Sri Lanka’s president Ranil Wickremesinghe is expected to lay out a vision for recovery for the bankrupt nation and call for unity as the country is pushed to take difficult measures to win an International Monetary Fund loan to address the worst economic crisis in its independent history.
(Bloomberg) — Sri Lanka’s president Ranil Wickremesinghe is expected to lay out a vision for recovery for the bankrupt nation and call for unity as the country is pushed to take difficult measures to win an International Monetary Fund loan to address the worst economic crisis in its independent history.
Wickremesinghe will make his so-called Throne Speech during a new session of parliament Wednesday, marking the 75th year of independence from British rule, which it commemorated on Feb. 4.
In his independence message on Saturday, Wickremesinghe said Sri Lanka had reached this historical milestone at an “extremely critical and challenging time in the country. However, it presents an opportunity for us not only to review our strengths and gains as a nation but also to rectify our errors and failures,” he said.
Since coming to power after former president Gotabaya Rajapaksa resigned in May following weeks of street protests, Wickremesinghe has been pushing toward a $2.9 billion IMF loan program to help the island nation out of its economic malaise.
He’s also made some efforts at political reforms to curb sweeping powers granted to the president in a bid to calm public anger that climaxed with the ousting of Rajapaksa and called for unity among political parties to foster reconciliation, given it’s been more than a decade since the end of the island’s long-drawn war with the Tamil Tiger rebels.
The president is likely to “show the journey ahead and the sacrifices that the population has to make to achieve economic stability,” said Murtaza Jafferjee, chief executive officer of JB Securities in Colombo. “He will prepare the population that 2023 will be a difficult year for the simple reason that reforms are going to bite.”
In his 2023 budget, Wickremesinghe, who also doubles up as the finance minister, sharply increased taxes and pledged to curtail spending in a bid to narrow the fiscal deficit, wean the economy away from populist policies and unlock the IMF funds.
A few opposition parties have threatened to boycott Wednesday’s parliament session while some unions have also called for a strike against the tax hikes.
Sri Lanka’s foreign currency reserves have been below $2 billion for months. The nation has relied on re-purposed funds and aid from friendly countries to ease crippling shortages and stay afloat amid a deep recession, inflation that’s above 50% and borrowing costs that jumped 950 basis points last year.
There’s been some optimistic news too. India has written to the IMF with financing assurances, while members of the Paris Club of creditors have said they formally support obligatory debt restructuring — measures that could hasten the bailout.
A creditor group of the country’s dollar bondholders also wrote to the multilateral lender last week and showed willingness to engage in quick debt recast talks with local authorities, while China, the island nation’s biggest bilateral creditor, called on the IMF to provide Colombo urgent assistance.
While Wickremesinghe has been credited for bringing about some normalcy to the country, he is criticized for aligning with the Rajapaksas and clamping down on protests.
Wickremesinghe summoned an all-party conference on Jan. 26 to discuss implementing a so-called 13th amendment to the constitution that calls for devolving powers to the provinces — a bid to promote reconciliation and appease the international community.
The leader depends on the support of lawmakers in Rajapaksas’ still-in-power Sri Lanka Podujana Peramuna party. The administration will face a crucial test of its approval when the nation holds local government elections on March 9.
Opposition factions and protesters have also been calling for presidential and parliamentary elections to vote in a government with a fresh mandate.
–With assistance from Asantha Sirimanne.
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