Mar 24 2023
Sri Lanka’s President Ranil Wickremesingh has warned of more economic
pain to come for the crisis-hit nation, with strict austerity measures needed
to restore its ruined finances after an IMF bailout deal.
Monetary Fund approved its
long-delayed rescue package on Monday after China, the South Asian island’s
biggest bilateral lender, offered debt relief assurances.
Ranil Wickremesinghe lauded the deal in a speech to
parliament as a milestone in Sri Lanka’s recovery from last year’s
unprecedented economic crisis. He also told lawmakers that the bailout was only
the first step in more difficult structural reforms. “The IMF loan is not an end in itself, this is the beginning of a long
and more difficult journey,” Wickremesinghe said. “We have to traverse it
with care and courage. The only objective is to rebuild the economy.”
Sri Lanka defaulted
on its 46 billion US dollars foreign debt last April after nearly exhausting
its foreign exchange reserves, making it almost impossible for importers to
source vital goods. The island nation’s 22 million people endured months of
food and petrol shortages, along with runaway inflation and prolonged
blackouts, as a result.
sought to restore government coffers by sharp tax hikes and ending generous
consumer subsidies on fuel and electricity. He said more taxes were on the
cards to meet the IMF’s demand that Sri Lanka halve its spend on foreign debt
servicing from the nine per cent of GDP recorded last year.
IMF also requires Sri Lanka to set up tough anti-corruption laws and sell off
cash-bleeding state companies, including beleaguered carrier Sri Lankan
the government would assume the external debts of key public companies to make
them more attractive to investors. Trade unions have opposed the austerity
program with strikes crippling the health and transport sectors last week and
warnings of further industrial action to come.