= Says debt restructuring is a meticulous, sequential journey
= SL to resume debt overhaul talks with China after Chinese Communist Party convention
= Japan to co-chair Sri Lanka’s creditors’ conference
= President to travel to New Delhi to meet Indian Prime Minister = Private creditors of London Club will also be approached
= Ceilings to impose on high interest rates on deposits
by Sanath Nanayakkare
President Ranil Wickramasinghe, who made a special statement in parliament yesterday, renewed his earlier call on all parliamentarians to put aside their political animosities and work together to rebuild the country and create a sustainable political and economic environment where they can achieve their desired political goals.
“I undertook this journey at great risk when other political parties and leaders were unwilling to take this risk. Now we are slowly but surely moving along this risky path. A majority of the country supports this journey because they yearn for a decent life, country and future. But some sections want to block the path to stability and come to power by making life more difficult for the masses. It is easy to criticize, criticize and protest, but it is difficult to find solutions. If they seize power through such moves, the country will suffer even more because such tactics will not be sustainable. So let’s unite and face the challenges of the country together. I invite you all to join in the effort to rebuild the country by making your contribution through the National Council and other parliamentary committees,” he said.
President Wickramasinghe added:
“During my recent overseas tours, I have been able to speak to a number of world leaders and a large number of foreign ministers and global financial authorities for minimal time and money. We hope to reach a common agreement with creditor countries, including Japan, China and India.We have also started dialogues with ambassadors from other countries that have provided loans to Sri Lanka. plan to discuss with private creditors such as the London Club on debt restructuring I have tried to get the maximum benefit for Sri Lanka by meeting with leaders from UK, Japan, Philippines , officials of international organizations such as the Asian Development Bank (ADB), JICA, etc.
“Japan is willing to assist Sri Lanka in its debt restructuring process. We have asked Japan to co-chair the Sri Lanka creditors’ conference.
We have also asked the International Development Association (IDA) to help us secure concessional financing as Sri Lanka currently does not have the creditworthiness to borrow from the World Bank or other institutions. This journey can only be strengthened with the support of all, therefore, I urge you to put aside old political animosities and help move this journey forward.
“Some political parties act thinking that the country is in a normal situation and express their ideas and propose solutions accordingly. Just because there are no more fuel queues doesn’t mean things aren’t back to normal.
“After getting IMF approval, securing loan assistance and stabilizing the economy, we will be able to put the country on the path to growth. However, this is going to be a meticulous and sequential journey. I have informed all the important people I have met about the steps we are taking to rebuild the country in order to gain their support. I was able to interact with 68 finance ministers working with the AfDB when I met them in Manila. Singapore’s prime minister also pledged his support for Sri Lanka. I had a brief chat with Indian Prime Minister Narendra Modi and told him that I would be visiting Delhi to brief him on the latest economic developments in Sri Lanka. India has helped us enormously and we are grateful to them.
“Japan, whose relations with Sri Lanka have deteriorated in recent years, has now given us the green light to support us in the future as relations normalize. We have started initial discussions with China. After Convention of the Chinese Communist Party, we will resume discussions with China. Japan’s willingness to discuss with China the restructuring of our debt is a positive development. China has helped us a lot in the past. We believe that the China will also help Sri Lanka through this difficult period. From the leaders of the UK and the Philippines, we also received favorable responses to resolve the crisis in our country. It was a rare opportunity that I had in Manila to talk to so many finance ministers and officials at minimal cost of time and money under one roof.
“Now we need to reach a common agreement on debt restructuring with the support of Japan, China and India. We also spoke with ambassadors from other creditor countries. We also hope to reach an agreement with them. Following the success of these talks, we will engage in discussions with private creditors of the London Club to restructure their debt. Once these agreements are finalized, we will be able to obtain the approval of the IMF. In this context, the AfDB has already pledged a loan of 500 million dollars. Then we should be able to get bridge financing from the World Bank, AfDB and other institutions worth $1-2 billion. This will pave the way for obtaining financial assistance from other countries at concessional rates.
“We will be able to achieve significant economic stability by the end of 2023 with a strengthening Sri Lankan Rupee. We may see the trend towards such stabilization by the middle of next year. But I don’t like to make special mention of it right now.
“Money printing must be paced with increasing production, otherwise inflation will rise at an alarming rate and Sri Lanka will face a dangerous future.”
“The restructuring of loss-making state enterprises will be a vital undertaking to implement. In the first half of 2021, CPC, Sri Lanka and CEB recorded losses of Rs 1057 billion, Rs. 799 billion and Rs. 261 respectively. This will amount to Rs 4 trillion by the end of 2022. This burden should not be placed on the people endlessly.
“Tax revenues must be maintained at 18% of GDP if the government wants to maintain free education and health. The government must earn revenue through taxes, because the country will have no future if money printing continues.
“We plan to increase our gross foreign exchange reserves to around $2-3 billion with expected funds from the AfDB, saving money through public enterprise restructuring and the X-Press Pearl clearing vessel. “
“Due to the measures we have taken in the agricultural sector by providing fertilizers, the yield of the Yala season has been better than expected. Maha season is ready to receive enough seeds and fertilizer. As food production increases, prices will fall over the next few months. In the meantime, we have initiated village level food security programs which are ongoing. »
“High interest rates on deposits are good for some, but overall it’s a disadvantage as the private sector suffers and the economy shrinks. According to forecasts, this year, the economy will affect 7 to 8%. To deal with this, we are taking measures which include: controlled prices for essential foodstuffs, increasing local production of foodstuffs and other basic products, relaxing regulations to some extent exchange rates, controlling non-essential imports, ensuring a more efficient market economy and capping interest rates on deposits at a manageable level.
“We will gain the trust of our migrant workers to raise their remittances to higher levels. When all of these elements, including the strengthening of our foreign exchange reserves, start to materialize as expected through these measures, Sri Lanka will regain the much-needed international confidence to move the country onto a sustainable growth trajectory. “said the president.