President Ranil Wickremesinghe making a special statement in Parliament today said that the country has witnessed positive outcomes of entering into a programme with the International Monetary Fund (IMF), including the appreciation of the rupee against the US dollar.
9 key points from the President’s speech:
1.Economic growth is forecasted at a minimum of 3%, with the figure being supported by various national and international institutions, President Wickremesinghe said. Inflation reduced to 1.5%, the primary account balance, which had been in deficit for many years, has turned into a surplus of 0.6% of GDP in 2023. A surplus in the current account of the balance of payments was recorded in 2023 & interest rates have decreased to between 10% & 13% over the year. Foreign reserves meanwhile surpassed USD 5 billion, the President said elaborating on several economic indicators.
2.Government employees received an allowance increase from Rs. 5000 in January to Rs. 10,000 in April, while pensioners were given a Rs. 2500 allowance. President Ranil Wickremesinghe acknowledged that these allowances are insufficient relative to the cost of living, but stated that the government cannot afford further increases.
“There have been numerous requests to revise salaries, but the government revenue is not sufficient to consider such requests. The truth is that government salary revisions can only be considered next year, based on the 2024 economic growth and state revenue.”
3.Outlining the key milestones of Sri Lanka’s debt restructuring efforts, the President said that government revenue was earlier at 8% of the GDP while state expenditure was 20% of GDP. By December 2022, total national debt was 128% of GDP.
4.President Wickremesinghe said that Sri Lanka has agreed in principle with foreign creditors to restructure its debt and is in ongoing discussions with the official creditors committee and the EXIM Bank of China.
“Sri Lanka entered an agreement with the Paris club official creditors as well as China, who is not a member of the Paris Club. China opted out, so we are dealing independently with China,” the President said.
5.By November 2023, Sri Lanka secured agreements to restructure debt with creditor countries including those from the Paris Club and China. While formal agreements with these creditors are pending, Lazard and Clifford Chance are facilitating ongoing dialogues on behalf of Sri Lanka. The goal is to conclude discussions by mid-2024, President Wickremesinghe said
6.Debt restructuring aims to reduce national debt to 95% of GDP by 2032, down from 125% President Ranil Wickremesinghe said as he detailed the targets and challenges in achieving debt sustainability during this period of time.
7.Making note of the Governance Diagnostic Report introduced to minimize corruption as per conditions agreed with the IMF, the draft law for the Proceeds of Crimes Act was approved by the Cabinet, President Wickremesinghe said.
8.The Aswesuma welfare scheme allocated Rs. 205 billion in 2024, tripling the funds compared to the previous Samurdhi scheme. The President emphasized the government’s efforts to provide relief to various vulnerable groups through these economic revival programs. Direct financial assistance has been allocated to kidney patients, the elderly and disabled individuals, with a 50% increase effective from April 2024.
9.Several new laws aimed at strengthening the government’s economic reform efforts will be presented in Parliament soon. The Economic Transformation Bill, the Public Finance Bill and the Public Debt Management Bill are some of the key laws anticipated, the President said.