President Gothabaya Rajapaksha is walking a tight rope as reserves and finances dwindle. Business reporters Anusha Ondaatjie and Asantha Sirimanna observe that while the government is trying to stay off the International Monetary Fund(IMF )and they have turned towards India and China for loans.
The government may wish to stay away from the IMF; it often comes with conditions for fiscal and monetary reform that may not be popular among the voters who may be voting in an early election that has been rumoured.
President Rajapaksha has announced a $1 billion relief package last month and raised civil servants’ salaries and started compensating farmers for crop failures due to a hurriedly carbonic fertilizer drive. All these pay-outs are adding pressure to the country’s economy which has to pay a $7 billion in dollar-denominated debt maturing this year. Meanwhile, inflation is rising rapidly with a possible food shortage and power cuts.