State Minister Siyambalapitiya emphasises transparency in Sri Lanka’s IMF deal and debt restructuring

By Rathindra Kuruwita

Sri Lanka has never been this transparent about an agreement it entered with the IMF, State Minister of Finance, Ranjith Siyambalapitiya says.Addressing calls for greater transparency in dealings with the IMF, Siyambalapitiya noted on Wednesday that Sri Lanka had engaged with the global lender on 16 previous occasions. The Cabinet of ministers had access to those agreements.

“Previous IMF agreements were not presented to Parliament. As per IMF regulations, representation by the Finance Minister and the Central Bank Governor suffices for a country. However, we discussed the agreement in Parliament. We prioritised transparency and discussed domestic debt restructuring. Parliamentary proceedings were telecast live,” he said.

Siyambalapitiya highlighted the challenge in restructuring domestic debt, stating, “We have completed the restructuring of loans from multilateral sources. Now, we need to restructure foreign debt, including multilateral, bilateral, and sovereign bonds.”

He added that an agreement on restructuring bilateral debt would be concluded by the end of December.

“Debt restructuring is challenging. We must consider the implications for lenders, who would also face consequences. Granting concessions to us means doing the same for other borrower countries,” he explained.

The State Minister said Sri Lanka had raised interest rates in 2022 to combat inflation, adversely affecting small and medium enterprises.

“Inflation shot up. Consequently, consumers lacked purchasing power when products hit the market. This presents a serious issue. We are gradually lowering interest rates,” he remarked.

Siyambalapitiya recalled the uncertainty in December 2022 about meeting state sector salary payments but a few months later they had been given a 10,000-rupee allowance..

“Annually, around Rs 500 billion was expended on loss-making state enterprises. The prevailing consensus is that governments should not engage in business but function as regulators,” he said.

Considering the competence of India’s Adani, Siyambalapitiya expressed the government’s openness to collaborating with him in restructuring state assets. He mentioned that the government had assessed the value of state-owned enterprises.