Minister of Foreign Affairs ,  Justice, Prison Affairs & Constitutional Reform, President’s Counsel Ali Sabry emphasized that renegotiating with the International Monetary Fund (IMF) is a very serious and unsuccessful endeavour.

The Minister highlighted that resuming negotiations with the IMF could jeopardize the next tranche due in December, as well as subsequent disbursements from the World Bank (WB) and the Asian Development Bank (ADB).

As a result, between December 2024 and January 2025, the country could lose between USD 1.2 billion to 1.3 billion, which could lead to further instability, Minister Ali Sabry warned.

Minister of Foreign Affairs, Justice, Prison Affairs & Constitutional Reform, President’s Counsel Ali Sabry, made these remarks during the news conference titled ‘Two Years of Progress and Advancement’, held at the Presidential Media Centre today (28).

The Minister further stated,

In 2022, the Ministry of Foreign Affairs was assigned a crucial role due to the country’s challenging circumstances. We faced the task of rebuilding strained foreign relations, regaining the trust of the international community, and leveraging international relations to boost the country’s economy.

After almost two and a half years of dedicated effort, we have successfully stabilized the country. Our international reputation now reflects the positive results achieved domestically. It is important to acknowledge that President Ranil Wickremesinghe’s leadership was instrumental in reaching these outcomes.

Securing agreements with 17 countries for debt restructuring through international relations is a significant achievement for us. We have completed the debt restructuring process while upholding our foreign policy, local identity, and sovereignty. Our swift recovery from the economic crisis has set a global example. Currently, countries such as Pakistan, the Maldives, and Bangladesh are seeking our advice on economic revitalization. The leadership of President Ranil Wickremesinghe in stabilizing the country has been recognized internationally.

Among the five countries—Lebanon, Venezuela, Argentina, Zimbabwe and Greece—that faced similar economic crises, only Greece has managed to recover so far and it took 12 years for Greece to do so. Sri Lanka stands out as the only country to have overcome an economic crisis in such a short period.

However, some individuals are misleading the public by advocating for renegotiations with the International Monetary Fund for narrow political objectives. For those considering pursuing this challenging and often unsuccessful process of renegotiation, I wish them “good luck.”

In March 2022, we officially communicated the desire to apply for an extended-fund facility. By the time we get the first tranche was March 2023. It took one year for us to agree on the Debt Sustainability Analysis (DSA).

The DSA is conducted based on five key parameters. First, the current national debt, which is 133% of Gross Domestic Product (GDP), must be reduced to 95%. Additionally, 9.3% of the current payment of the GDP which is going for foreign loan settlement has to be brought down to 4.5%.

Moreover, the primary budget balance should achieve a surplus of 2.1%. Furthermore, tax revenue should account for 15% of GDP. These goals are now legally established and cannot be easily altered. Any attempt to change them would require renegotiation, which would take at least another year.

If this happens, the IMF is likely to withhold the next instalment of USD 400 million due in December. If the IMF does not release the funds, the WB will also withhold its USD 400 million tranche. Consequently, the ADB will not release their USD 500 million allocation. This would result in a loss of USD 1.2 billion to USD 1.3 billion between December and January. The loss of these funds would make it impossible to prevent the country from destabilizing again, leading to a potential devaluation of the rupee and a rise in inflation.

The Ministry of Foreign Affairs has undertaken numerous initiatives to support and coordinate the country’s economic recovery. Additionally, it has played a significant role at the Ministerial level in advancing priorities for the Global South in multilateral forums and effectively addressing challenges related to multilateral human rights issues. It is also noteworthy that Sri Lanka has been elected to four mechanisms of the United Nations: the Committee on the Elimination of Discrimination against Women for the period 2022-2024, the Committee on the Protection of the Rights of Migrant Workers and Members of Their Families, the UNESCO Executive Board for the period 2023-2027, and the Economic and Social Council for the period 2025-2027.

Our foreign policy was recently evaluated in an article published by ForeignPolicy.com. The article noted that, despite the global power struggle, small sovereign states like Sri Lanka have been significantly impacted, yet Sri Lanka has navigated this situation remarkably well, maintaining strong relations with all major powers.

This success did not occur by chance. It is largely attributed to the knowledge, understanding, experience and personal connections of President Ranil Wickremesinghe. He is the only leader in this country capable of directly engaging with the head of state of any country.

It is also important to acknowledge the President’s directive to maintain the independence of the Foreign Service. As a result, the Foreign Service now operates with even greater independence and without political influence, surpassing the level of independence achieved during the tenure of former Minister Lakshman Kadirgamar.

(PMD)