COLOMBO, Sri Lanka (AP) — Sri Lanka’s new president said Wednesday that his government is preparing a national policy roadmap for the next 25 years that aims to cut public debt and turn the country into a competitive export economy as it seeks a way out of its worst economic disaster.
President Ranil Wickremesinghe in his speech to Parliament said Sri Lanka needs long-term solutions and a strong foundation to stop a recurrence of economic crises.
Massive public protests have blamed Wickremesinghe’s ousted predecessor, Gotabaya Rajapakasa, and his powerful family for years of mismanagement and corruption that have bankrupt the nation and led to unprecedented shortages of essential imports like fuel, medicine and cooking gas. But many are still skeptical of Wickremesinghe and accuse him of trying to protect the former leader and his relatives.
Sri Lanka announced in April that it is suspending repayment of foreign loans. Its total foreign debt is $51 billion, of which it must pay $28 billion by 2027.
Wickremesinghe said his government had initiated negotiations with the International Monetary Fund on a four-year rescue plan and had commenced the finalization of a debt restructuring plan.
Wickremesinghe had said earlier that negotiations with the IMF have been difficult because of Sri Lanka’s bankruptcy and that an expected early August target for an agreement with the agency was not possible and is now expected in September because of social unrest in the country.
He said the hardships had eased somewhat with reduced power cuts, fertilizers being brought in for cultivation and cooking gas distribution improving.
Instead of relying on foreign loans for fuel imports, Sri Lanka should initiate a system where export income and foreign workers’ remittances are used for purchases, Wickremesinghe said.
“We also have to limit selected imports in order to balance the payments for fuel. On the other hand, fuel supply has to be curtailed. These hardships would need to be borne until the end of this year.”
He thanked neighboring India’s Prime Minister Narendra Modi for giving Sri Lanka a breath of life by providing timely assistance through credit lines and loans to buy food, medicine and fuel.
Wickremesinghe said the government’s aim is to create a surplus in the primary budget by the year 2025 and to bring down public debt, currently at 140% of GDP, to less than 100% by 2032.