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Message: <blockquote data-quote="monson" data-source="post: 28080230" data-attributes="member: 30005">TE: What will determine whether the agreement happens?RW: There are some outstanding issues. Debt sustainability, the criteria we have given, some of the incentives of taxation.TE: You’ve been very complimentary in the press about India’s assistance. How sympathetic have the other bilateral creditors been?RW: Many of them are but they’re saying first go to the IMF. They felt that Sri Lanka just allowed this crisis to happen. I think there will be more assistance once we get the IMF agreement.TE: Are you encouraged by the agreement between China and Zambia?RW: Yes, but it’s for a low-income model, and we are in a middle-income country.TE: Moving on from economics, there’s been a lot in the Indian press in the last couple of weeks, not only about the Chinese ship that is supposed to dock at Hambantota but also the Pakistani ship that’s supposed to dock or has docked in Colombo. Now Sri Lanka obviously cannot entirely align itself with one or another big Asian power. But how do you manage that balance of competing interests from big powerful neighbours?RW: It’s becoming more difficult now, especially after Ukraine and the agreement between Russia and China. You could see the pressure building up on the European side. And in particular my worry is that this rivalry can come into the Indian Ocean. We’ve so far kept out the power rivalry from the Indian Ocean. But I think we have to face up to that situation and work with everyone. Sri Lanka, of course, has a special relationship with India where we have to look after each other’s interests. But most countries in the Indian Ocean want to stay out of the power rivalry. So we have to be clear about that and say what our policies are.TE: So you think the rhetoric we see in the Pacific and the South China Sea, you think the Indian Ocean is perhaps the next venue for that sort of thing?RW: You don’t want that to happen. For instance, now, Nancy Pelosi on her own has created a crisis [in Taiwan]. I don’t think the US government has been happy, but they had to back her up. We don’t want any of that happening here. We see India as the net security provider in the area. And then all other countries can also be present as long as it doesn’t lead to rising tensions or increase the rivalry between states.TE: Are there lessons for other countries in how you’re handling this?RW: There’ll be something to learn from what we have done and from what we haven’t done.TE: In the past few months Western publications have written that Sri Lanka could be the first of many countries to default. In the same vein, given the conditions of 2022, what lessons do you think there are for other countries to avoid some of the same mistakes made in the past few months and years economically?RW: There are many lessons. For instance, you can’t subsidise items every day, you will run out of money. Second, the balance of trade. That’s the big issue for all of us, because we have greater disadvantages on the balance of trade compared to bigger economies like China and India. We have people leaving the country. We have to put our economy in order to attract investment, but for different reasons: the reason to go to Bangladesh is quite different from the reason to come to Sri Lanka. What I’ve learnt is that for the smaller economies in the region, you want to go to the IMF on time, be careful about the foreign debt that you run up. Basically governments have to make hard decisions if they want to prevent default.TE: On the subject of making the economy more competitive, who do you see as your peers, or indeed your influences or competitors?RW: We would like to be like Singapore, but let’s start by emulating the standard of Thailand, Malaysia and Vietnam.TE: In terms of what you were talking about earlier, making decisions to make the economy more competitive, cutting the debt and deficit, all of these are going to be painful decisions. How do you intend to take Sri Lankans with you after this period of political unrest?RW: You have to be honest about what is happening, and how much money are you setting aside for the vulnerable people? I mean, people realise it’s bad, they just want to get out of it, you can assure them that you can get out quickly then it’ll be harder for a time. But get them out quickly is what we have to do, and there is hope. And you can’t just reject what the government does if you can’t offer a solid alternative.TE: But how will you deal with it if there’s renewed hostility or protests once people realise just how bad things are and how hard they’re going to get? How much do you worry about that?RW: I worry especially on food. People need food, we don’t want them to go hungry. The middle class was expanding and now we’ve got to make cuts in their living standards, with people who were above the poverty line falling below it, we have to give support to them in the shortest possible time. We have to dispose of some state assets and have that money in our reserves.TE: But it’s a hard message, isn’t it? I mean, after everything over the past six months, 12 months, to tell people, “You know what, things are going to be even tougher now for a little while”?RW: People know that, I mean, basically, we tell them the truth, tell them that we are going through a hard time.TE: What’s your experience been when telling people about this?RW: I’ve been losing some elections.</blockquote>

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