must be given special attention to ensure that no one is harmed in the process. “Some banks may express their inability to cope with the program, but it is important for them to accept it in order to move the economy forward. There are concerns that the stock market may collapse, and some may not be able to offer different conditions. However, decisions will be made in Parliament, and appropriate measures will be taken to ensure that no harm is done to anyone, such as the members of the Employees Provident Fund,” Wickremesinghe emphasised.
He also said the Government has initiated necessary programs to support the poor, and the World Bank has provided funding for this. We are currently implementing a program to give aid to those who truly deserve it and remove those who do not. “Our aim is to create financial stability and protect the low-income people,” the President said.
He pointed out that stability alone is not enough for Sri Lanka.
“Actuality, the nominal GDP for 2019 was just $ 89 billion during this period. The gross domestic product will be the same in 2028 as it was in 2019. If we stay with the growth rate of 3%, we can lose the national income of nine years. If we maintain the current growth rate of 3%, we may lose nine years of national revenue. Furthermore, it has been predicted that the Sri Lankan GDP will decrease by around 3% in 2023,” the President said.
“Economic positivity will likely be confirmed in the fourth quarter of 2023. If the economy grew at least 3% or 7% each year starting in 2019, our GDP would be worth $ 110 billion. But if we go to 5%, it will be $ 130 billion. In fact, we believe we will be able to reach 3% or 4% in the first two to three years.
“Following that, we must aim for a growth rate of at least 6% to 7% over this time period. That should be agreed upon by everyone in this House. However, this may be done at 7% or 8%. We have opportunities for that. That is why we are restructuring the entire legal system. Some regulations have to be removed. Some people wonder why corporations are being sold. They can be better run by the private sector. We leave them to the private sector,” Wickremesinghe pointed out.
The President emphasised that Sri Lanka has no other option but the IMF agreement.
“There have not been alternative suggestions. If there is no other alternative, let’s approve this. I also urge the opposition to work together. Let’s get both parties together and pass this,” he appealed to MPs.
“There are policies and initiatives in place for the first five years. Let’s discuss them. There is a national assembly. In particular, there are other committees. Let’s make the entire Parliament a Government to implement this program. Let’s get together for this. There may be differing viewpoints. However, everyone must back this initiative,” he stressed.
He warned that if Sri Lanka doesn’t accomplish this, the country would be betraying the youth.
“Their future has been destroyed. Think about the youth of the country. Don’t just think about grabbing power only. If this program is not done, none of us will be able to survive in another two or three years. So I urge everyone to come together to approve this. After that we will come together and prepare the set of policies required until 2048. I also urge you to provide support to implement the program during the next five years,” President Wickremesinghe urged the Parliament.