Recently, President Ranil Wickremesinghe succinctly outlined the events in Sri Lanka from March 2022 to June 2024, stating, “I have safely brought the Titanic, entrusted to me, to port. While other captains fled from the iceberg, we faced a critical decision: sink or navigate to safety. Now that we’ve reached port, the question is what to do next with this ship. We must decide whether to refurbish it for the next 50-100 years or hand it over in its current state to a fleeing captain.”
Regarding the implementation of external debt restructuring agreements, President Wickremesinghe will make a special statement to Parliament today. The debate on the Resolution for the Implementation of External Debt Restructuring Agreements will commence at 9:30 am and continue until 5:00 pm today and tomorrow. The parliamentary vote on this resolution is scheduled for 5:00 pm tomorrow.
President Ranil Wickremesinghe also announced that Sri Lanka will seek parliamentary approval for these agreements on July 2. These agreements allow Sri Lanka to defer repayment to its bilateral creditors until 2028 and extend the repayment period up to 2043.
The finalisation of these deals was a crucial condition set by the IMF under a $2.9 billion bailout program signed in March 2023. This programme has been instrumental in helping Sri Lanka tame inflation, stabilise its currency, and improve government finances. Projections indicate that Sri Lanka’s economy is poised to grow by 3% in 2024, rebounding from a 2.3% contraction the previous year.
The approval of the resolution for the Implementation of External Debt Restructuring Agreements now rests with the 225 parliamentarians elected by the people of Sri Lanka. It is imperative that they vote in accordance with the wishes of their constituents rather than the directives of party leaders. It has become evident that while the Sri Lankan people desire one outcome, the political party leadership often leans towards the opposite.
Sri Lankans typically have a sharp memory for hardships endured, such as the queues and shortages experienced in 2022. They remember vividly who stood up for them during those challenging times. This collective memory influences their decisions, often prioritising practical experience over rhetoric.
President Ranil Wickremesinghe has not just spoken but has acted decisively. His courageous decisions, despite harsh criticism, have significantly reduced the cost of living, with prices of essentials like fuel, gas, and electricity plummeting. This tangible relief resonates deeply with the populace, who are inclined to support leadership that delivers on promises.
However, manoeuvring the political landscape in this land is a complex affair. Entrenched interests often resist change. Despite the positive momentum, challenges remain. It reflects the nation’s tumultuous journey.
The deterioration of the ship’s condition was orchestrated by pirates who continually attacked and plundered it over time. Unable to seize the ship directly due to its strength, the pirates resorted to tactics like using so-called “trade unionists” and a disruptive process called “Aragalaya” to weaken it. They also propagated falsehoods and undermined every captain who took command, leading many to capitulate to their schemes. However, the people have grown weary of these tactics and strongly oppose the pirates.
As of May 2024, Sri Lanka’s Gross Official Reserves stood at USD 5.4 billion, marking a significant increase of over USD 1 billion from the previous year-end. Based on inflation forecasts, average consumer price inflation is projected to be 3.1% in 2024 and 2.0% in 2025, a notable decrease from 4.06% in 2023 and 9.59% in 2022. The Sri Lankan Rupee is anticipated to strengthen against the US Dollar by the end of 2024, with the LKR/USD rate expected to reach $0.003112. Furthermore, the interest rate, which peaked at 28% in 2023, has now dropped to a single-digit figure.
Despite a 3.7% budget primary deficit in 2022, Sri Lanka achieved a remarkable turnaround in 2023, achieving a primary budget surplus. This achievement, the sixth instance in the 76 years since independence, is a significant milestone. In 2022, the balance of payments deficit was 1.9% of GDP, but by the end of 2023, the country managed to achieve a surplus, a feat not seen since 1977.
Moreover, the government’s 52 main statutory bodies, which faced a loss of Rs. 745 billion by the end of 2022, turned a profit of Rs. 313 billion by September 2023, surpassing expectations. The people eagerly await the storm in October, ready to entrust the ship to the captain who saved it from turmoil and uncertainty.
