Japan emphasizes need for continuity with IMF programme

• Hails appointment of Siriwardana as Finance Secretary

By Kelum Bandara 

Japanese Ambassador Mizukoshi Hideaki who offered insights from Japan on economic recovery based on its experience emphasized the importance of pressing ahead with the programme with the International Monetary Fund (IMF) and hailed the new government’s reappointment of Mr. Mahinda Siriwardana as the Finance Secretary as a step for policy continuity.   

Japan is the second largest bilateral creditor to Sri Lanka. Japan, along with India and France, co- chaired the Official Creditors Committee in debt restructuring.   

The ambassador said the agreements with the IMF serves as backing for Sri Lanka’s commitment to pursuing rational and consistent economic policies from an international perspective.   

Referring to Japan’s experience, he said most reforms in Japan that were achieved would not have been possible without pressure from the international community.   

“The reformist leaders of Japan, whether during the Meiji restoration period or under occupation after WWII, had made wise decisions for the future of the country, decisions under foreign pressure. Today, Sri Lanka is trying to reform the economic system under the agreement with the IMF. Reforms such as tax reform, electricity reform, or SOE (state owned enterprises) reform may be challenging and not always popular to citizens. However, viewing the utilization of such external pressure for the betterment of the country should not be seen as a weakness but as a testament to the wisdom of leaders. India which went into financial crisis in 1991, went through structured adjustment of the IMF and World Bank. The economic reforms which were achieved at the time transformed India into a fast-growing economy. From an international perspective, agreements with the IMF serve as backing for Sri Lanka’s commitment to pursuing rational and consistent economic policies,” he said.  

The ambassador said Japan recently announced the resumption of 11 yen loan projects that have been suspended since May 2022 due to the default of Sri Lanka ahead of any other foreign country.  

“It is important to recognize that this resumption was done on the basis of Sri Lanka’s agreement with IMF and official creditor countries,” he said.   

Emphasizing the need for the development of competitive industries, he said Sri Lanka is now at a crossroads. He said the economic crisis can be utilized as a golden opportunity to transform and grow.    “Japan’s experience of the economic miracle shows that it is important to formulate its industrial policy to foster a competitive export industry. What can be the strong and competitive industries for Sri Lanka?   

Sri Lanka’s economy has stabilized under the IMF programme. The inflation was contained to single digit and the GDP growth turned positive from the 4th quarter of last year. I commend the immense efforts of the government and the people of Sri Lanka to bring about this economic stability in a very short time. However, once Sri Lanka lifts its import restriction, there is a danger of foreign currency shortage happening again.