IMF will build trust in SL’s ability to repay debts: Harsha

By Mihi Perera

The International Monetary Fund (IMF) will build the trust that Sri Lanka has lost with the international community with regard to the country’s ability to repay debts, stated Samagi Jana Balawegaya (SJB) MP Dr. Harsha De Silva today (01).

He said that Sri Lanka’s debt is more than $29 billion which has to be repaid by the year 2025 and that many countries have lost hope in Sri Lanka’s economy and do not believe that Sri Lanka would be able to repay the same.

At a media briefing held today, De Silva stated that engaging with the IMF will not result in pulling the country into further debt.

“Borrowing from the IMF does not mean that the country will pay back certain debts while being indebted to the IMF. The IMF will certainly not give us the entire $29 billion which is our international debt. They will perhaps provide us $2.5 billion. But the objective of this move is to regain the trust of the international community,” he said.

Speaking further, he said, “Many countries think our economy is hopeless. But I believe that the country still has hope. We can work together as the people in power to pull our citizens out of the economic crisis that we are currently sinking into. And this is one way of doing it.”

Answering a journalist’s concerns as to whether this will result in an open economy where the country will lose its assets, Harsha De Silva said, “Back in 1978 when the open economy was announced, our products came with labels like ‘Made in China’ or ‘Made in Taiwan’, but now products are made across 20 countries. We have to be a part of these countries by opening the country’s economy, because if we are not among these countries we will not be anywhere.”

Harsha De Silva further said that the idea of ‘local production’ has been warped by the government.

“Local production does not only mean that we have to produce these objects 100% within the country. As I mentioned earlier, we have to be a part of countries that manufacture these products so that we are also in the loop. That way we can generate foreign exchange, build ties with international communities while also making a profit with these products. But the government has put into the citizen’s heads that for local production to start, all imports must be banned. This is not the way to move forward. We are isolating ourselves from the international community this way,” he said.

He stated that these were the reasons why the help from the IMF is needed.

“For us to build more foreign ties and for the international community to express their confidence in us, we need to engage with the IMF. That is the start,” he concluded.

Recently, former Prime Minister and current MP Ranil Wickremesinghe also expressed his opinion that the IMF is the only way out of Sri Lanka’s current economic crisis.

Sri Lanka submitted its request to the IMF for emergency financial support under the RFI in April last year. In mid-April, then-IMF Acting Mission Chief for Sri Lanka Mashiro Nozaki confirmed that this request was being reviewed. Nozaki added that the RFI, if approved, could potentially replace the existing $ 1.5 billion Extended Fund Facility (EFF) arrangement of Sri Lanka with the IMF, of which Sri Lanka has so far received $ 1.3 billion.

In April this year, the IMF responded with the following, which has remained its response for the past few months: “In April 2020, we received a request from the Sri Lankan authorities for emergency financial support under the Rapid Financing Instrument. Assessing relevant conditions for the RFI has taken longer than for other countries, due to Sri Lanka’s daunting economic challenges and high public debt. Staff have sought but not reached an understanding on how to fulfil key requirements for the RFI, which include policies to continue ensuring debt sustainability.”