Reforms crucial but can’t ignore the poor, says Sri Lankan FM ahead of IMF talks

Rajapaksa govt ‘prepared to take political risks for country’s future’

COLOMBO

Sri Lanka’s economic recovery will depend on reforms undertaken with the IMF’s support, but the government will not ignore the country’s poor, Finance Minister Ali Sabry said.

The recently appointed Minister spoke to The Hindu ahead of his departure to Washington DC, where he will lead the Sri Lankan delegation in negotiations with the International Monetary Fund. “We have seen huge cuts to the country’s revenue and are trying to recover from the current economic crisis. Reforms are going to be crucial,” he said.

Mr. Sabry, who served as Justice Minister in the former Cabinet, stepped down with his Cabinet colleagues early in April, amid mounting pressure from citizens demanding that the President, Prime Minister and their relatives in office step down for “mismanaging” the crisis. President Gotabaya Rajapaksa soon appointed him as Finance Minister in a “new”, four-member cabinet. Mr. Sabry reportedly resigned again, but it was not accepted by the President.

With Sri Lanka deciding to default on its foreign debt totalling about $ 50 billion dollars, Colombo is counting on an IMF programme for improved chances of borrowing in the international market. Sri Lanka has received IMF support at least 16 times in the past.  

On what Sri Lanka would put forth to the international financial institution, expected to extend support based on tough conditions, Mr. Sabry said: “We believe there is a need for a poverty alleviation programme. We definitely need a safety net for the poor. We cannot ignore the poor,” he said. According to a recent World Bank report on Sri Lanka, the pandemic years saw at least 5 lakh people fall below the poverty line, owing to severe job and income losses.

It remains to be seen how the government, which was earlier reluctant to seek IMF assistance, might now reconcile the Fund’s likely conditionalities of fiscal discipline and prudent state spending, with growing public resentment.