= Says debt restructuring is a meticulous, sequential journey

= SL to resume debt rework talks with China after Chinese Communist Party Convention

=Japan to co-chair Sri Lanka creditor conference

= President to visit New Delhi to meet with Indian PM= London Club’s private creditors also to be approached

= Caps to be imposed on high deposit interest rates

by Sanath Nanayakkare

President Ranil Wickramasinghe making a special statement in parliament yesterday renewed his earlier appeal to all members of parliament to cast aside their political animosities and work together to rebuild the country, and create a sustainable political and economic environment where they can realize their desired political goals.

“I embarked on this journey at great risk when other political parties and leaders were not willing to take the risk. Now we are moving ahead this risky path slowly but steadily. A majority of the country supports this journey as they aspire for a decent life, country and future. But some sections want to block the path of stability and come to power by making life more difficult for the masses. It is easy to criticize, find fault and protest but finding solutions is hard. If they grab power through such moves, the country will suffer even more as such tactics won’t be sustainable. So let’s unite and face the country’s challenges together. I invite all of you to join the endeavour of rebuilding the country by making contributions through the National Council and other parliamentary committees,” he said.

President Wickramasinghe further said:

“During my recent oversea tours, I was able to speak to a number of world leaders, and a large number of foreign ministers and global financial authorities at a minimal expense of money and time. We hope to come to a common agreement with creditor nations including Japan, China and India. We have also commenced dialogues with ambassadors from other countries that have provided Sri Lanka with loans. Subsequently, we expect to discuss with private creditors such as the London Club on debt restructuring. I tried to get maximum benefit to Sri Lanka by meeting leaders of the U.K., Japan, Philippines, officials of international organizations such as Asian Development Bank (ADB), JICA etc.”

“Japan is willing to assist Sri Lanka in its debt restructuring process. We have requested Japan to co-chair the Sri Lanka creditors’ conference.

We have also requested International Development Association (IDA) to assist us in getting concessional financing as Sri Lanka currently lacks the credit worthiness to borrow from the World Bank or other institutions. This journey can be strengthened only with everyone’s support, therefore, I urge you to put aside old political animosities and help drive this journey forward.”

“Some political parties act thinking that the country is in a normal situation and express their ideas and propose solutions accordingly. Just because fuel queues are not there anymore , the situation is not back to normal.”

“After obtaining the endorsement from the IMF and obtaining loan assistance and stabilizing the economy, we will be able to shift the country to a growth path. However, this is going to be a meticulous, sequential journey. I have briefed all those important people I met about the measures we are taking to rebuild the country in order to obtain their support for it. I was able to interact with 68 finance ministers working with the ADB when I met them in Manilla. Singapore Prime Minister also pledged his support to Sri Lanka. I had a brief discussion with Indian Prime Minister Narendra Modi and I told him that I would visit Delhi to give him more information about the latest economic developments in Sri Lanka. India has helped us immensely and we are grateful to India for that.”

“Japan whose relations with Sri Lanka had turned sour in the past few years have now given us the green light to support us in the future as the relations are normalizing. We have started initial discussions with China. After the Convention of the Chinese Communist Party, we will resume discussions with China. Japan’s willingness to talk to China about our debt restructuring is a favorable development. China has helped us substantially in the past. We are confident that China will help Sri Lanka through this difficult time too. From leaders of the UK and Philippine also we received favourable responses for resolving the crisis in our country. It was a rare opportunity I got in Manilla to speak to so many finance ministers and officials at a minimal cost of time and money under one roof.”

“Now we have to arrive at a common agreement on debt restructuring with the support of Japan, China and India. We have also discussed with ambassadors of other creditor nations. We hope to come to an agreement with them also. After the success of these talks, we will hold discussions with London Club’s private creditors for restructuring their debt. Once these agreements are finalized, we shall be able to get the IMF endorsement. In this backdrop, the ADB has already pledged a loan of USD 500 million. Then we should be able to obtain bridging finance from the World Bank, ADB and other institutions worth USD 1- 2 billion. This will pave the way for getting financial assistance from other countries at concessional rates.”

“We shall be able to achieve significant economic stability by end of 2023 end along with a re-strengthening of Sri Lanka rupee. We shall be able to see the trending towards such stabilization by mid-next year. But I don’t like to make a special mention about it right now.”

“Printing of money has to be paced in line with increase in production or otherwise inflation will grow at an alarming rate and Sri Lanka will face a dangerous future.”

“Restructuring of loss making SOEs will be a vital undertaking to put in motion. By the first half of 2021, CPC, SriLankan and CEB have made losses of Rs 1057 billion, Rs. 799 bn and Rs. 261 respectively. This will accrue to Rs 4000 billion by end 2022. This burden should not be placed on the people endlessly.”

“Tax revenue needs to be maintained at 18 percent of GDP if the government is to maintain free education and health. The government must earn revenue through taxes as the country will have no future if money printing continues.”

“We expect to boost our gross foreign reserves to about USD 2-3 billion with expected ADB funds, by saving money from restructuring of SOEs and the compensation X-Press Pearl ship.”

“Due to the steps we took in the agriculture sector by providing fertilizer, Yala season’s yield was better than expected. Maha season is ready to be provided with enough seeds and fertillizer. As food production goes up, price will come down in the next few months. In the meantime we have launched food security programmes at village level which are ongoing.”

“High deposit interest rates are advantageous to some, but as a whole it’s a disadvantage as the private sector suffers and economy contracts. According to forecasts, this year, economy would contact by 7-8%. To face this, we are taking measures that include: controlled prices for essential food items, increase of local production of food and other commodities, relaxing of forex regulations to some extent, controls on non-essential imports, ensuring a more efficient market economy and imposing a cap on deposit interest rates at a manageable level.”

“We will win the confidence of our migrant workers to elevate their remittances to earlier higher levels. When all these elements including the boosting of our foreign reserves begin to trend in as planned through these measures, Sri Lanka will regain the much needed international confidence it needs to enable the country to shift to a sustainable growth path,” the President said.