This is the last chance Sri Lanka has been given by the International Monetary Fund (IMF) and donor community to implement reforms and take the country’s economy to a new dimension, Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe.
“Sri Lanka won’t have a second chance,” he said at the first ‘PIMA Strategic Forum’ organized by The Alumni Association of the Postgraduate Institute of Management, in Colombo on Tuesday.
He said that Sri Lanka had gone to the IMF on 16 previous occasions promising to adopt various economic reforms for the betterment of the country but no serious thoughts were given to implement them.
“But this time around Sri Lanka is serious and some of the IMF long term proposals/reforms are already being implemented especially towards restricting huge loss making State owned enterprises.”
“Stating he could observe the route cause for this loss making SOE’s he asked how private entities like Lanka IOC, private container terminals could make huge profits while the SOE ‘s in the same vertical are making losses. The IMF pointed out that Sri Lanka’s external debt was not sustainable and we then went into ‘default’ last April until such time debt can be brought to a sustainable level. “Sri Lanka and the IMF want to implement reforms, bring in steps to minimize corruption to ensure that there won’t be a repeat of the ‘current worst economic downturn in Sri Lanka’ happening again.”
“Sri Lanka was in major ‘balance of payment issue’ as the country was paying more than what it earned. This mistake kept repeating year after year and at least now we must look at managing our export income. As this was not done long power cuts had to be implemented and Sri Lanka saw huge queues for fuel, gas and there was also political unrest.
“While ensuring the vulnerable community is protected Sri Lanka had to introduce import restrictions for non-essential items and including some raw material which I know are hurting some sectors. But I tell them to bear with us with a change of mindset for some time till the country situation improves.
“The IMF too is content with Sri Lanka’s reform agenda. We are now seeking support from the international community to assist us in gaining final approval from the IMF Executive Board for an IMF bailout as Financial assurance from bilateral creditors are needed for this.”
Dr. Weerasinghe said that Clifford Chance, the firm Sri Lanka hired to restructure its defaulted debt, too would assist in this discussion on Friday. “We will also talk to our commercial and bilateral creditors ensuring that they would be compensated.”
The Governor also thanked donor countries and specially India for assisting Sri Lanka during these economically turbulent times.