UCA News
Contribute

Sri Lanka prez warns hard times to follow IMF bailout

Ranil Wickremesinghe warned Wednesday the rescue package was only the first step in more difficult structural reforms
A man stands amid smoke of firecrackers set alight by supporters of Sri Lanka's President Ranil Wickremesinghe along a street in Colombo on March 21 following the announcement of the International Monetary Fund's (IMF) approval of a three billion US dollars bailout package

A man stands amid smoke of firecrackers set alight by supporters of Sri Lanka's President Ranil Wickremesinghe along a street in Colombo on March 21 following the announcement of the International Monetary Fund's (IMF) approval of a three billion US dollars bailout package. (Photo: AFP)

Published: March 22, 2023 10:05 AM GMT
Updated: March 24, 2023 05:25 AM GMT

Sri Lanka's president warned Wednesday 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.

The International Monetary Fund approved its long-delayed rescue package on Monday after China, the South Asian island's biggest bilateral lender, offered debt relief assurances.

President 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.

But 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 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.

Wickremesinghe has sought to restore government coffers by sharp tax hikes and ending generous consumer subsidies on fuel and electricity.

On Wednesday he said more taxes were on the cards to meet the IMF's demand that Sri Lanka halves its spending on foreign debt servicing from the 9 percent of GDP recorded last year.

The IMF also requires Sri Lanka to set up tough anti-corruption laws and sell off cash-bleeding state companies, including beleaguered carrier Sri Lankan Airlines.

Wickremesinghe said 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.

Help UCA News to be independent
Dear reader,
Lent is the season during which catechumens make their final preparations to be welcomed into the Church.
Each year during Lent, UCA News presents the stories of people who will join the Church in proclaiming that Jesus Christ is their Lord. The stories of how women and men who will be baptized came to believe in Christ are inspirations for all of us as we prepare to celebrate the Church's chief feast.
Help us with your donations to bring such stories of faith that make a difference in the Church and society.
A small contribution of US$5 will support us continue our mission…
William J. Grimm
Publisher
UCA News
Asian Bishops
Latest News
UCA News Catholic Dioceses in Asia
UCA News Catholic Dioceses in Asia
UCA News Catholic Dioceses in Asia