COLOMBO, Sri Lanka (news agencies) — Sri Lanka’s new President Anura Kumara Dissanayake said Wednesday that he will soon resume discussions with the International Monetary Fund and foreign creditors to plot a way out of the worst economic crisis in the country’s history.
“We expect to discuss debt restructuring with the relevant parties and complete the process quickly and obtain the funds.,” he said.
The future of the economic recovery plan drafted by former liberal President Ranil Wickremesinghe was called into question after Dissanayake, a Marxist, won the presidential election on Saturday.
During the campaign, Dissanayake said that he will renegotiate the bailout agreement with the IMF agreed by Wickremesinghe. He said he wants to make austerity measures more bearable for the poor.
Sri Lanka declared bankruptcy in 2022 and suspended repayments on some $83 billion in domestic and foreign loans.
That followed a severe foreign exchange crisis that led to a severe shortage of essentials such as food, medicine, fuel and cooking gas, and extended power outages.
Wickremesinghe, however, had warned that any move to alter the basics of the agreement could delay a fourth tranche of nearly $3 billion from the IMF package, which is crucial for economic stability. Days before the election Wickremesinghe’s administration also agreed in principle to restructure Sri Lanka’s foreign debt.
Despite the election pledges, Dissanayake has shown signs that he may continue with the IMF agreement without much changes by retaining the governor of the Central Bank and the secretary to the ministry of finance who were at the forefront of implementing the reform program.
Sri Lanka’s economic upheaval led to a political crisis that forced then-President Gotabaya Rajapaksa to resign in 2022. Parliament then elected the then-Prime Minister Wickremesinghe to replace him.
The economy was stabilized, inflation dropped, local currency strengthened and foreign reserves increased under Wickremesinghe. Nonetheless, he lost the election in what is seen as the people’s rejection of the old guard who they hold responsible for the economic crisis.
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