Economic crisis: Ceylon Chamber urges govt. to reach out to the IMF

The Ceylon Chamber of Commerce, amidst a deepening economic crisis now exacerbated by the shortage of fuel resulting in long queues at fuel stations and debilitating power cuts, on Wednesday urged the Government to enlist IMF support.

“… the Ceylon Chamber of Commerce urges the Government of Sri Lanka to commence a process of engagement with the International Monetary Fund (IMF) without any further delay to obtain their technical advice in managing the debt servicing as well as boosting foreign reserves. The chamber hopes that this engagement should result in a Debt Sustainability Analysis being carried out by the IMF which could pave the way for a pre-emptive debt restructuring programme,” the chamber said in a statement.

The plea came as power cuts (7.5 hours on Wednesday) have hit all productions sectors in the country while there is a diesel shortage to run generators at factories and other establishments.

The chamber said a systematic and methodical approach to restructure debt with the support of the IMF will help the Government to successfully manage its external debt obligations while ensuring the availability of much needed foreign exchange to support vital economic activity. This could ensure the allocation of scarce foreign exchange reserves towards the purchase of essential supplies such as fuel for electricity generation, transport of goods and persons and other industrial purposes without holding it back for debt servicing, it said.

The chamber noted with serious concern the adverse effects brought on its members and all sectors of the economy in general as a result of the ongoing interruptions to the supply of electricity coupled with frequent disruptions to the availability of fuel. It was of the view that these issues are all ramifications of the shortage of foreign exchange experienced by the country and believes urgently addressing the currency issue is the fastest way in which the power and energy issues can be tackled in the short term.

The chamber said it will also soon provide further recommendations on what other actions are needed specifically on power and energy sectors in the medium to long term in consultation with relevant experts.

“The chamber is concerned that the recovery seen recently in tourism and export sectors can be seriously hampered and economic growth slowed down unless urgent action is taken to eliminate the disruptions to the supply of electricity and fuel which is threatening to cripple all sectors of the economy. The chamber, on its own and together with other chambers, has, on numerous occasions, consistently advocated an engagement with IMF since the beginning of the COVID-19 pandemic in March 2020,” the statement said.