Will JVP/NPP leaders respond to this, while dabbling on populist politics?

Half this year 2025 has also been spent with no answer to how Sri Lanka would begin settling its restructured foreign debts and interests on them, from year 2028 August. When President Wickramasinghe led government began discussing its foreign debt restructuring with the IMF framed within IMF conditions, Sri Lanka had amassed a massive USD 56,092.95 million by end third quarter 2024, the time we were tied to presidential election campaigns.

The last quarter with parliament elections also slotted in, the new President Anura Kumara Dissanayake (AKD), sworn in late September last year, had no time to intervene in the economy. Thus the fourth quarter of the year 2024, the first 03 months of President AKD’s rule closed in December with foreign debt increasing to USD 57,133.49 million. An increase of USD 1,040.54 million in 03 months. Sri Lanka had by then agreed with IMF to restructure USD 12.55 billion of its total debts.

According to the IMF agreement signed by President AKD’s NPP government, Sri Lanka has to begin repayments from 2028 August. That would be under AKD’s NPP rule.   

Meanwhile Sri Lanka has to settle this year 2025, a total of USD 2,454 million in routine debts including USD 1,085 million as interest, according to Deputy Minister of Economic Development, Anil Jayantha. That, excluding the annual foreign trade deficit the GoSL has to settle every year.

In year ending December 2024, the total foreign trade deficit was USD 6,100 million with an import bill of USD 18,841 million, an increase of 12.1 percent over the previous year, despite fuel imports decreasing. This year 2025, the trade deficit in month of May was USD 473 million, according to the CBSL figures published. This was an increase of 16.9 percent over previous year trade deficit in month of May.

We are in the midst of a two year Middle East armed conflict, that may drag on, even if it does not lead to a cease fire between Israel, Iran and the Hamas armed organisation in Palestine. Uncertainties looming in Middle East may not provide the dollar remittances from migrant labour the government estimated for this whole year and received during the past 05 months. Thus, GoSL may have to face a serious increase in the external trade deficit, if a miracle does not make a change. Assumed the increase would be around 10 percent over the previous year 2024, the external trade deficit may reach or even go beyond USD 6,710 million. To this, has to be added the annual routine debt of USD 2,454 million disclosed by Deputy Minister Jayantha in parliament, to have the total commitment of the GoSL for year 2025. That then would be USD 9,164 million in 2025.

As much as the NPP government, the SJB in Opposition is inefficient and intellectually timid too in responding to governance issues. Thus there is no serious, intellectual debate in how the government could earn the extra USD 9,164 million needed to bridge the trade deficit this 2025. The IMF has no proposal for increased exports to fetch extra dollars. They are only focussed on axing State expenses and increasing “Rupee income” with increased taxing. The IMF thus approved import of luxury vehicles as a source of Rupee income from taxes, wholly ignoring the fact, GoSL would have to burn a heavy load of hard earned dollars including remittances from migrant labour. From January this year till beginning of month of May, Sri Lanka had spent USD 200 million for vehicle imports, according to CBSL Governor Dr. Nandalal Weerasinghe. He told media on 22 May, the total value of Letters of Credit opened by then for vehicle imports was USD 450 million. And the NPP government seems happy with a tax collection of Rs.136 billion by end of April.

Now, what is important? Collecting 136 billion rupees, form spending USD 200 million for vehicles, that would need extra dollars for extra consumption of fuel, with greater traffic congestions on urban roads? Fact remains, the IMF has no programme, no proposal to increase the export and service income despite all tax concessions, privileges and State patronage for FDIs and for tourism development given by the State at the expense of the tax payer. The annual gap between import trade cost and the export trade income remains around USD 7,000 to 8,000 million with another USD 2,000 million required for debt servicing.

This should be stressed without ambiguity. The required extra annual income in many millions of dollars cannot be earned with Ministers reducing numbers in their vehicle fleet, from not taking residency in official bungalows, from reducing State expenses in patches, from Ministers stepping into paddy fields carrying a mammoty, or by indicting few officials and politicians of the previous regime.

We need a well designed national development plan that can guarantee annual increase in dollar exports to bridge a trade deficit of about USD 10,000 million. Will the JVP/NPP leadership tell the People what their plan is for such income earning, while going round with their populist propaganda stuff?

– Kusal Perera