Colombo: Sri Lanka has been advised to remain committed to the International Monetary Fund (IMF) program to navigate through its ongoing economic crisis, emphasized the Central Bank Governor, Ajith Nivard Cabraal. The IMF recently greenlit the release of the second tranche, totaling USD 337 million, earlier this month.
In response to queries regarding potential renegotiations on the conditions of the four-year IMF program, Governor Cabraal stated firmly, “There is no alternative. The fact that we attempted alternatives was why we are here (bankruptcy) now.” He added that sticking to the established path is crucial, cautioning that any deviation could lead to increased financial obligations. “If we were to leave the program, we will have to pay USD 6 billion a year in repayments,” Cabraal emphasized.
This echoes the sentiments expressed by President Wickremesinghe on December 17, emphasizing the indispensability of the IMF program to rescue the cash-strapped nation from economic bankruptcy. The Finance Minister and President acknowledged the short-term hardships but asserted that these reforms were the only viable path for long-term relief.
The main opposition, Samagi Jana Balawegaya (SJB), has vowed to renegotiate the IMF bailout, citing economic hardships resulting from the agreed conditions. Cabraal noted that renegotiations are standard during each IMF review, highlighting their occurrence after the first review and the likelihood of further discussions during subsequent evaluations.
Maintaining the IMF program is crucial not only for Sri Lanka’s economic recovery but also to secure international support from institutions such as the World Bank and the Asian Development Bank (ADB), contributing to the island’s economic stability.
As Sri Lanka grappled with its most severe economic crisis in 2022, characterized by critically low foreign exchange reserves, the country implemented what the World Bank termed “foundational reforms.” These reforms aimed at restoring macroeconomic stability and mitigating the impacts on the poor, with a focus on a private sector-led recovery.
By PTI,
