IMF talks continue despite political unrest

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Officials from the Ministry of Finance (MoF) and the Central Bank of Sri Lanka (CBSL) told Finance Today that talks with the International Monetary Fund (IMF) are ongoing despite the political unrest in the country.

IMF closely monitored the Sri Lankan situation.

They said the second round of talks with the IMF began successfully on Monday and would continue until 23 May 2022.

They said determining the sustainable debt level for Sri Lanka acceptable for the IMF would form the basis of the second round of talks.

Many political commentators are hopeful that the current political and social instability and unrest will level down in the coming weeks.

It is hoped that President Gotabaya Rajapaksa will step down in the near future, thereby handing over State power to an Interim Government led by Karu Jayasuriya, as agreed in the party leadership talks that have commenced.

The Central Bank Governor Nandalal Weerasinghe and Finance Ministry Secretary Mahinda Siriwardana briefed Opposition Leader Sajith Premadasa yesterday (10) on the economic situation. 

Premadasa tweeted: “We have always offered our unstinting support to overcome this crisis. It’s good to finally have a productive meeting with the CB Governor and Treasury Secretary. It is a given that we will take on any responsibility as long as it does not involve working with any crisis instigators.” 

Finance Today understands that the process of selecting financial and legal advisers for restructuring the external debt of Sri Lanka has been completed. Government of Sri Lanka (GoSL) recently floated requests for proposal (RFPs) seeking both Financial and Legal Advisers on its behalf to restructure the external debt of Sri Lanka.

Due to the resignation of the Prime Minister and Cabinet, however, the process of finalising the two advisers via Cabinet approval is presently stalled.

While the selection process is stalled in
Sri Lanka, the respective bondholders whose debt will be the subject of restructure and negotiation have already appointed their Legal Adviser and are said to be in talks to appoint their own Financial Adviser. Rumours were rife in the Market that Rothschild was pitching for this role as Financial Adviser for the Bondholders, thus potentially opposing the Government of Sri Lanka (GoSL) at the negotiations. Finance Today is unsure if Rothschild had also responded, as noted above, to the RFP floated recently by the Government of Sri Lanka seeking Financial Advisers to act on its behalf.

Joint Chambers call for appointment of Interim PM

Joint Chambers together with the Institute of Chartered Accountants of Sri Lanka called on the President to take immediate steps to appoint a competent person as the Interim Prime Minister and a small Cabinet of Ministers to be appointed in consultation with the Prime Minister acceptable to all leading political parties represented in Parliament.

“This must be done with immediate effect in order to take urgent action to restore law and order and economic activity in the country.

Further, it is abundantly clear that concluding the IMF staff level agreement in a timely manner as planned, could be jeopardised due to the absence of a legitimate government. While awaiting the IMF programme, it is critical that Sri Lanka secures bridge financing to help get through the next six months,” they said. 

They therefore:

=Call on all political parties to leave aside their political agendas and differences in order to support the formation of an Interim Government under a leadership accepted by all.

=Urge the expedition of much-needed constitutional amendment to repeal the 20th Amendment and abolishment of the Executive Presidency within a reasonable timeframe through a consensual approach.

=Request that the President respects the voice of the public and resigns immediately after the Interim Government is firmly in place.

=Appeal to the people of this country to remain calm and not resort to violence that will make it even harder for the country to emerge from this crisis. 

=Respectfully urge all religious leaders to advise the public on the need to desist from violence while expressing their voice in a peaceful manner as done so effectively up to yesterday. 

Statement issued by the following Institutions:

The Ceylon Chamber of Commerce, Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL), Joint Apparel Association Forum Sri Lanka (JAAFSL), Chamber of Young Lankan Entrepreneurs (COYLE), International Chamber of Commerce
Sri Lanka, The National Chamber of Commerce of Sri Lanka, Exporters Association of Sri Lanka, Chamber of Construction Industry of Sri Lanka, Women’s Chamber of Industry and Commerce (WCIC), AmCham Sri Lanka, Ceylon National Chamber of Industries (CNCI), Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).

By Ishara Gamage