President Gotabaya Rajapaksa’s address to the nation on Wednesday took a hopeful tone as he urged all citizens to be patient and keep trust as the Government navigates the unprecedented economic crisis.
He acknowledged the difficulties people face at present with the shortage of essential items and price hikes as well as gas and fuel shortages on top of power cuts. The President said although the situation erupted due to reasons beyond the control of the Government, he said they will make “maximum possible efforts” to resolve them. He said this situation will be managed successfully as with the battle against terrorism.
Responsibility
The President said: “I accept responsibility for the actions I take” and added that he is ready to take “tough decisions” in bringing the people out of this present plight. He said he would continuously monitor the National Economic Council and the Advisory Committee to ensure that decisions are implemented. “I request you to have faith in the actions I will take on behalf of the people,” the President said.
President Rajapaksa reminded the people that Sri Lanka is not the only country to undergo difficulties as the Covid-19 pandemic engulfed other parts of the world too. He said other countries too face increasing shipping costs, rising commodity prices and shortage of certain goods due to the pandemic, which are “beyond our control”. However, he said the Government has adopted concessionary initiatives for the benefit of the people.
“This crisis was not created by me. When those who contributed to the creation of this crisis are criticising the Government in front of the people today, I am attempting to immediately resolve this crisis and provide relief to the people,” he said.
He acknowledged that in a such as this, it is the responsibility of the politicians and intellectuals to collectively seek solutions.
Forex crisis
The President explained the foreign exchange crisis and the Government’s approach to solving it. He said the target is to reduce the trade deficit to US$ 7 billion.
“The projected export earnings for this year were US$ 12 billion, before the rupee was floated. According to the data of the past two months, we have to bear US$ 22 billion as the import cost this year. Accordingly, this will result in a trade deficit of US$ 10 billion,” he said.
“Based on recent data,” he added, “this year, we will receive about US$ 3 billion from tourism, as well as export services such as information technology, and US$ 2 billion from remittances from expatriate workers. Accordingly, the trade deficit will be US$ 5 billion. Meanwhile, US$ 6.9 billion will have to be paid in loan installments and sovereign bonds this year. Then there will be a deficit of US$ 11.9 billion. We expect to generate US$ 2.5 billion from other grants and investments. Accordingly, there is a total deficit of US$ 9.4 billion in foreign exchange. However, once the rupee is floated, export earnings are expected to reach US$ 13 billion. This will also reduce the cost of imports from US$ 22 billion to US$ 20 billion. If that happens, the trade deficit could be reduced to USD 7 billion,” the President said.
He was also hopeful that US$ 4 billion can be expected by providing export services and US$ 5 billion in remittances from expatriate workers. Accordingly, the trade deficit will be US$ 2.4 billion, he said.
IMF
The President added that discussions are ongoing with international financial institutions, friendly countries and other parties regarding the repayment of loan installments and adopting new methods beneficial to the country.
He added that the Government will work with the International Monetary Fund (IMF) to find ways of paying off annual loan installments, sovereign bonds, and so on. This was decided after assessing the pros and cons.
The President added: “Due to some decisions I have taken in the recent past, we were able to control the import expenditure to a great extent. We suspended importing vehicles two years ago because we saw this issue in advance. In addition, we encouraged local industries. We also stopped the imports of many non-essential food items and took steps to cultivate those crops in our own country. Now we can witness the successful results of those initiatives.”
He said the rising fuel cost in the world market has a huge impact on Sri Lanka since the country depends on fuel for most industries. As a solution, he said the Government is in discussions with stakeholders on shifting to renewable energy sources and called on all to use fuel sparingly. Over 20 percent of the country’s import expenditure is spent on fuel while in the last few months, fuel prices have more than doubled. “This is the reason why the increase in fuel prices in our country was inevitable. Fuel is widely used in our country not only for vehicles but also to generate electricity,” the President added.
Positives
The President’s highlighted some positives in the tourism industry and ICT sector where revenue generation seemed to have picked up over the past couple of months. He added that the increased provision of infrastructure facilities in the IT and telecommunications sectors has led to these developments.
The President encouraged all to think positively and face challenges as one nation, drawing on past experiences with foreign invasions, famine, natural disasters and terrorism. The latest challenge of Covid-19 was successfully overcome drawing accolades from the international community. “Therefore, I urge all of you not to be discouraged but to unite as a nation to overcome this crisis.”
He said: “You requested me to build a secure, disciplined, and a modern developed country, as well as provide a better education for your children. Almost two and a half years of my tenure were devoted to protect you and your child from the pandemic. I will dedicate the remaining period of my tenure to accomplish the original goals.”
The President concluded after urging the Cabinet, Parliament and public officials to work together as a team to overcome the challenges the country faces at present.