The Hon. Sajith Premadasa - Leader of the Opposition

¶ 01 Hon. Deputy Speaker, let us ask the apparel sector — Hydramani, Brandix, MAS Holdings — where the dollars have gone. Plants opened under the 200-factory programme have closed and relocated abroad. I regret the Deputy Minister of Finance is not in the House at this crucial moment.

¶ 02 I propose an urgent, practical step: immediately commence negotiations for an IMF successor programme, effective seamlessly after the current EFF ends in March 2027. With the rupee depreciating, challenges are mounting. The IMF target for reserves is US$ 14.2 billion; we currently have about US$ 7 billion, including non-usable swap components, implying even lower real usable reserves. To reach US$ 14.2 billion, we would need roughly US$ 600 million net additions monthly, while recent months averaged around US$ 60 million. Hence the necessity of a successor programme.

¶ 03 Fuel prices (e.g., Octane 92) have risen ~39% over four months. In 2022, Octane 92 peaked at Rs. 470/l; today it is Rs. 410 — still room for further increases if pressures persist. Over the past 12 months, the rupee has depreciated ~9.2%. Year-on-year tourism earnings are down ~17%. Remittances exceeding US$ 8 billion are welcome, but 60% come from GCC countries, where construction is weakening due to regional conflict — a risk to future inflows.

¶ 04 When the current IMF programme ends in March 2027, Special Drawing Rights access linked to the arrangement expires, IMF oversight lapses, grace periods end, and from 2028 we must pay principal in addition to interest — US$ 3–4 billion annually — against reserves of only US$ 7–8 billion. Without a negotiated successor arrangement extending timelines and ensuring buffers, we risk a severe crunch. Begin talks now to secure better terms, extend timelines, and protect about 22 million citizens through a robust social safety net aligned with any new IMF framework.

¶ 05 Fuel, medicines, and industrial inputs draw down reserves; with oil moving towards US$ 110/bbl, import cover can compress below three months, raising balance of payments risk. Historic evidence (e.g., 1930s Great Depression dynamics; Asian Financial Crisis analyses) suggests that ~25% oil price jumps, sustained, can lead to BoP stress within 6–9 months.

¶ 06 Recent fraud incidents — NDB (Rs. 13.2 billion), a US$ 2.5 million Treasury cyber incident, Sri Lanka Posts US$ 625,000 missing payment, SriLankan Airlines INR 22 million fraud, People’s Bank Rs. 656 million remittance error — weigh on investor confidence and sovereign ratings. Mixed signals — the President acknowledging potential further depreciation, and the CBSL Governor stating future conditions are uncertain — deter FDI. We urge the Government to convene all stakeholders for a comprehensive review and to start IMF successor negotiations immediately so that from April 2027 a programme is in place.

¶ 07 Thank you.