Prime Minister Dinesh Gunawardena

Prime Minister Dinesh Gunawardena yesterday formally informed the Parliament of the Staff-Level Agreement with the International Monetary Fund (IMF) for $ 2.9 billion Extended Fund Facility over a period of four years.

“This is an important milestone in the attempt to revive the economy which is faced with a deep recession,” Gunawardena told the Parliament. He added that after this Staff-Level Agreement there is a requirement to obtain financial assurances about debt sustainability from the countries that provide loans to Sri Lanka.

He also said the Government will further keep the Parliament informed about the agreement reached with the IMF. Following is the full statement made by the Prime Minister.

The Government of Sri Lanka has succeeded in entering into a Staff-Level Agreement with the International Monetary Fund, under which a sum of $ 2.9 billion Extended Fund Facility will be granted to Sri Lanka, which will be provided over a period of four years.

This is an important milestone in the attempt to revive the economy which is faced with a deep recession. After this Staff-Level Agreement there is a requirement to obtain required financial assurances about debt sustainability from the countries that provide loans to Sri Lanka.

After that it will be necessary to obtain the approval of the IMF Executive Board. Subsequently, the next round of official bilateral level discussions will commence.

At the same time this will provide space for Sri Lanka to obtain loans from our bilateral and multilateral development partners. Through this step, we will be able to obtain funds for reviving the economy and bring normalcy to the country.

The agreement reached today is a result of our constant efforts. However, you must keep in mind that this is only the beginning. We have a long way to go. In the future we will have to make major sacrifices in order to find the solutions to the factors that led to this economic debacle.

For several decades, we have consumed much more than our savings. Hence, our debts have increased in a massive proportion.

Due to several factors the income of the country has declined. As a result, we were unable to increase the investment in important sectors such as health, education, and public transport.

We have consumed a huge amount of fuel and electricity over the years. This has led to a huge trade deficit and weakened our foreign exchange parity.

For several decades, State-owned enterprises have not been managed properly. Hence, they made huge losses. It has resulted in a large burden on the people. As a result of the weak and wrong policy decisions the country was unable to pay the loans and it has pushed the economy into a deep crisis situation.

To come out of this problem we have to take similar deep and comprehensive economic reforms.

Whoever is in power, these reforms will have to be implemented. Only through that a sustainable and comprehensive development could be achieved.

During the last five months the Government has prepared a reforms program. That program has been agreed at the official level meeting now. The biggest challenge is to implement these difficult reforms.

The Government is aware that reforms are difficult to implement in the circumstances where the people are faced with economic difficulties. The most essential requirement is to understand why these reforms are necessary to save the country in the mid-term and long-term and then attain development eventually. I wish to remind you that the President and our Government is absolutely committed to bring back this bankrupt country to the path of progress and ensure a bright future for our future generations.  

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