Sri Lanka President seeks unity govt to save economy

COLOMBO • Sri Lanka's new President, Mr Ranil Wickremesinghe, has formally invited MPs to join an all-party unity government to revive the bankrupt economy by undertaking painful reforms, his office said yesterday.

Mr Wickremesinghe took office last month after public anger over the island nation's worst economic crisis forced his predecessor Gotabaya Rajapaksa to flee the country and quit.

In a meeting on Saturday with the influential monks of the Temple of the Tooth in Kandy, one of Buddhism's most sacred shrines, Mr Wickremesinghe outlined his plans.

"As the President, I wish to start a new journey," Mr Wickremesinghe was quoted as telling the monks in his first meeting with the powerful Buddhist clergy since taking office. "I would like to get all the parties together and go on that journey as well as to form an all-party government."

He has written to all lawmakers asking them to join a unity government.

A former opposition MP, Mr Wickremesinghe, 73, took up the premiership for the sixth time in May after Mr Rajapaksa's elder brother Mahinda resigned and there were no other takers for the job.

Mr Wickremesinghe went on to become the President after Mr Gotabaya Rajapaksa escaped on July 9 when tens of thousands of protesters angry at the economic crisis stormed the presidential palace. He fled to Singapore, from where he resigned, and Mr Wickremesinghe became interim president and later won a vote in Parliament confirming his ascension.

Sri Lanka's 22 million people have endured months of lengthy blackouts, record inflation and shortages of food, fuel and medicines. Since late last year, the country has run out of foreign exchange to finance even the most essential imports.

In April, Sri Lanka defaulted on its US$51 billion (S$70.4 billion) foreign debt and opened bailout talks with the International Monetary Fund (IMF).

On Saturday, Mr Wickremesinghe said an agreement with the IMF to help pull the country out of its economic crisis had been pushed back to next month because of street protests over the past weeks, the Associated Press reported. He said he had initially aimed to reach an agreement by early this month but talks with the IMF on a rescue package had slowed down, the report said, citing a Saturday speech.

The Finance Ministry last Friday said Sri Lanka had resumed bailout discussions with IMF after the new government took office and talks were highly successful. The country has US$12 billion overseas debt with private creditors.

Last Friday, the World Bank said it would not offer new funding to Sri Lanka unless the country carried out "deep structural reforms" to stabilise its crashing economy.

"Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka," the lender said in a statement. "This requires deep structural reforms that focus on economic stabilisation, and also on addressing the root structural causes that created this crisis."

During his meeting with the monks on Saturday, Mr Wickremesinghe said the economy would decline further this year with a contraction of 7 per cent, but expected a recovery next year.

"I am working to re-stabilise this economy and build the economy in such a way that the country can be developed by 2023, 2024.

"It is a difficult task. But if you don't do it now, it will be more difficult. We should think about whether we should try to cure the patient by giving medicine or let the patient die without giving medicine," he added.

He said inflation, currently running at 60.8 per cent, could go up further.

After his election as President, Mr Wickremesinghe, while ordering security forces to clear protest sites, has appointed an interim Cabinet leaving the door open for others to join.

He has called a new session of Parliament from Wednesday and is expected to expand the 18-member Cabinet to accommodate members from opposition parties.

AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS