Sri Lankan President Takes U-Turn, Backs IMF Package Despite Pre-Election Rhetoric To Renegotiate It

COLOMBO: Sri Lankan President Anura Kumara Dissanayake Thursday backed an International Monetary Fund bailout package despite pre-presidential election rhetoric to renegotiate with the global lender to water down tough conditions laid down for the recovery. In his inaugural address to the newly convened parliament after his party's landslide victory last week, President Dissanayake also pledged to fulfil his pre-election promises by ensuring the supremacy of the law and addressing past wrongdoings.

Dissanayake affirmed his administration's commitment to continue the IMF bailout programme initiated by the previous government led by Ranil Wickremesinghe. "We will enter the staff-level agreement (with IMF) hopefully by November 23,” Dissanayake said, expressing optimism about securing the agreement for the next tranche of the nearly USD 3 billion facility.

Met with the IMF delegation today (18) to discuss Sri Lanka’s economic recovery. I stressed the need for a balanced approach that addresses citizen hardships and restores public trust. Our focus: tackling child poverty, and malnutrition, supporting the differently abled, and… pic.twitter.com/xhElYTTYOc

— Anura Kumara Dissanayake (@anuradisanayake) November 18, 2024

A staff-level agreement is a preliminary pact reached between the IMF staff and the government of a country on a set of economic policies and reforms that the country must implement in exchange for financial assistance from the global lender. The IMF team on Sunday arrived in Sri Lanka to carry out the third review of the nearly USD 3 billion bailout facility.

The third review should lead to the fourth tranche of the 4-year facility. It would be around USD 330 million as was the case in the previous three tranches, according to the Finance Ministry officials. The debt restructuring agreement reached in the last week of the Wickremesinghe presidency is yet to be officially sealed. Debt restructuring agreement with both bilateral and sovereign bondholders was made compulsory to maintain debt sustainability by the IMF.

Sri Lanka tapped the IMF for a facility at the height of the economic crisis under the presidency of Gotabaya Rajapaksa, the president who was made to flee the country by months-long public protests. Mid April of 2022 Sri Lanka announced its first-ever debt default. The negotiations with the IMF began thereafter and the Wickremesinghe's government clinched the bailout, a year later in March 2023.

In his policy address, President Dissanayake focused significantly on the country's struggling economy. On debt restructuring, Dissanayake assured that his government would honour agreements made by the previous administration. “Soon, there will be separate agreements with each country on debt restructuring, and hopefully, all will be finalised by the end of this year,” he said.

Staying true to his National People's Power (NPP) party's commitment to austerity, Dissanayake made a modest ceremonial entry to parliament, foregoing the usual pomp of motorcycle outriders, motorcades, and military gun salutes. Clad in a simple white tunic, the 56-year-old President addressed the parliament from the Speaker's chair, marking the first session since his party's landslide victory.

The NPP created history in the November 14 election by winning 159 seats in the 225-member assembly. This was the first time that a party won two-thirds control or over 150 seats in a parliamentary election held since 1989. "It is our duty to make everyone accountable and equal before the law," he said, adding that his government will deliver justice to everyone affected by past crimes.

"Our duty since being elected was to win the confidence of all parties by ensuring continuity,” Dissanayake said. The President emphasised the need for broader public participation in economic development, ensuring that economic benefits reach the larger population. He highlighted the unique unity his government represents, bringing together people from both the south and the north.

“There will be no race, religion, or discrimination-based politics in the government,” he stressed. Announcing welfare measures, Dissanayake vowed to address immediate challenges such as malnutrition, healthcare, and social care, pledging to protect all citizens. “This will be a government that protects all people,” he said.

At the start of the new session of the 10th parliament since 1978, the NPP's Ashoka Ranwala was elected house speaker while Rizwie Salih was elected deputy speaker. Himali Weerasekera, a female member, was elected the deputy chairman of the committee. The significant feature of the appointment was that all three elected to the high offices were first-time members of parliament, which is an unprecedented occurrence in Sri Lanka's parliamentary history.

Speaker Ranwala, a chemical engineer, represents the NPP's elevation to the highest office through decades of public agitations. He was a trade union leader in the state fuel entity, CPC and an organisation often hit by leftist trade union activism. After the ceremonial appointments of the three parliamentary appointments, an announcement was made that Sajith Premadasa from the main opposition had been recognised as the opposition leader.