In 2022, Gotabhaya appointed Ranil as Prime Minister and Finance Minister based on Ranil’s promise that he could leverage his international connections to secure 4 to 5 billion US dollars for Sri Lanka. Previously, former Finance Minister Basil Rajapaksa had obtained 4 billion dollars from India, and Gotabhaya had negotiated a one-year grace period for Sri Lanka’s debt to China, with China also depositing 1.4 billion dollars into Sri Lanka’s foreign reserves.
Ranil assured Gotabhaya that he could procure an additional 5 billion dollars from Japan. Impressed by this promise, Gotabhaya promptly appointed Ranil to the position. However, once in office, Ranil did not fulfil his promise to bring in the 5 billion dollars. Realizing that Ranil’s assurances were false, Gotabhaya was eventually forced to resign from the presidency and leave the country. Ranil then ascended to the presidency but has yet to secure the promised 5 billion dollars, or even 500 million dollars, from Japan.
‘Why did Ranil restructure debt and bring good news…?’
Regardless of who holds the presidency in Sri Lanka, debt restructuring is manageable if certain conditions are met. India, Japan, and the Paris Club indicated their willingness to restructure Sri Lanka’s debt when Gotabaya sent then-Finance Minister Ali Sabir to the IMF. Indian Finance Minister Nirmala Sitharaman played a key role by meeting with the IMF Chief on behalf of Sri Lanka to request assistance.
“However, Ranil managed to balance China beautifully…”
During Gotabaya’s tenure, China granted Sri Lanka a one-year grace period for its debt and deposited 1.5 billion dollars into Sri Lanka’s foreign reserves. After Ranil became President, China extended the grace period.
In the two years since Ranil became president, Sri Lanka has only received the IMF loan instalment and additional funds from the World Bank and the Asian Development Bank. These would have been disbursed even if Gotabaya were still president, provided IMF conditions were met.
Sri Lanka has a foreign debt of 58 billion dollars, of which Ranil has only restructured 10 billion dollars.
‘And the other $48 billion?’
There is still no agreement on that $48 billion.
The true story is that if a president with a mandate had been appointed and an all-party government established when Sri Lanka went bankrupt, it would have been possible to restructure the debt more favourably for Sri Lanka. The 10 billion dollars restructured by Ranil could have been done under better conditions. Sri Lanka missed this opportunity when the Rajapaksas made Ranil president.
For other bankrupt countries, the IMF often delays loan instalments and debt restructuring to create a favourable environment. For example, Pakistan refused to fulfil some of the IMF conditions. Sri Lanka, however, complied with all IMF conditions and bilateral creditors’ requirements. Ranil’s positive outcome for Sri Lanka would have been a significant debt cut or receiving 4.5 billion dollars in financial aid.
Since becoming president, Ranil has been seeking a victory to announce his presidential candidacy, aiming for a triumph that could weaken the Podujana Peramuna and Samagi Jana Balawega. Historically, in Sri Lankan politics, state leaders have broken parties and removed MPs to win elections by defeating the opposition. Ranil’s biggest challenge is to secure votes. If he believes that restructuring 10 billion dollars of debt in a country with 58 billion dollars in foreign debt will secure his election victory, it is an unrealistic expectation.
In 2002, Ranil’s government successfully promoted the LTTE peace effort internationally, securing a promise of a 4.5 billion dollar aid package. Had Sri Lanka received this aid, it might have avoided its current bankruptcy. However, President Chandrika, Mangala Samaraweera, and the JVP conspired to dissolve the government, preventing the aid package from reaching Sri Lanka. In the 2004 general elections, neither Ranil nor the UNP could effectively promote this aid package, leading to their defeat.
“Ranil, who failed to win votes after marketing a 4.5 billion dollar aid package, how can he market debt restructuring with two lakh votes…?”
A poster campaign in Sirikoth suggested that before appointing Ranil as prime minister under Gotabaya, Ranil must be liked whether he likes it or not. This implied that even if the public did not favour Ranil if the Rajapaksas did, the people would have to accept him. However, in the next presidential election, the candidate chosen by the people must be someone they genuinely like, regardless of Ranil’s preferences.
