Colombo: In a notable departure from the customary annual address, Sri Lankan President Ranil Wickremesinghe, marking independence day, shared that the country is gradually overcoming its severe economic crisis. Reflecting on the past challenges and the stigma of being labeled financially bankrupt, the President pointed to the positive trajectory after implementing austerity measures tied to an IMF bailout.
Sri Lanka faced a tumultuous period in 2022 as it defaulted on its $46 billion foreign debt due to a foreign exchange collapse, leading to an inability to import essential goods like food and fuel. The ensuing economic crisis resulted in civil unrest and the removal of then-president Gotabaya Rajapaksa.
The International Monetary Fund’s infusion of the first tranche of a $2.9 billion four-year bailout loan in March 2023 played a pivotal role. The reform program accompanying the loan involved tax hikes and significant price increases, aligning with IMF conditions.
President Wickremesinghe, expressing optimism, stated, “Throughout this journey, challenges will gradually dissipate, life’s burdens will lighten, the economy will fortify.”
While recent data from the Central Bank of Sri Lanka indicates a more than six percent spike in prices last month, attributed to tax hikes complying with IMF conditions, it remains significantly lower than the peak of the crisis in 2022, where inflation reached nearly 70 percent.
Wickremesinghe emphasized the importance of learning from past mistakes to prevent their recurrence, underscoring the nation’s commitment to economic recovery.
