Colombo, Sri Lanka ( Associated Press) – Sri Lanka’s prime minister said on Thursday that he would quickly draw up an economic recovery program and seek approval from the International Monetary Fund – as global inflation and the financial impact of Russia’s invasion of Ukraine on other countries is on their way. may limit the range. Ability to help the island nation.
Prime Minister Ranil Wickremesinghe said officials have reached agreement on basic reform concepts with the IMF and they plan to prepare an economic recovery program within two weeks. After it is finalised, an IMF delegation will visit Sri Lanka to evaluate the programme.
“I have paid special attention to this due to the current global situation, the war in Ukraine and global inflation. We can see that many countries like ours may face economic problems,” Wickramasinghe said.
He added: “At the moment the United States and Europe are spending a lot on war and the aid given to us is likely to be low.”
Sri Lanka is almost bankrupt by an acute foreign exchange crisis that has resulted in foreign loan defaults. The country announced last month that it was suspending foreign debt repayments of about $7 billion due this year out of about $25 billion by 2026. Sri Lanka’s total external debt is $51 billion.
The IMF said in a statement on Thursday that a team remotely concluded preliminary discussions about Sri Lanka’s reform plan on Tuesday.
“The team has made good progress in assessing the economic situation and identifying policy priorities going forward,” the statement said.
Discussions took place on restoring fiscal stability while protecting the vulnerable and the poor, the statement said; Ensuring monetary policy credibility and exchange rate regime; maintaining the stability of the financial sector; and structural reforms to spur economic growth and strengthen governance.
“We hope that these discussions will help the authorities to formulate their own reform programme,” the IMF said.
Former Sri Lankan Finance Minister Ali Sabri has said that timely tax cuts have reduced government revenue, the country’s ability to borrow and issue existing reserves to maintain the US dollar at a fixed rate against the local currency. decreased – and those factors gave rise to the forex crisis. Also the COVID-19 pandemic almost severely curtailed tourism revenue, one of the country’s economic lifelines.
The economic crisis has caused a reduction in imports of goods and industrial raw materials, leading to severe shortages of essential items such as food, medicine, LPG and other fuels, toilet paper and even matches.
Sri Lankans have been forced to queue for hours outside shops to buy fuel and cooking gas for months.
Protesters occupied the entrance to President Gotabaya Rajapaksa’s office for nearly 50 days, demanding his resignation as they blame him and his powerful and politically connected family for the economic crisis.
Protests have nearly destroyed the powerful Rajapaksa political dynasty after his supporters attacked peaceful protesters after the president’s brother resigned as prime minister amid nationwide violence earlier this month. Two other siblings and nephews of the president resigned from their cabinet posts.
Wickremesinghe has promised to reduce the president’s powers, strengthen parliament and propose constitutional changes to solve Sri Lanka’s economic difficulties.