Not much wriggle room on external debt

Sri Lanka's two presidential frontrunners have pledged to renegotiate the agreement with the International Monetary Fund (IMF), increase social security and ease people's financial burdens, but experts say major deviations may not be feasible though it is possible to chip away at the edges.

- DILRUKSHI HANDUNNETTI

The fact of the matter is, irrespective of who becomes the president on September 21, he has an insurmountable task to revamp the economy and to keep things afloat.

A new government will have to ensure that we meet revenue targets already agreed to. This is not negotiable. It is fundamental to the country's survival to have a stable tax revenue flow," said Umesh Moramudali, a lecturer in economics with the University of Colombo.

Sri Lanka has performed well with revenue targets so far. There is little scope for making changes there. Irrespective of who comes to power, the IMF will have to adopt a pragmatic approach and work with the new administration. Negotiating with external creditors is a time-consuming complex process. And neither the Samagi Jana Balawegaya (SJB) nor the National Peoples' Power (NPP) will run such a political risk at this moment, Moramudali noted.

The immediate priorities of the next government, according to Imran Furkan, a geopolitical economic risk analyst, will be to reach agreements with bond holders to overcome the island's default status, deal with corruption towards accountable governance and to create conditions to increase consumption to pre-crisis levels to stabilise the economy and increase revenue.