New president says Sri Lanka will restart IMF bailout talks

COLOMBO, Sri Lanka – Sri Lanka will restart bailout talks with the International Monetary Fund in August, Sri Lanka’s new president said on Wednesday, while calling on lawmakers to form an all-party government to tackle the severe economic crisis.

Addressing parliament, President Ranil Wickremesinghe said the constitution needed to be amended to limit presidential powers – a sign that he would meet a key demand from protesters who put his predecessor Gotabah on the table. Ya Rajapaksa was ousted.

“The president of a country does not have to be a king or a god above the people. He or she is one of the citizens,” Wickremesinghe said.

The island nation of 22 million is facing its worst financial crisis since independence from Britain in 1948, its foreign exchange reserves are at record lows, and an economy has been hit by the coronavirus pandemic and a sharp drop in government revenue.

Hundreds of thousands of people took to the streets in early July due to persistent shortages of necessities such as fuel and medicines, and inflation that soared more than 60 percent year-on-year, forcing Rajapaksa to flee the country first and then out of office.

Wickremesinghe, then prime minister, took over as acting president, which was later confirmed by parliament.

In his first major speech to parliament since taking office, Wickremesinghe told lawmakers that discussions with the International Monetary Fund on a four-year plan that could provide up to $3 billion will resume in August.

The government is working with its financial and legal advisers Lazard and Clifford Chance to finalise a plan to restructure overseas debt, including about $12bn owed to bondholders.

Image: Sri Lanka - Politics - Parliament
Wickremesinghe said his government was working on a long-term economic plan.Ishara S. Kodikara/AFP – Getty Images

“We will submit the plan to the International Monetary Fund in the near future and negotiate with countries providing loan assistance,” Wickremesinghe said.

“Subsequent negotiations with private creditors will also begin to reach a consensus.”

A veteran lawmaker whose party holds only one seat in parliament, Wickremesinghe last month was elected in a 225-member parliament with the backing of the country’s ruling party dominated by the Rajapaksa family. won a leadership vote in parliament.

But the new president reiterated his call for a coalition government, adding that he had started discussions with some groups.

“I respectfully extend the hand of friendship to all of you. I invite you with confidence to let go of your past and come together for the sake of your country,” Wickremesinghe said.

Opposition MP Hasha de Silva backed the president’s proposal.

“We have to come together; especially an all-party or multi-party government working in a limited time to create this new #SriLanka on a common minimum plan,” he said. say on twitter.

Wickremesinghe said an interim budget could be presented within weeks and his government was working on a long-term economic plan. This would include reducing public debt from its current level of 140% of Sri Lanka’s GDP to less than 100% within 10 years and creating a budget surplus by 2025.

He did not provide any details.

Wickremesinghe, who has been accused by activists and advocacy groups of cracking down on anti-government protesters, said peaceful struggle was a fundamental right but he would not tolerate violence.

“I will not allow anyone to act illegally,” he said.

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