Sri Lanka seeks global support

Nation faces difficulties in getting help without strings attached

Crisis-hit Sri Lanka needs a new functioning government to overcome its economic and political predicament, experts say.

It is hard for the Indian Ocean nation to rely on any immediate assistance from international monetary institutions, including the International Monetary Fund and World Bank, to save themselves, they said. Also, relief from these organizations has conditions attached that may negatively impact it.

"The ongoing political turmoil will adversely affect IMF involvement (in helping Sri Lanka) as the government is seen as unstable," said Bernard Goonetilleke, chairman of the Sri Lankan think tank Pathfinder Foundation. "The IMF involvement will be slow, approximately six months to kick in."

Sri Lanka's parliament is expected to elect a new president on Wednesday, and nominations for the presidency will be accepted on Tuesday. Parliament Secretary-General Dhammika Dasanayake informed legislators that nominations for the presidency must be submitted to him in writing.

Sri Lankan Prime Minister Ranil Wickremesinghe said he will contest for the presidency on July 20. He was sworn in as interim president on Friday following the official resignation of former president Gotabaya Rajapaksa.

Opposition leader Sajith Premadasa and legislators Anura Kumara Dissanayake and Dullas Alahapperuma have also announced their intention to be candidates for the presidency.

The parliament was informed of Rajapaksa's resignation on Saturday as his resignation letter was read to legislators.

Sri Lanka is experiencing its worst economic crisis in 70 years, with a severe lack of food, medicine, energy and production materials.

Sanctions placed on Russia by the United States and other Western nations have increased the prices of fuel and food on the global markets that have exacerbated shortages in the country.

Sri Lanka has also lost access to international capital markets after recently defaulting on its external debt, said Rajiv Biswas, APAC chief economist at S&P Global Market Intelligence.

Moreover, the US Federal Reserve increased its benchmark interest rate by 0.75 percentage points on June 15, making it harder for countries to raise funds or investments from global markets.

Ongoing talks

Sri Lanka is now in discussions with the IMF for an Extended Fund Facility arrangement, which will help it pay for its immediate needs and revive the economy, to continue negotiations.

The IMF paid a visit to Sri Lanka last month with no final agreement. Later, the prime minister stated the country was "bankrupt". Protests then broke out, forcing Rajapaksa to announce his resignation.

The IMF has undertaken field studies, held discussions and said it would help Sri Lanka, but that involves a process which requires time, Goonetilleke said, adding that it can be painful to the people of the country.

Goonetilleke also said the World Bank had expressed its view, citing its earlier statement, "until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka".

"The stance of the two international lending institutions is apparent," he said. "It is up to Sri Lanka to develop solutions and introduce financial discipline."

Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore Business School, said "we will need to see a stronger emphasis on Asian determinism－the fates and fortunes of countries have to rely, first and foremost, on self-dependencies".

Xinhua contributed to this story.