Sri Lanka to resume IMF bailout talks, President’s coalition government demands

Sri Lankan President Ranil Wickremesinghe arrives in Colombo, Sri Lanka on August 3, 2022 to open the new session of Parliament and deliver his first policy statement amid the country’s economic crisis. β€” Reuters
  • Wickremesinghe signaled a reduction in presidential powers.
  • “The president of a country does not have to be a king or a god.”
  • Sri Lanka is facing its worst financial crisis since 1948.

COLOMBO: Sri Lanka will resume bailout talks with the International Monetary Fund (IMF) in August, its new president said on Wednesday, as he urged lawmakers to resolve the economic crisis. Form an all-party government for

In a speech to parliament, President Ranil Wickremesinghe said constitutional amendments were needed to curtail presidential powers – indicating he would meet a key demand of protesters who had ousted his predecessor, Gotabaya Rajapaksa. was forced out.

Wickramasinghe said, β€œThe president of a country does not have to be a king or a god who is above the people.

The island nation of 22 million people is facing its worst financial crisis since independence from Britain in 1948, with foreign exchange reserves at record lows, and the economy hit by the COVID-19 pandemic. There is a huge drop in government revenue.

Frustrated by persistent shortages of essential goods, including fuel and medicine, and skyrocketing inflation of more than 60 percent year-on-year, millions of people took to the streets in early July, forcing Rajapakse to first flee the country and then Left the position.

Wickremesinghe, then the Prime Minister, took over as Acting President and was later confirmed by Parliament.

Wickremesinghe told lawmakers in his first major address to parliament since taking office that a four-year program with the IMF that could provide up to $3 billion would resume in August.

The government is working with its financial and legal advisers Lazard and Clifford Chance to finalize a plan to restructure overseas debt, including about $12 billion from bondholders.

“We will submit the project to the International Monetary Fund in the near future, and negotiate with countries providing loan assistance,” Wickramasinghe said.

“Later discussions with private lenders will also begin to reach a consensus.”

A veteran lawmaker whose party held just one seat in parliament, Wickremesinghe won a leadership vote in the 225-member house last month with the support of the country’s ruling party, which is dominated by the Rajapaksa dynasty.

But the new president reiterated his call for a unity government, adding that he had already started talks with some groups.

“I respectfully extend the hand of friendship to all of you. I confidently invite you to put aside the past and come together for the sake of the country,” Wickramasinghe said.

Opposition lawmaker Harsha de Silva supported the President’s proposal.

He said in a tweet, “We must come together; especially to work towards an all-or-multi-party government for a limited period on a common minimum program for this new #SriLanka.”

With the interim budget likely to be presented within weeks, Wickremesinghe said his government is working on a long-term economic plan. This includes reducing public debt by 100% within 10 years from the current level of 140% of Sri Lanka’s GDP and creating a budget surplus by 2025.

He did not elaborate.

Wickremesinghe, who has been accused by activists and rights groups of cracking down on anti-government protesters, said peaceful struggle was a fundamental right but he would not tolerate violence.

He said that I will not allow anyone to act outside the law.