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Sri Lankan Prime Minister Ranil Wickremesinghe last week said the country’s economy needs to be restructured as the sources of foreign exchange earnings are limited and hence an imbalance in the Balance of Payments (BOP) cannot be corrected without a major restructure. Addressing a press conference held on the sidelines of the 46th Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland, the Premier thus indicated that Sri Lanka was seeking a new facility from the International Monetary Fund (IMF) in order to face any contingency during the restructuring process in the wake of global economic uncertainty.

“There has been certainly a drop in the revenue collection in the country and it shows the mechanism is not working. We are also being buffeted by what is happening internationally. Certainly the global economy has not recovered fast enough and then it is compounded by the fact that China has now decided now that they want to be a consumption driven economy,” the Sri Lankan Premier said on Wednesday.

For the first time in the country’s history, Wickremesinghe was an invitee to the WEF attended by over 40 heads of state and 2,500 economists and expected to conclude on 23 January.

“We want to be strong enough to face any contingency and carry out our restructuring because everyone has found out that in the last few months they had to revise their budgetary targets as we face global uncertainty. If need be we will come out with an appropriate arrangement with the IMF,” Wickremesinghe said.

When questioned on the status of the negotiations with the IMF, Wickremesinghe noted that talks have still not concluded and he was scheduled to meet with the Managing Director of the IMF in Davos.

“We are talking with the IMF what is the programme we should have. Fiscal consolidation and value for money will be one of the important parts of the Budget. The depreciation of the Asian currencies starting with the Chinese currencies mean that we might have to re-look at our figures and that is not only in Sri Lanka but a global phenomenan. Where money is needed we will look at the bond markets but overall we would like to see more and more private sector investments over a period of time,” he said.

Speaking on Chinese funded projects in Sri Lanka, Wickremesinghe said the government has decided to go ahead with most of the stalled projects including the controversial Port City and development of the Hambantota Harbour but would encourage more Chinese investments into Sri Lanka.

“We would also like to see Chinese investment because infrastructure development wont alone take us forward. I think the Chinese government has also decided that manufacturing industries should move out and Sri Lanka is one of the locations for their industries to move out. We are looking at Chinese participation in the logistics hub of Sri Lanka as well as investments in the real estate sector,” the Sri Lankan Premier said.

Expressing views on the Paris climate conference (COP21) held in December 2015 Wickremesinghe whilst assuring the government’s commitment towards climate change,  announced that Sri Lanka will be establishing a Sustainable Development Council which will have oversight of all sustainable development legislation.

Economy needs  restructuring (1) Economy needs  restructuring (2)

Prime Minister met Prof. Klaus Schawb, Founder and Executive Chairman of the World Economic Forum
Prime Minister met Prof. Klaus Schawb, Founder and Executive Chairman of the World Economic Forum