Prime Minister Ranil Wickremesinghe said Wednesday that he has urged IMF chief Kristalina Georgieva to “expedite" its assistance programme to Sri Lanka and underlined that no country except India is providing money to the crisis-hit island nation for fuel. The conversation between Wickremesinghe, who is also the finance minister, and the Managing Director of the International Monetary Fund comes as Sri Lanka has decided to seek the assistance of the Washington-based global lender to combat the worst economic crisis since its independence from Britain in 1948. The talks between Sri Lanka and the IMF commenced on April 18.
Sri Lanka has already initiated measures to restructure its foreign debts — a prerequisite for an IMF programme — after the government suspended all the external debt repayments on April 12. In his address to Parliament, Wickremesinghe said he had a telephonic conversation with Georgieva on Tuesday during which she was informed of Sri Lanka’s need for bridging finance.
I requested her to expedite this process because we need bridging finance. Both our arrangement and debt restructuring plan which we are unfamiliar with were discussed, he said. I am doing my best to push forward this and get finance latest by September, Wickremesinghe added, as his cash-starved government is seeking to find USD 6 billion to keep the country afloat for the next six months.
Referring to a planned strike by the engineers of the Ceylon Electricity Board (CEB), state-run power entity, Wickremesinghe said, “Please don’t cause blackouts, you can hold placards and strike. If you do so, don’t ask me to ask for help from India. No country is giving us money for fuel and coal. Only India is giving. Our Indian credit line is now nearing its end. We are talking about extending it, he said.
The prime minister said India cannot go on providing aid to Sri Lanka. Some in India are asking why they should give us help. They ask us to help ourselves first before they can help us, Wickremesinghe said. The CEB engineers on Wednesday announced that they will go on an indefinite strike from midnight in protest over the government’s plan to amend the CEB Act, a proposal of which will be tabled in Parliament on Thursday.
The strike can potentially lead to power blackouts in the country already grappling with its worst economic crisis in decades. The CEB engineers’ unions say the new Act would stop competitive bidding in purchase of power from private sources.
We will resort to industrial action to stop this amendment, Ranjith Induwara of the CEB engineers’ union said. Energy minister Kanchana Wijesekara told Parliament that the new Act would not do away with the competitive bidding process but would focus on sustainable energy projects approved by the Sustainable Energy Authority.
India has helped Sri Lanka with thousands of tonnes of diesel and petrol to the crisis hit country, apart from food and medical supplies, to help ease the acute fuel shortage in the debt-ridden island nation. India extended an additional USD 500 million credit line to Sri Lanka last month to help the neighbouring country import fuel as it has been struggling to pay for imports after its foreign exchange reserves plummeted sharply in recent times, causing a devaluation of its currency and spiralling inflation.
With the economic crisis and the shortage of forex, the Indian credit line of USD 500 million for fuel imports has provided a lifeline to the island nation, where people have been queuing up for fuel, cooking gas, and essentials. In keeping with India’s ‘Neighbourhood First’ policy, New Delhi has extended this year alone support worth over USD 3.5 billion to the people of Sri Lanka for helping them overcome their current difficulties.
On Thursday last, Wickremesinghe had said the government was targeting USD 5 billion this year for repayments, plus a further USD 1 billion to bolster the country’s reserves. He said Sri Lanka’s bridging finance requirements would depend on an agreement with the IMF being reached.
Addressing Parliament on Tuesday, Wickremesinghe said Sri Lanka will need USD 5 billion to ensure that the people’s daily lives are not disrupted for the next six months. “We need to strengthen the rupee in line with the daily requirements of the citizens. Another USD 1 billion is needed to strengthen the rupee. That means we need to find USD 6 billion to keep the country afloat for the next six months," he told the lawmakers.
While addressing the representatives from the Joint Trade Chambers earlier this week, the prime minister had said that debt restructuring had begun, following the appointment of financial and legal advisors. He said that the ongoing negotiations with the global lender for a bailout could be concluded by the end of this month. According to Economy Next news portal, Wickremesinghe’s discussion with Georgieva came hours after he called on the IMF to hold a conference to help unite Sri Lanka’s lending partners.
The nearly bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026. Sri Lanka’s total foreign debt stands at USD 51 billion. The IMF in May said that it requires “sufficient assurance" from the country that it will restore debt sustainability during the debt restructuring process.
“Since Sri Lanka’s public debt is assessed as unsustainable, approval by the Executive Board of an IMF-supported programme for the country would require adequate assurances that debt sustainability will be restored, the IMF had said. The economic crisis has prompted an acute shortage of essential items like food, medicine, cooking gas and other fuel, toilet paper and even matches, with Sri Lankans for months being forced to wait in lines lasting hours outside stores to buy fuel and cooking gas.