WILL 2023 BE A YEAR OF HOPE?  

Fazmina Imamudeen ponders on what the new year could hold for us all

Sri Lankans will need to work together and put in a mammoth effort in 2023 to rekindle the economy and foster growth – and ensure that it is inclusive of and beneficial to all.

At the dawn of the new year, the economic climate in Sri Lanka is reasonably stable. This is because President Ranil Wickremesinghe and his government have been able to provide most of the essential items such as food, fuel, fertiliser, gas etc., and the sense of intense deprivation among Sri Lankans has abated to some degree.

In April last year, Sri Lanka informed its creditors that it would be defaulting on its external debts, which comprise International Sovereign Bonds (ISBs), as well as syndicated and bilateral loans worth about US$ 51 billion.

Thereafter, the government turned to the IMF and requested an urgent bailout package to help Sri Lanka obtain vital essential goods and limit the extent of its debt default.

However, the board of the International Monetary Fund has yet to approve the US$ 2.9 billion Extended Fund Facility (EFF) even though the government and the lender of last resort reached a staff level agreement in September.

The IMF is awaiting Sri Lanka’s debt restructuring proposal, which must be agreed upon by all its creditors. Unfortunately, progress has been slow due to China’s delayed response to the process.

In an article published in December regarding discussions held between the Managing Director of the IMF Kristalina Georgieva and Chinese authorities, the former notes: “According to the IMF, discussions with Chinese authorities were fruitful and the IMF sees space for a platform for more systematic engagement on debt issues where China can play an active role.”

There will be no multilateral debt restructuring even if it is offered. Creditors and investors will have more faith in Sri Lanka if its debt is restructured with bilateral and com­mercial lenders, and with the help of the International Monetary Fund.

One of Wickremesinghe’s aims is for the island’s GDP to reach its 2019 level by 2026. However, it’s unclear whether this is possible.

In his New Year message to the nation, the president noted that the country is looking forward to 2023 after having been through the darkest times and greatest tribulations.

Considering it to be a pivotal year for the economy, he urged all state sector employees to commit themselves to making Sri Lanka affluent in the year ahead. He asked his staff to not watch the clock, and put in extra time and effort to meet the nation’s goals.

In his speech, he praised the accomplishments of the government. By his account, it set out on a historic mission when he became president. Wickremesinghe wants to restore stability in Sri Lanka and admits that the government still needs to succeed in healing a bleeding nation.

He noted: “We haven’t solved all our economic problems but we’re now in a place where adequate fuel, food and fertiliser can be supplied. However, our programme doesn’t end here – 2023 is going to be the most important year.”

Since the pandemic, several setbacks have hit the education sector hard. The government will also be required to increase its investment in educational opportunities. To better organise the country’s educational infrastructure, 550 new school boards will have to be established across the island, and the number of educational zones will need to be increased to 120. Currently, there are only 100 educational zones in the island.

Under UNESCO’s watchful eye, Sri Lanka’s education system is expected to undergo a dramatic overhaul.

If state coffers are to grow in tandem with expanding economic activity and individual incomes, then the scope of taxation must be broadened and the efficiency with which taxes are managed needs to be improved.

And if the government wants to achieve foreign exchange liquidity and debt sustainability, it should focus on increasing exports, revitalising the tourism industry and garnering more foreign remittances.

The people of Sri Lanka need to pull together to re-build their country. The ultimate objective is to free the Pearl of the Indian Ocean from the chains that bind it, so that its full splendour can once again be appreciated by all.

As former US President Barack Obama rightly observed, “the best way to not feel hopeless is to get up and do something. Don’t wait for good things to happen to you. If you go out and make some good things happen, you’ll fill the world with hope; you will fill yourself with hope.”