By F.F Mushfika

Ever since the start of the fall of Sri Lanka due to economic crisis many incidents have happened. Mass protestors demanded the resignation of Gotabaya Rajapaksa which resulted a political turmoil and a power crisis as well. Today Ranil Wickremasinghe runs the country as the current President to bring back Sri Lanka from its dire state.
As of the background, Sri Lanka ran out of fuel and suffered its worst economic default with many deaths and sufferings in long and extended queues. However, the situation is escalating for better and today we are able to see no to minimal queues as a QR code system was initiated to obtain the essential crude oil. However, the measures taken were short term. The island nation is also losing its currency’s value and it is said that the exchange rate is rather unbelievable. According to the official news the Central Bank of Sri Lanka reported on 14th October 2022 that the selling rate of the US dollar as 370.71. This is in fact has increased from the 13th of October – a day prior which has been 370.42. Sadly, the rupee has only appreciated against the Chinese Yuan, Swiss Franc, and Japanese Yen. It has massively declined against the major currencies like dollars of Australia, Canada and Singapore, Euro, and Sterling Pound. Thus, the only bailout as a long-term solution is to obtain help and assistance from the International Monetary Fund which is commonly addressed as IMF.
Sri Lanka has achieved the initial stage of the agreement and several staff level discussions took place attempting to draft the perfect plan. The nation has requested a sum of $2.9 billion as a loan. It was stated by the IMF that the “debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps.” Verily, Sri Lanka is on the run of a long journey to obtain IMF which is the last practical hope to bring back a stability into the country for a smooth function. Besides, it will not be an easy run as well.
The major focus of the IMF is to rebuild the country with an increase in foreign reserves which will come as an outcome of raising government revenue and escalating prices for fuel and hydropower. These are few examples of their targets. In fact, this will introduce an immense tax reform within the country. It was stated that “these reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT.” Further, they also mentioned a target of a primary surplus of 2.3 percent of GDP by the year of 2024.
However, IMF is yet to be arrived regardless of the fact that Sri Lanka needs it immediately. The basic formalities have been fulfilled and IMF is still processing. The authorities of the Sri Lankan government are also at a mutual communication with the IMF holders for better outcome. Recently, it was stated by the Governor of the Central Bank, Dr Nandalal Weerasinghe that, “next week, the state Finance Minister, Treasury Secretary and CBSL staff will meet the IMF for talks, and we hope to continue with the discussions with creditor nations, and commercial creditors. We hope progress can be achieved.” This was announced on Thursday the 6th of October to the reporters.
Nonetheless, IMF appears to be unsatisfied at the proposed mechanism of debt restructuring and resolution. According to the current bulletin, it was narrated by the IMF Managing Director Kristalina Georgieva about their expectancy as follows. She aired that “we want the common Framework to become more predictable with guidelines and able to bring equality of treatment for all creditors, public and private.” She also reinstated that, “it is so important that we understand the urgency to act, and we understand that acting together makes a difference to the lives of hundreds of millions of people.”
Although, the IMF is looking into every viable way to help Sri Lanka outwardly, it is inevitable that this will take time. This is also because their major concern is on the creditors. Bilateral creditors are also on the track with equal support and negotiation but still the final destination is an extended pathway.
According to Anne-Marie Gulde-Wolf who is the deputy director, Asia and Pacific Department at IMF mentioned that “I want to say also very importantly that the policies under the other multilateral lenders in their areas of expertise will be important to resolve Sri Lanka’s longer term growth problems.”
Hence, Sri Lanka is about to travel with IMF with the hope that it will finally happen, someday for good. The procedure looks like infinity, yet it gives a hope to achieve stability in macroeconomics and sustain debt with assurance to finance while also protecting the marginalized with a structural reform to address any corruption. Thus, it assures the capacity for the Sri Lanka to advance and develop from its fall, once again.