Sri Lanka-current 27th May 2022 – By Dr Harold Gunatillake
*Sri Lanka PM to take over as finance minister too. Ali Sabry, previous finance minister, resigns
*Wickremesinghe will present an interim budget within six weeks that will slash government expenditure ‘to the bone’.
*The PM is seeking $4bn from the IMF, China and Japan to pay for food and fuel even as he slashes the budget to ‘bare bones’.
*Sri Lanka’s Rajapaksa Appeals for Bridging Finance in TokyoLanka has run out of money to pay for food, fuel, medicines and other daily need.
*Sri Lanka hikes fuel prices, hires financial and legal advisers
*Sri Lanka’s inflation increased by 20-24 per cent
Lanka’s Prime Minister Ranil Wickremesinghe will take charge as finance minister, the president’s office has announced. It will lead talks with the International Monetary Fund (IMF) as the crisis-hit nation seeks a bailout.
“Prime Minister Ranil Wickremesinghe was sworn in as finance, economic stabilisation and national policies minister before President Gotabaya Rajapaksa,” the president’s office said.
Ali Sabry, the previous finance minister who started talks with the IMF in April, quit in early May when the cabinet was dissolved after Prime Minister Rajapaksa resigned.
“The finance minister’s appointment is extremely crucial because he needs to get the ball rolling on a new budget, talks with the IMF and spearhead fiscal support,” said Lakshmi Fernando, macro-economist for Sri Lanka-based investment firm Asia Securities.
Wickremasinghe lays his immediate plans.
In an interview with Reuters on Tuesday, Wickremesinghe laid out his immediate plans for the economy, including presenting an interim budget within six weeks that will slash government expenditure “to the bone” and re-route funds into a two-year relief programme.
On Tuesday, the World Bank said it is not planning to provide any new financing to Sri Lanka until an adequate economic policy framework has been implemented.
Wickremesinghe told Reuters he hoped for a “sustainable loan package” from the IMF while undertaking structural reforms to draw new investments into the country.
Sri Lanka PM trying to fast-track IMF talks
The PM is seeking $4bn from the IMF, China and Japan to pay for food and fuel even as he slashes the budget to ‘bare bones’.
Sri Lanka is looking to fast-track talks with the International Monetary Fund and agree on a loan by mid-June to approach other lenders for urgently needed funds.
The bankrupt nation will slash its budget expenditure to “bare bones” and hopes to break even or post a primary surplus of 1% of gross domestic product by 2025, Prime Minister Ranil Wickremesinghe said in an interview at his office in Colombo Wednesday. Even so, that would be smaller than the 2% surplus the IMF has sought, which could be a sticking point, as reported by Bloomberg on 26 May.
Initial discussions with the IMF ended on Tuesday. Earlier this week, IMF Managing Director Kristalina Georgieva said the lender was “working relentlessly” at a technical level in Sri Lanka.
A veteran politician who knows the IMF
Wickremesinghe, 73, is a veteran politician who has been prime minister five times before the current appointment.
The economic liberal already has experience with the IMF – Sri Lanka last had an IMF programme in 2016 during one of Wickremasinghe’s tenures as prime minister. He has also built relationships with regional powers India and China, key investors and lenders who vie for influence in Sri Lanka, along busy shipping routes linking Asia to Europe.
Sri Lanka protests to continue as new PM struggles to form gov’t
Ranil Wickremesinghe’s appointment fails to appease protesters demanding the president’s resignation over the economic crisis.
This news is extracted from ALJAZEERA. Central Bank Governor stays on Sri Lanka’s central bank governor says he will stay in his position given improved political stability amid an economic crisis. He would not step down as he had earlier warned.
Sri Lanka is expecting $3 to $4 billion from the IMF. The technical discussions with the IMF on a bailout loan are scheduled to conclude today. Its spokesman Gerry Rice Sunday said:
“We remain committed to helping Sri Lanka align with the IMF policies ….” However, finalising the loan agreement will take another three months.
IMF Managing Director Kristalina Georgieva speaking to the BBC yesterday declared: “Governments need to subsidise the cost of food and energy for the poorest members of society, and without the correct support, the protests seen in Sri Lanka could be repeated in other countries.”
However, the IMF prescription for the bailout loan will deepen the attacks on working people’s social rights and living standards, pushing many more into poverty. Power and energy minister
ON THURSDAY, Governor P Nandalal Weerasinghe also said that the Central Bank of Sri Lanka had nearly finalised plans to restructure the country’s debt, and proposals would be submitted to the cabinet soon, possibly by Friday.
Kanchana Wijesekera said in a message on Tuesday that petrol prices would increase by 20- 24 per cent while diesel
prices would rise by 35-38 per cent with immediate effect. That is the latest news of the happenings in Sri Lanka
Let us meet again. Till then, Stay safe. Bye for now
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