Prime Minister Ranil Wickramasinghe says that the Sri Lankan Government's negotiations with the International Monetary Fund were successfully concluded.
The Prime Minister announced this in a special statement today (July 5) in Parliament.
The Prime Minister said that although Sri Lanka has been negotiating with the International Monetary Fund as a developing country, today Sri Lanka is conducting the negotiations as a bankrupt country.
Therefore, he pointed out that those negotiations are more difficult and complicated than normal level negotiations.
Below is a part of the Prime Minister's statement.
"I am ready to explain the information about the road map or travel plan that we are following to revive the fallen economy today before this assembly and the people of the country.
We were able to successfully proceed with the round of negotiations we held with the International Monetary Fund. We were able to reach a number of agreements. Because of this, we can now put the road map in front of you in more detail.
Our country has held talks with the IMF on many occasions before. But this time the situation is different from all those occasions. serious The other day we held discussions as a developing country. In such a case, both parties have only to reach an agreement on EFF or Extended Credit Assistance. It is like moving along a straight line.
But now the situation is different. We are now participating in the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation than normal level negotiations. After reaching a consensus at the staff level, the consensus can be submitted to the IMF Board of Directors for approval. But due to the state of bankruptcy our country is in, we have to submit a plan report on our debt sustainability to them separately. Once they are satisfied with that plan, we can reach an agreement at the staff level. This process is not a straight line like before. A journey through a maze.
But it is a pleasure to be able to end the round of discussion effectively amid those difficulties. According to the IMF's official statement, “Positive and productive discussions were held on the economic policies and reforms to be supported. Significant progress has been made.”
Now the next step is to submit to them the plan report on debt restructuring and sustainability, which is now being prepared by financial and legal experts Lazard and Clifford Chance. We hope to submit that report to the IMF by August.
Then we will be able to reach a staff agreement. After that, the agreement will be submitted to the IMF Board of Directors for approval. After the approval, a comprehensive loan assistance program will be prepared for a period of 4 years and we are now on that path.
Likewise, after obtaining the IMF staff agreement, we will organize an aid offering conference by bringing together the friendly countries that give us the most credit assistance, such as India, China and Japan. We hope to create a system where we can get loan assistance through a common agreement.
Among the problems we face today, the most fundamental problem is the fuel crisis. At the same time, we are also facing the problem of food availability. In terms of fuel and food, our country was going to crisis for some time. Fuel was scarce. Food prices went up.
But due to the recent global crises, this situation became more acute and we who were in the frying pan fell into the oven. Due to the Ukraine-Russia war, our problem has been solved. What has happened now is the collapse of international crises on top of our crisis. This situation is not only for us. It affects other countries too. India and Indonesia are getting affected by this effect. Therefore, India has had to limit the loan assistance concessions given to us.
This situation affects the whole world equally. The UN Secretary General has warned that as a result of this, the gap between developed countries and underdeveloped countries will increase. Similarly, he warns that the gap between the upper class and the lower class within a country may increase. No country in the world can isolate itself outside of this world crisis. We also have to face all this.
We have prepared this road map or travel plan considering all the local and global challenges that we have to face. We can stay in the old system without going this way. But if it stays like that, the whole country will collapse.
Therefore, we should strive to continue on this path. It is not an easy journey. I have reminded you of that from time to time. A difficult journey. A difficult journey. A bitter journey. But we can get relief at the end of that journey. Progress can be won.
Our economy is currently shrinking. We are trying to reverse it. According to central bank statistics, our current economic growth rate is between negative four and negative five. According to IMF statistics, it is between negative six and negative seven. This is a serious situation. If we make a determined journey along this road map, we can achieve a negative unit economic growth rate by the end of 2023.
By 2025, our aim is to create a surplus in the primary budget. Our effort is to raise the economic growth rate to a stable level. Our expectation is to establish a stable economic base by 2026.
I would like to give you an idea of the debt we have paid off so far. 3489 million dollars between June and December this year. 5860 million in 2023. 4916 million in 2024. 6287 million in 2025. 4030 million in 2026. 4381 million in 2027.
At the end of 2021, the total debt of the government is 17,589.4 rupees. 21,696.6 billion rupees by March 2022.
This is the real situation. In addition, we are facing the effects of many problems that have worsened in the past two or three years. They are not problems that can be solved in two days. Similarly, we are suffering from the effects of certain traditional ideas that have been practiced in our country for many years. Therefore, as I mentioned earlier, we will have to face difficulties in 2023 as well. This is the truth. This is the reality. Some may try to put an end to this reality by showing the world of dreams to the people. But it will be confirmed with time that they are only beautiful words.
Our plan is to strive to control inflation. By the end of this year, inflation will rise to 60%. This is mainly due to the increase in the prices of goods in the world and the fall in the value of the rupee.
Due to the current inflation, depreciation of the rupee, the value of the money now available in the Employees' Provident Fund and the Employees' Trust Fund has decreased by 50% and the real value of pensions has also decreased by 50%. Think how this situation affects our senior citizens. Poverty is spreading among all of them. The value of the money they receive has decreased by 50%. Their purchasing power has decreased by about 50%. Creating dream worlds is easy. But it is difficult to find answers to such questions.
What is the solution to this? Stabilizing the rupee as soon as possible, strengthening the rupee without letting it fall. For that purpose, we have implemented a plan to limit the printing of money in the future.
In 2023, we will have to print money with restrictions on several occasions. But by the end of 2024, it is our intention to stop printing money completely.
We aim to reduce the inflation rate to between 4 and 6 percent by 2025.
Another top priority for us is to protect the banking and financial system. The pressure on these systems during an economic crisis does not need to be explained anew to this House. But due to this pressure, we will not allow the banking system to be prejudiced by mustard seed. The government has given priority to strengthening the banking and financial system.
Meanwhile, we pay special attention to state banks. They beat from both sides. On the one hand, the economic crisis, on the other hand, the huge amount of loans they have given to state enterprises....”
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