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First round of talks with IMF successful: PM

5 July 2022 12:08 pm - 20     - {{hitsCtrl.values.hits}}

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First round of discussions with the International Monetary Fund (IMF) has been a success but the assistance depends on the debt restructuring program which Sri Lanka has to come up with, Prime Minister Ranil Wickremesinghe  told Parliament today.

Making a special statement in the House Mr. Wickremesinghe said Sri Lanka will hand over a debt restructuring program report to IMF in August this year. “The expert companies which we have hired are in the process of preparing a debt restructuring program and we will hand over the report on it to IMF in August this year,” the Prime Minister said.

“Our country has held talks with the IMF on many occasions before. But this time the situation is different from all those previous occasions. In the past, we have held discussions as a developing country. In such a case, both parties have only to reach an agreement on the EFF or Extended Credit Facility. It is like moving along a straight line.However  now the situation is different. We are now participating in the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation than previous negotiations. Once a staff-level agreement is reached, this will be submitted to the IMF Board of Directors for approval. But due to the state of bankruptcy our country is in, we have to submit a plan on our debt sustainability to them separately. Only when they are satisfied with that plan can we reach an agreement at the staff level. This is not a straight-forward process. We have been able to end the round of discussion effectively despite these difficulties. According to the IMF's official announcement, "Positive and productive discussions were held on supportive economic policies and reforms. Significant progress was achieved."Now the next step is to submit to them the plan on debt restructuring and sustainability, which is being prepared by financial and legal experts Lazard and Clifford Chance. We hope to submit this report to the IMF by August,” he added. 

“Our economy is currently shrinking. We are trying to reverse it. According to central bank statistics, our current economic growth rate is between negative four and negative five. According to IMF statistics, it is between negative six and negative seven. This is a serious situation. If we make a determined journey along this road map, we can achieve an economic growth rate of negative one by the end of 2023.By 2025, our aim is to create a surplus in the primary budget. Our effort is to raise the economic growth rate to a stable level. Our expectation is to establish a stable economic base by 2026.I would like to give you an idea of the debt we have to pay off so far. $3.4 billion between June and December this year. $5.8 billion in 2023. $4.9 billion in 2024. $6.2 billion in 2025. $4.0 billion in 2026. $4.3 billion in 2027.The total debt burden of the government at the end of 2021 was Rs 17.5 trillion and by March 2022 it has increased to Rs 21.6 trillion.

This is the real situation. In addition, we are facing the effects of many problems that have worsened in the past two or three years. These are not problems that can be solved in two days. We are suffering from the effects of certain traditional ideas that have been followed in our country for many years. Therefore, as I mentioned earlier, we will have to face difficulties in 2023 as well. This is the truth. This is the reality. Some may try to cover up this reality by showing the people a false image. But this reality will be confirmed in time. Our plan is to control inflation. By the end of this year, inflation will rise to 60%. This is mainly due to the increase in the prices of goods in the world and the fall in the value of the rupee,” he also said.

Due to the current inflation, the depreciation of the rupee has reduced the value of the money in the Employees' Provident Fund and the Employees' Trust Fund by 50% and the real value of pensions has also decreased by 50%. Think about how this situation affects our senior citizens. Poverty is spreading among all of them. The value of the money they receive has decreased by 50%. Their purchasing power has decreased by about 50%. Presenting positive ideas is easy. But it is difficult to find answers to these problems.What is the solution to this? Stabilizing the rupee as soon as possible, strengthening the rupee without letting it fall. For that purpose, we have implemented a plan to limit the printing of money in the future. In 2023, we will have to print money with restrictions on several occasions. But by the end of 2024, it is our intention to stop printing money completely.We aim to reduce the inflation rate to between 4 and 6 percent by 2025.Another top priority for us is to protect the banking and financial system. The pressure on these systems during an economic crisis does not need to be explained anew to this House. But due to this pressure, we will not allow the banking system to be pressured by poor policies. The government has given priority to strengthening the banking and financial system,” the Prime Minister said.

Meanwhile, we pay special attention to state banks. They have been beaten from both sides. On the one hand, the economic crisis, on the other hand, the huge amount of loans they have given to state enterprises. As of March 31, 2021, SriLankan Airlines owes Rs. 541 billion as of May 31, 2022, the Electricity Board owes Rs. 418 billion. Petroleum Corporation owes Rs. 1.46 trillion.When public enterprises continue to incur losses, the entire citizenry suffers. People who have never traveled on a plane in their lifetime are suffering for the loss of SriLankan Airlines. The people who have paid money for fuel all their lives are suffering for the loss of the petroleum corporation. After hours, days and days of waiting in queues to get fuel, they pay compensation to the oil company to cover the loss of the company. The people who get electricity by paying money all their life, sit in the dark for several hours a day and suffer for the loss of the electricity board. We will have to restructure Electricity Board, Ceylon Petroleum  Corporation and  Srilankan Airlines,”  he also highlighted. (Yohan Perera and Ajith Siriwardana)

 

 


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  Comments - 20

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  • joshua Tuesday, 05 July 2022 12:16 PM

    as usual he has come out with his bad news and predictions. We the general public are suffering and you have no solutions other than begging. Your days are numbered saar.

