• Former PM says he had call with IMF MD
• IMF says monitoring political and economic developments in SL  

 

United National Party (UNP) Leader and former Prime Minister Ranil Wickremesinghe said yesterday (5) that during a phone call he had with International Monetary Fund (IMF) Managing Director (MD) Kristalina Georgieva, the latter had said that the IMF is happy to help Sri Lanka, and that the Parliament should immediately take up the responsibility of the economy. 

“During a phone call with the IMF Managing Director, she said that the IMF is happy to help Sri Lanka. Similarly, World Bank officials have also told me that they will consider short-term loans. The Asian Development Bank (ADB) will also help out in a number of sectors like the healthcare sector. The Government has decided to go to the IMF, but in the IMF’s 2021 Article IV Consultation report on Sri Lanka, under the ‘views of the Sri Lankan officials’, it is stated that the officials believe that there is no economic crisis in the country. I urge the Finance Minister to remove that and to then discuss with the IMF,” said Wickremesinghe while speaking in the Parliament. 

The IMF said yesterday, as quoted by Reuters, that it is monitoring political and economic developments in Sri Lanka “very closely” as public unrest in the island nation grows amid its worst economic crisis in decades. 

“IMF staff is looking forward to programme discussions with the authorities, including during the visit of the newly appointed Finance Minister to Washington later this month,” IMF Sri Lanka Mission Chief Masahiro Nozaki told Reuters in an emailed statement. 

The Cabinet of Ministers granted the approval to present the IMF’s report on Sri Lanka to Parliament, based on a proposal submitted by former Finance Minister Basil Rajapaksa.

Wickremasinghe called upon the Parliament to immediately take up the responsibility of the economy, noting that other than the unfolding political crisis, there is a large economic crisis in the country as well, as people suffer due to the lack of petrol, diesel, gas, and food.  “We need US dollars to buy these products. Firstly, we need to understand the monetary situation in the country. We never received a proper word on the state of our foreign reserves. I urge Committee on Public Finance (COPF) Chairman Anura Priyadarshana Yapa to, when the Monetary Board comes to the Parliament this week, get these details accurately from them and present such to the Parliament.” Furthermore, Wickremesinghe emphasised the immediate need for a relief budget and called upon the COPF to urgently set up a safety net for the banks. “Summon all the banks to the Parliament and set up a safety net immediately.”  In a statement made to Reuters yesterday, the IMF has said that it is monitoring the political and economic developments in the country "very closely" while anticipating programme-related discussions with the Finance Minister in Washington, District of Columbia, USA later this month.  Following the resignation of the Cabinet of Ministers over the weekend, President’s Counsel M.U.M. Ali Sabry was appointed as the new Finance Minister. However, he tendered his resignation yesterday. Furthermore, reports show that Treasury and Finance Ministry Secretary S.R. Attygalle has resigned. Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal resigned on Monday (4). Newly appointed CBSL Governor Dr. Nandalal Weerasinghe has told the BBC that he will accept his position over the course of the week.  On 25 March, the IMF published the 2021 Article IV Consultation report on Sri Lanka. While acknowledging that the Covid-19 pandemic had severely affected the country’s economy, the IMF said that pre-pandemic tax cuts, coupled with the pandemic, led to fiscal deficits larger than 10% of the gross domestic product (GDP) in 2020 and 2021 and a rapid increase in public debt to 119% of the GDP in 2021. “Sri Lanka’s access to international capital markets was lost in 2020, prompting a decline of international reserves to critically low levels and large-scale direct lending to the Government by the CBSL. External debt repayments and a widening current account deficit have led to foreign exchange shortages, while the official exchange rate has been de facto fixed since April 2021. Inflation is on the rise, reaching double digits in December 2021, reflecting imported inflation, supply shocks, and a pickup in the domestic demand amidst a loose monetary policy,” the report noted in summary.