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President decides to work with IMF 

17 Mar 2022

  • ‘I accept responsibility for my actions and am determined to make tough decisions’
Addressing the nation “at a challenging time”, President Gotabaya Rajapaksa said yesterday (16) that following his discussion with officials from the International Monetary Fund (IMF), he has decided to work with them, after examining the advantages and disadvantages of doing so, in order to fill the country’s trade deficit and build the foreign exchange reserves.   “We must take action to fill the trade deficit and increase our foreign exchange reserves. To this end, we have initiated discussions with international financial institutions as well as with friendly countries regarding the repayment of loan instalments. The Government is in discussions with various parties to implement a new method regarding this which will be beneficial to our country,” the President said in his address to the nation yesterday.  The President met with IMF Asia and Pacific Department Director Changyong Rhee and two other top officials at the Presidential Secretariat on Tuesday (15).  “The discussion with the IMF was also held for this purpose. Through those discussions, we hope to find a way to pay off our annual loan instalments, sovereign bonds, and so on. Subsequent to my discussions with the IMF, I have decided to work with them after examining the advantages and disadvantages,” said the President.  The President claimed that the root cause of the crises faced by the country is the foreign exchange crisis.  He said that before the Sri Lankan rupee was floated, the projected export earnings for 2022 was $ 12 billion (bn) and as the import cost is $ 22 billion, it would have resulted in a trade deficit of $ 10 billion. “Based on recent data, this year, we will receive about $ 3 billion from tourism, as well as from export services such as information technology, and $ 2 billion from remittances from expatriate workers. Accordingly, the trade deficit will be $ 5 billion. Meanwhile, $ 6.9 billion will have to be paid in loan instalments and sovereign bonds this year. Then, there will be a deficit of $ 11.9 billion. We expect to generate $ 2.5 billion from other grants and investments. Accordingly, there is a total deficit of $ 9.4 billion in foreign exchange.” However, he said that with the floating of the rupee, export earnings are expected to reach $ 13 billion. “This will also reduce the cost of imports from $ 22 billion to $ 20 billion. If that happens, the trade deficit could be reduced to $ 7 billion. We should aim for this target. We can also expect $ 4 billion by providing export services and $ 5 billion in remittances from expatriate workers. Accordingly, our trade deficit will be $ 2.4 billion.”  The President said that he is aware of the difficulties faced by the people and that he is sensitive to the many sufferings of the people, including the issues which have arisen due to the shortages of essential items such as fuel and gas, the increases in prices, and power cuts.  “The most serious issue we face in controlling the cost of imports is the rapidly rising fuel prices in the world market. Generally, more than 20% of our import expenditure is spent on purchasing fuel. In the last few months alone, fuel prices in the world market have more than doubled. This is the reason why the increase in fuel prices in our country was inevitable. Fuel is widely used in our country not only for vehicles but also to generate electricity. This is why I constantly took steps to discuss and encourage the relevant agencies to use renewable energy sources as much as possible. Therefore, by limiting the use of fuel and electricity as much as possible, the citizens too can extend their support to the country at this time. I hope that you will understand the responsibility that lies with you at this challenging time.” He stressed that the crisis was “not created” by him, noting that when those who contributed to the creation of this crisis are criticising the Government in front of the people today, he is attempting to immediately resolve this crisis and provide relief to the people. “Our country is not the only country in the world that is affected by the prevailing crisis situation. The entire world is engulfed with various hardships. Increasing shipping costs, rising commodity prices, and shortages of certain goods caused by the Covid-19 pandemic are all beyond our control. However, we have adopted concessionary initiatives for the benefit of the people.” Thus, he requested faith in the actions that he takes on behalf of the people, and promised to monitor whether the recently appointed National Economic Council and its Advisory Committee implements the decisions he takes. “I accept responsibility for the actions I take. Today, I am determined to make tough decisions to find solutions to the inconveniences that the people are experiencing.  “You requested me to build a secure, disciplined, modern, and developed country, as well as to provide a better education for your children. Almost two-and-a-half years of my tenure were devoted to protecting you and your child from the Covid-19 pandemic. I will dedicate the remaining period of my tenure to accomplishing those original goals. I entered into politics on your invitation. All of you have placed an utmost trust in me. I will never betray the trust you have placed in me and will protect it with great commitment.” He further added: “I know that this situation will continue for reasons beyond our control though we take maximum possible efforts with regard to these situations. In a crisis situation like this, it is the responsibility of the politicians and intellectuals to collectively find solutions to the issues. We are a nation that has experienced many adversities and at the same time conquered those challenges throughout history. However, we all need to understand that we have to face difficulties for a certain period of time when implementing solutions for the issues. Therefore, I urge all of you not to be discouraged but to unite as a nation to overcome this crisis. I urge the Cabinet of Ministers, the Parliament, and public officials to work together as a team in order to achieve our desired goal of providing a better country for our children with great commitment.”  


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