    Mizaru Tuesday, 05 July 2022 12:19 PM

    Where are the solutions? What is the governed doing to restructure the loan? As usual the PM is telling us what we know. Please tell us something we do not know.

    Rathnavali Perera Tuesday, 05 July 2022 12:31 PM

    Yes, reality is frightening....we may blame Ranil, but I am happy that he is giving the true economic picture to the people without giving false hopes, which the Rajapakshas have done since 2005. I think we should endorse the debt restructuring plan that the experts come up in August when it is submitted to the Parliament without attacking it from both sides. If politicians do that for their own survival, then may God help Sri Lanka!

    Daya Tuesday, 05 July 2022 12:35 PM

    @ the solutions: Sri Lankan Airlines has to be privatized, it's a burden on the taxpayer. CPC and CEB are dens of mismanagement, corruption, and fraud. Renewable Energy should be prioritized and work with Private/government partnerships with stringent procedures to follow. CPC should be privatized except around keeping 40% of the market. The Chairman and Board of Directors should be selected through a competitive process with individual KPIs for the board. Remember, the unions are a headache and they only fight when their jobs are in trouble, otherwise, they are also part of the corruption. If the smaller private airlines in Sri Lanka, LIOC, and the private power suppliers can make profits, why cant these organizations make profit??

    Siri Tuesday, 05 July 2022 01:00 PM

    Successful only.

    Dan Tuesday, 05 July 2022 01:15 PM

    Debt restructuring process not even started.

    Nimal Tuesday, 05 July 2022 01:16 PM

    For any chance of success in saving SL, need to first get rid of the Rajapaksa cancer which is the root cause of this predicament.

    R.K. Dissanayake [Leading Businessman - A'pura] Tuesday, 05 July 2022 01:31 PM

    Everyday there are so many people dies being in long queues because of our ruthless rulers Gota and Ranil and nasty rowdies being ministers, we need a change polishing all these culprits.

    Harry Gunawardene (Retired Vice Principal - Galle) Tuesday, 05 July 2022 01:33 PM

    IMF loan, SriLanka will never get unless Gota and Ranil steps down, this is the fact and its crystal clear.

    Roxton Schockman Tuesday, 05 July 2022 01:35 PM

    I will bet with you Ranil, unless Rajapakshes'

    Lal Piyal Mendis Tuesday, 05 July 2022 01:36 PM

    If Mahinda, Basil, Namal's looted public money is given back to our treasury, no need going for a IMF loan.

    Aragalaya Tuesday, 05 July 2022 01:52 PM

    Ranil are you oblivious to the fact that no REAL funds will flow until you and Gotabaya leave the scene? The whole nation knows this fact but your GREED FOR POWER IS KEEPING YOU THERE. REMEMBER WHAT HAPPENED TO SADAM HUSSAIN AND GADDAFI!

    Fathima Lai Tuesday, 05 July 2022 02:04 PM

    "Operation success, the patient died!"

    Vinoth Tuesday, 05 July 2022 02:25 PM

    How many round of talks remaining PM

    Mano Manoharan Tuesday, 05 July 2022 02:37 PM

    Ranil you are deceiving the general public, it is a disgrace to my old school which educated you. Be honest.

    Jef Tuesday, 05 July 2022 03:21 PM

    What priminister saying is absulatly correct he have the knowledge experience and other important capacity look at some of our ministers they have got no substance at all they only know how to bark first we must get the best team let Mr President and priminister take full responsibility the damage is huge we just have to bite the bullet and box on entair parliament must be reapoint or replace if not suitable for the portfolios no favours should play at any given time strick firm reforms should be introduced stop all corruptions influence bribery compulsory All ministers to implement duty chart performance chart work execution chat profit

    Bandu Wednesday, 06 July 2022 05:15 AM

    Ranil need to move faster. Country is sinking fast.

    Waco Wednesday, 06 July 2022 05:57 AM

    You can have lengthy discussions. They do not recognise you as man with character and integrity. Further they know you have no “ Mandate to sit in that chair as the Prime Minister of Sri Lanka”. Step down .

    Andrew Silva Wednesday, 06 July 2022 06:15 AM

    So you went to the IMF to ask for money with out constructing a method of paying back. What a goon you are. Pathetic.

    Makanal Wednesday, 06 July 2022 07:58 AM

    Ethnic Solution is The only sure and lasting panacea for all our difficulties, financial and social. Once we achieve this, then we can stand up and challenge the world.


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