In an interview with Nisthar Cassim, Chief Editor of Daily FT, President Ranil Wickremesinghe outlined his strategic vision for Sri Lanka’s future amidst the ongoing election campaign. Emphasizing the need for economic reform and stability, Wickremesinghe highlighted his administration’s focus on innovative policies such as an export-oriented economy, agricultural modernization, and enhanced financial markets. He accentuated the importance of governance reforms alongside economic stabilization and expressed commitment to addressing challenges like the brain drain through educational advancements. As Sri Lankans approach the polls, Wickremesinghe’s detailed plans reflect a concerted effort to steer the nation towards growth and resilience in the face of ongoing economic and governance challenges. – Editor
Excerpts of the interview;
When asked about the current election campaign, President Wickremesinghe described it as “very exciting” and emphasized the importance of determining Sri Lanka’s path following the 2022 economic crisis. He expressed concern about his opponents, stating, “My opponents really have no plans. They want to just carry on with the same old system.”
He noted that while many believe Generation Z is inclined to vote against the government, “this is still an open election where people are listening and they have to decide what their future will be.” He highlighted his administration’s new ideas, including “an export-oriented economy, women’s empowerment law, social justice commission, parliamentary standards law, the 87 recommendations of the debt commission, and agriculture modernization.”
Turning to capital markets, President Wickremesinghe discussed how macroeconomic stability could be leveraged to attract more investors. He said, “Firstly, investors are looking for stability, which they will have after the elections. Implementing our economic transformation law and other measures will show that we are committed to maintaining a stable economy.”
We are revisiting the strategy due to dissatisfaction with the previous bids for Sri Lankan Air
Regarding the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF), he suggested that “there should be a board of trustees appointed together with employees’ organizations and employers’ organizations with the right to invest outside Sri Lanka.” He clarified that this board would include trade union representatives, adding, “We already have a trade union representative, but we need to address some issues with them.”
On attracting foreign investors to the stock market, he emphasized, “We aim to open up to the world so that we become part of the global system. It’s crucial to get foreign investors to invest in our market; otherwise, we won’t have the necessary funds to run the economy and make investments.”
Addressing the restructuring of State-Owned Enterprises (SOEs), he noted that while there had been expectations of raising three to four billion dollars through SOE sales, “I didn’t expect that within two years. If we can achieve it in the coming year, that will be sufficient, especially given our focus on debt restructuring.” He also mentioned the possibility of listing some SOEs, saying, “We have come through on some of them but held back until after the elections.” Regarding the future of SOE restructuring post-election, he affirmed, “Yes, it will gather more momentum. We are considering a holding company model to improve transparency and accountability.”
On the topic of SriLankan Airlines, he revealed, “We are revisiting the strategy due to dissatisfaction with the previous bids. We are exploring new options, including discussions with local companies.”
Regarding the demutualization of the Colombo Stock Exchange, he acknowledged that progress had been slow, attributing it to a focus on other economic issues.
Discussing the Port City project, he noted, “There have been over 100 companies expressing interest. We are working on converting it into the Colombo Financial Zone, which would be an offshore jurisdiction to attract more investments.”
“Sterling and Sherman have already drafted the legislation. We need to draft the subsidiary legislation, but I wanted to delay this until after the election to give people ample time to discuss and understand its implications,” added.
Addressing the challenge of making Sri Lanka more attractive for investors compared to similar projects in India and offshore financial centers, the President explained, “One, it’s a niche market. Secondly, the first investors in any country are those who have moved their money abroad and are now looking for a place to bring it back. This provides a window for them to return their investments; otherwise, it might not come back at all. We need to develop this niche market for certain sectors.”
He mentioned specific areas for development, noting, “We need to focus on areas such as insurance and other niche markets. We are committed to making sure the Port City becomes a success.”
When asked about the government’s commitment to the Port City project, the President assured, “We are fully committed. However, none of this can progress until we complete the debt restructuring process.”
Turning to the engagement with youth, particularly their interest in cryptocurrencies, he acknowledged the growing demand. “There has been significant demand, especially from the youth. We will have further discussions in the country before making a final decision, as the youth are pressing very hard for this.”
Regarding exports and the trade sector, the President outlined his strategy: “We need to accelerate exports by focusing on both export markets and increasing export manufacturing in Sri Lanka. Foreign investors often bring their supply chains with them, which we should encourage. We need to add value in areas such as tea and apparel, and attract investors who will bring their markets with them.”
Sri Lanka has lagged behind in e-commerce and digitalization.
On free trade agreements (FTAs) and international engagement, he stated, “We are advancing with bilateral FTAs and are working towards implementing the Regional Comprehensive Economic Partnership (RCEP). We aim to cover the Bay of Bengal and eventually expand to East Asia, Australia, and Europe to create a large market for investments.”
Addressing institutional reforms, he noted, “We are addressing the merger of the Board of Investment (BOI) and Export Development Board (EDB) as part of the economic transformation bill. Customs reforms are also underway. We need major reforms in the revenue sector to improve Sri Lanka’s revenue collection.”
Discussing digitization, he highlighted the need for progress: “Sri Lanka has lagged behind in e-commerce and digitalization. We are moving forward with a digitalization act despite opposition, especially in the government sector.”
