ECONOMYNEXT – Sri Lanka has experimented the worst of its economic crisis and its political stability will help the country turn a corner, starting with finalizing the negotiations for an International Monetary Fund (IMF) bailout, says President Ranil Wickremesinghe The Wall Street Journal.
“I think we have already hit rock bottom. I can see the light at the end of the tunnel; it is how fast we can get there,” the New York-based business daily said, quoting Wickremesinghe, on Sunday, July 31.
However, it will take a few months before most Sri Lankans begin to see their economic situation improve significantly, he said.
President Wickremesinghe told the WSJ he expects an IMF staff-level agreement to be reached by the end of August, in backuh that the country would be able to continue talks with the sovereign bondholders and bilateral creditors.
“We’ve gotten down to business,” he said. “We would have had it this month [July] if it were not for the unstable political condition.
Separately, Wickremesinghe had said it was not the right time for former President Gotabaya Rajapaksa, who fled the country after protesters stormed his official residence on July 9, to return. Rajapaksa had also not indicated his intention to return, Wickremesinghe said.
“I don’t think now is the time for him to come back,” he said. “I have no clue about him. back soon.”
Wickremesinghe also defended the legitimacy of his presidency to the WSJ. His election by parliament following Rajapaksa’s resignation was controversial, with some members of the opposition and sections of the Sri Lankan youth-led protest movement saying he had no popular mandate and that the current parliament did not reflect the will of the people.
“I arrived by chance. Basically, the president had resigned. The country was on fire. They were taking possession of the buildings,” he said. “I was constitutionally elected… it’s up to us to perform now.
The president noted that once an agreement with the IMF is in place, Sri Lanka would need to work out debt restructuring with creditors who have different approaches.
“It’s a problem between the diffDifferent approaches to debt relief between India and Japan on one side, supported by the United States and China on the other,” he said. “It’s a matter of getting them to agree on a plan. It’s a question of how to handle Haircut? How do you deal with having new money to pay off old loans? »
Wickremesinghe told the WSJ that the Central Bank of Sri Lanka (CBSL) was confident it would “find the money to cover enough fuel imports.”
However, even with an IMF deal in place, Wickremesinghe said Sri Lanka needs to get more than US$3 billion from other sources next year to help pay for major imports such as fuel, food and fertilizer. He is also keeping an eye on the process that took place in Zambiya, he added. (Colombo/August 1, 2022)