Lanka completing terms for IMF aid: President

Sri Lanka is completing the pre-requisites to unlock a $2.9 billion bailout from the International Monetary Fund (IMF) and expects rapid approval from the global lender, President Ranil Wickremesinghe said on Saturday.

“We are successfully completing the difficult stage required to get support from the International Monetary Fund. We expect to get their consent without delay,” Wickremesinghe said in his address to the nation to mark the 75th Independence Day.

Sri Lanka, caught in the worst financial crisis since independence from Britain in 1948 triggered by a severe shortage of dollars, has seen steep inflation, a currency plunge and its economy slide into recession.

The island of 22 million people has also been hit by high taxes, a shortage of essential items such as medicine and fuel, and daily power cuts.

Wickremesinghe, who took over after his predecessor fled the country and resigned last year after thousands of protesters occupied his office and residence, has pledged to put the economy back on track but warned it will be an uphill task.

“I know that many of the decisions I have been compelled to take since assuming the presidency have been unpopular.... I will continue this new reform programme with the majority of people who love this country,” he added.

Sri Lanka is currently focused on getting financing assurances from key bilateral creditors China and Japan. India, the third major creditor, agreed to support debt restructuring last month.

Sri Lanka’s central bank estimates an economic turnaround in the second half of 2023 and inflation to reach single digits by the end of this year.

Sri Lanka marked its 75th independence anniversary on Saturday as a bankrupt nation, with many citizens angry, anxious and in no mood to celebrate.

Many Buddhists and Christian clergy had announced a boycott of the celebration in the capital, while activists and others expressed anger at what they see as a waste of money in a time of severe economic crisis.

A group of activists began a silent protest on Friday in the capital, condemning the government’s independence celebration and failure to ease the economic burden. University students also attempted a protest march later Saturday but police blocked them. Troops with assault rifles were stationed every few meters (yards) surrounding the site of the independence ceremony and riot police stood ready to prevent anti-government demonstrations.

Despite the criticism, armed troops paraded along the main esplanade in Colombo, showcasing military equipment as navy ships sailed nearby and helicopters and aircraft flew over the city.

Catholic priest Rev. Cyril Gamini called this year’s ceremony commemorating independence from British rule a “crime and waste” at a time when the country is experiencing such economic hardship.

“We ask the government what independence they are going to proudly celebrate by spending a sum of 200 million rupees ($548,000),” said Gamini, adding the Catholic Church does not condone spending public money on the celebration and that no priest would attend the ceremony.

About 7% of Buddhist-majority Sri Lanka’s 22 million people are Christians, most of them Catholics. Despite being a minority, the church’s views are respected.

Prominent Buddhist monk Omalpe Sobitha also said there was no reason to celebrate and that the ceremony was just an exhibition of weapons made in other countries.

Sri Lanka is effectively bankrupt and has suspended repayment of nearly $7 billion in foreign debt due this year pending the outcome of talks with the International Monetary Fund for a bailout package.

The country’s total foreign debt exceeds $51 billion, of which $28 billion has to be repaid by 2027. Unsustainable debt and a severe balance of payment crisis, on top of lingering scars from the COVID-19 pandemic, have led to a severe shortage of essentials such as fuel, medicine and food. Massive protests last year forced Wickremesinghe’s predecessor, Gotabaya Rajapaksa, to flee the country and resign.

Despite some improvements, power cuts continue due to the fuel shortages, hospitals struggle with a lack of medicines, and the treasury cannot raise money to pay government employees.

To manage the country’s expenses, the government has increased income taxes sharply and has announced a 6% cut in funds allocated to each ministry. Also, the military, which had swelled to more than 200,000 members amid a long civil war, will be downsized by nearly half by 2030.

Wickremesinghe said that everyone, politicians and the citizens alike, were to blame for the country’s woes. He said from the early days of independence, Sri Lankans were divided in terms of race, religion and region.