Turning to tourism, a sector he is passionate about, he emphasized the need for collective effort: “We need to increase tourism from 2.5 million tourists spending about $150 a day to 5 million tourists spending $400 per head. We are developing significant areas like Irana Villa in Galle, Ikkadu, Dedua in Bentota, and expanding in the eastern province, Kandy, Anuradhapura, and Jaffna. This effort involves the government, the tourism industry, and international investors.”
Regarding visa outsourcing and the implementation of visa-on-arrival policies, he addressed concerns: “Visa-free entry needs to be approved by Parliament, which will meet on October 8th. The shortage of passports will be addressed by October and early next year. While we faced challenges with the old system and issues with passport specifications, we are working to resolve them.”
Between now and October 8th, there are concerns within the tourism industry about potential cancellations. When asked if there is an alternative arrangement until then, the President responded, “It doesn’t matter if Parliament is summoned earlier, which would only be a few days. It’s better for the government to give a commitment. All parties are agreed that it will be addressed from October 8th. It’s merely a legal formality.”
Addressing criticism of the IMF program, the President acknowledged the impact of austerity measures on poverty levels: “Poverty levels rose to 25 percent due to the economic breakdown in 2022. While the situation has improved, it is not yet resolved. The IMF agreement aimed to strengthen the rupee, which has improved from 370 to 300. However, the extent to which we can further strengthen the rupee is still under discussion with exporters.”
He noted, “Prices for many items have decreased by 10 to 40 percent, and incomes are gradually rising. We are working to narrow the gap between expenditure and income, and we expect to make significant progress by next year.”
Our borrowing is limited to 5% of GDP. Including all proposals would increase the deficit significantly. If we exceed the IMF’s limits, the rupee could depreciate further.
When asked about the possibility of starting to offer more relief, the President stated, “Flexibility is possible. While some in society may still need to be cautious, we can afford to be more relaxed. This is a consumer economy, and adjustments can be made.”
Regarding potential renegotiations of the IMF agreement, he clarified, “Renegotiations are not possible. While benchmarks cannot be changed, we can adjust how we meet them. For example, increasing debt or introducing small taxes could affect overall tax accumulation and complicate revenue collection.”
The President outlined fiscal constraints: “Our borrowing is limited to 5% of GDP. Including all proposals would increase the deficit significantly. If we exceed the IMF’s limits, the rupee could depreciate further.”
On accommodating salary increases within the budget, he said, “The budget can accommodate it. We have an understanding with the IMF that allows for adjustments as long as they are within agreed parameters. Higher revenue collection this year also supports this.”
Addressing equity in taxation, he assured, “We are addressing capacity to pay and equality in taxation. Strengthening the rupee will help alleviate the cost of living, and we will adjust taxes accordingly.”
Regarding the potential introduction of a wealth tax, he confirmed, “There will be a focus on wealth tax as part of the IMF program.”
On public sector reforms, he discussed the need for restructuring: “We can manage which vacancies to fill and which to hold. The focus will be on restructuring the public service, with additional investments in human resource development. We aim for gradual changes without job losses.”
Our primary measure is to continually train more individuals.
He added, “We are considering allowing staff under 41 years of age to pursue recognized courses while retaining their full pay. This will help them fit into the new structure. If a few thousand staff take this opportunity, it will be beneficial. The public sector’s size will remain high, but as jobs evolve, some may opt for new opportunities.”
In addressing the issue of brain drain, the President emphasized the importance of education and training: “Our primary measure is to continually train more individuals. While some will continue to leave, we expect that training will play a significant role in the economy. We are looking at establishing four new technology-focused universities as part of this effort.”
When discussing economic growth forecasts, he noted, “This year, we have a forecast of 3 percent growth, but we aim for about 5 percent. Despite this, people will continue to seek better opportunities elsewhere. Higher education is a key factor driving this trend, so we need to address issues within our education system.”
Regarding the diaspora, the President expressed cautious optimism: “While immediate results may not be evident, we hope that as stability continues and results become apparent, the diaspora will be more inclined to return and reinvest.”
On the topic of governance and economic stability, he reinforced his view: “Economic stability remains the priority, but governance reforms must also occur concurrently. Corruption is one of the biggest obstacles to economic reform. We’ve been working on governance reforms for years, but the economy must come first. We are implementing measures from the IMF’s diagnostic, including the anti-corruption law and the proceeds of crimes bill. We need comprehensive action, not just the anti-corruption law alone.”
The President addressed feedback on corruption and governance: “People have expressed satisfaction with the progress made. I have refrained from intervening in legal proceedings involving ministers. We continue to address underworld activities and drug-related issues. While there have been allegations of human rights violations, we are committed to investigating these claims.”
If re-elected, my focus will shift from policy orientation and economic stabilization to implementation.
Looking ahead to the election on September 21st, he said, “The future of Sri Lanka is at stake. I am confident that people will make the right choices, despite the array of alternative proposals.”
On managing a potential victory, he outlined his approach: “If re-elected, my focus will shift from policy orientation and economic stabilization to implementation. Many government agencies will need to undergo changes to drive progress.”
The President’s remarks highlight his focus on education, economic growth, governance reforms, and the future direction of the country.
The President emphasized the need for increased private sector responsibility: “The private sector must take on a larger role. I am confident in the team I have assembled to focus on implementation. However, the composition of the team moving forward will ultimately be decided by the voters, and we will need to hold elections promptly.”
Regarding the challenges posed by opponents in recent campaigns, he observed: “My opponents are not responding effectively. They have resorted to populist slogans and lack substantive answers. They must operate within the IMF framework, which they seem unable to address.”
