As Sri Lanka’s economic crisis continues to worsen, President Gotabaya Rajapaksa announced that he would work with the International Monetary Fund (IMF), after numerous statements rejecting a potential bailout.
“This crisis was not created by me” insisted President Rajapaksa during his statement. It follows riotous protests outside the Presidential Secretariat over the economic crisis. These protests were led by Sri Lana’s opposition leader Sajith Premadasa. During the rally, Premadasa demanded a snap Presidential election.
Read more here: ‘The country is ruined’ – Opposition protesters attempt to storm Sri Lankan President’s office
Through discussions with the IMF, “we hope to find a way to pay off our annual loan instalments, sovereign bonds” Rajapaksa stated.
He further claimed that “those who contributed to the creation of this crisis are criticizing the government in front of the people today” and that he was “attempting to immediately resolve this crisis”.
Despite his statement, numerous economists have criticised Sri Lanka’s leader for its poor management of the economy. The Economist has highlighted how Rajapaksa’s slashed taxes led to tax receipts plummeting by a quarter and the budget deficit rising to 14% of GDP. “Two-thirds of government revenue now goes on interest payments”, the Economist notes
Read more here: Sri Lanka’s crisis is of its own making
Aversion to the IMF
In January 2021, Sri Lanka’s Central Bank Governor, Weligamage Don Lakshman, rejected the possibility of turning to the IMF for support. IMF’s prescriptions which include fiscal consolidation and removing caps on borrowing costs would undermine Sri Lanka’s sovereignty, he maintained. Instead of turning to the IMF, Sri Lanka has increasingly turned to support from Bangladesh and China.
Read the full statement here.
