Sri Lanka ‘keeping an open mind’ on an IMF bailout

Cabinet Spokesman and Plantation Minister Dr. Ramesh Pathirana said yesterday that Sri Lanka was keeping an open mind about dealing with the IMF and would not ruled out assistance from the global lender to bailout Sri Lanka from the current economic and foreign currency reserves crisis.

While expressing hopes for an economic turnover in the coming months, Dr. Ramesh Pathirana said that the government was assessing the situation with an open mind. “We are in touch with the World Bank, the Asian Development Bank (ADB) and other global financial agencies. The government has not taken a decision not to deal with the IMF. It was under Mahinda Rajapaksa presidency that Sri Lanka obtained the highest amount of foreign loans from the IMF,” he recollected.

“Foreign remittances and tourist arrivals have recorded a steady increase in the last few months. The benefits accrued from vehicle and other nonessential imports were negated as a result of the sharp escalation of oil process in the international market and the three waves of the pandemic,” he said addressing the media.

“Sri Lanka’s import bill exceeds its export income drastically creating a huge trade gap. For instance, Sri Lanka imported goods in excess of US$ 4.1 billion in 2021 more than the value of its exports. Until we take steps to contain the trade deficit, Sri Lanka cannot come out of this economic crisis,” he observed.

Sri Lanka is facing debt repayment obligations of about $4 billion this year. In this context, politicians in the Opposition and economists are urging the government to seek assistance from the IMF.

Some opposition members have also urged the government to table in parliament an anticipated IMF assessment of the economic and financial situation, conducted as part of its regular consultations with Sri Lanka.

“It is essential that the government table this document before parliament and clearly state their plan for addressing this crisis in a sustainable manner,” members of the Opposition said.

With fuel stocks sufficient to last only for a few days, Pathirana said the Central Bank has been directed to release funds for fuel shipments.

Fuel shortage is also hitting power supply in the country with the power regulator (PUCSL) warning hours of rolling power cuts described as load shedding, over the next few days unless oil supplies to thermal power plants increase.

Pathirana mentioned the fact that any further increase in global oil prices would make the situation even more difficult. “We hope tensions in Ukraine will not push oil prices further up putting more pressure on Sri Lanka,” he said.