ECONOMYNEXT – Sri Lanka will seek International Monetary Fund support, President Gotabaya Rajapaksa said as the country reels from foreign exchange shortages due to unusually high levels of money printed to keep interest rates low.
Sri Lanka is facing forex shortages for basic imports as printed money has pushed up domestic demand and made it difficult to repay debt.
“To this end, we have initiated discussions with international financial institutions as well as with our friendly countries regarding repayment of our loan installments,” President Rajapaksa said.
“The government is in discussions with various parties to implement a new method regarding this which will be beneficial to our country.
“Yesterday’s discussion with the International Monetary Fund was also held for this purpose.
“Through those discussions, we hope to find a way to pay off our annual loan installments, sovereign bonds, and so on.
“Subsequent to my discussions with the International Monetary Fund, I have decided to work with them after examining the advantages and disadvantages.
Sri Lanka will be seeking IMF help for the 17th time since a Latin America style central bank was set up in 1950 abolishing a Singapore, Malaysia and Hong Kong style currency board that had kept the country stable since 1885.
The Singapore and Malaysia currency board (Straits dollar) was set up in 1898, but the monetary arrangements were retained after independence.
President Rajapaksa meanwhile promised to solve the economic crisis.
“I accept responsibility for the actions I take,” President Rajapaksa said. “Today, I am determined to make tough decisions to find solutions to the inconveniences that the people are experiencing.
“I have appointed a National Economic Council and an Advisory Committee to assist it. I will constantly monitor whether the decisions I make through this are implemented. Therefore, first of all I request you to have faith in the actions I will take on behalf of the people.”