Wickremesinghe will present an interim budget within six weeks that will slash government expenditure ‘to the bone’.
Sri Lanka’s Prime Minister Ranil Wickremesinghe will take charge as finance minister as well, the president’s office has announced, and will lead talks with the International Monetary Fund (IMF) as the crisis-hit nation seeks a bailout.
“Prime Minister Ranil Wickremesinghe was sworn in as finance, economic stabilisation and national policies minister before President Gotabaya Rajapaksa this morning,” a statement from the president’s office said on Wednesday.
In an interview with Reuters on Tuesday, Wickremesinghe laid out his immediate plans for the economy, including presenting an interim budget within six weeks that will slash government expenditure “to the bone” and re-route funds into a two-year relief programme.
On Tuesday, the World Bank said it is not planning to provide any new financing to Sri Lanka until an adequate economic policy framework has been put in place.
Wickremesinghe told Reuters he hoped for a “sustainable loan package” from the IMF while undertaking structural reforms that would draw new investments into the country.
Initial discussions with the IMF ended on Tuesday. Earlier this week, IMF Managing Director Kristalina Georgieva said the lender was “working relentlessly” at a technical level on Sri Lanka.
Sri Lanka has also been officially declared in default by ratings agencies after the non-payment of coupons on two of its sovereign bonds. It has hired heavyweight financial and legal advisers Lazard and Clifford Chance as it prepares for the difficult task of renegotiating its $12bn in overseas debt.
The island nation of 22 million people is reeling under its worst economic crisis since independence in 1948, with a severe shortage of foreign exchange severely curtailing imports, including essentials such as fuel and medicines.
The turmoil comes from the confluence of the COVID-19 pandemic ravaging the country’s lucrative tourism industry and foreign workers’ remittances, ill-timed tax cuts by Rajapaksa draining government coffers, and rising oil prices.