The IMF Operation Launched by Mahinda Samarasinghe to Rescue the Country

A decisive moment with Gotabhaya’s approval

Ranil’s commitment—prioritizing the country over the next election—becoming a global example

Despite public criticism, Anura’s continuation with the IMF helped secure Sri Lanka

Without Mahinda’s efforts to secure U.S. support, everything risked collapsing

(Washington Wolf)

After serving seven years in the Western Provincial Council as a minister and member since 1988, and then 27 years in Parliament from 1994—including holding cabinet ministerial positions and even top parliamentary roles such as government and opposition whip—Mahinda Samarasinghe was not given ministerial positions by Gotabaya Rajapaksa. Experienced figures like him were pushed to the backbench. Mahinda was disappointed.

One day, President Gotabaya called him and asked him to recommend a name for Ambassador to the United States. “If you want, I can go,” Mahinda said jokingly. “If you go, relations between the two countries will improve. Then we don’t need anyone else,” Gotabaya replied. “I will discuss it with my family and let you know,” Mahinda said.

From the next day, people close to Gotabaya explained to Mahinda’s family the benefits Sri Lanka would gain from his appointment as Ambassador to the United States.

His family argued that if, despite surviving two attempts by the LTTE and serving the country, he was still being sidelined, whether he should continue politics with them at all. They felt that instead of staying in the backbench, he could better serve the country by going to the United States. After receiving this advice, Mahinda made his decision.

The U.S. government also had to agree to his appointment—and they agreed immediately. The necessary arrangements were quickly made. By late 2021, when he began his duties in the United States, Sri Lanka was already heading toward bankruptcy and queues had formed across the country. Even salaries in diplomatic missions were delayed.

Mahinda, who had an academic background in economics, gathered diplomatic officials and emphasized that maximum support must be given to the country, and that IMF assistance was essential. He immediately requested contact with the head of the IMF.

Using his own connections, Mahinda established communication with the IMF Managing Director.

“I spoke based on my experience. The President may not know this, but Sri Lanka needs an international economic framework to recover. Let’s send a high-level IMF mission to Sri Lanka. Let’s meet the President and Finance Minister, but avoid media attention,” he said. The IMF agreed.

He then informed Gotabaya for the first time about his IMF initiative, and the President agreed. Accordingly, a strong IMF delegation was sent to Sri Lanka. The head of that delegation is today the Governor of the Central Bank of South Korea.

Before traveling to Sri Lanka, the delegation met Mahinda at the Sri Lankan Embassy in Washington. They asked for his views on how to proceed in Sri Lanka. Mahinda advised them to speak frankly about Sri Lanka’s situation rather than relying only on diplomatic language, and to propose the IMF program if the President agreed. He also noted that although 100% of Sri Lankan officials may not reveal the full truth to the President, comparing different perspectives would help the President make a decision.

The IMF delegation met President Gotabaya and Finance Minister Basil Rajapaksa in Sri Lanka. Later, Gotabaya informed Mahinda that Sri Lanka would formally send a written request to the IMF. Within 10 days, the letter reached Washington. It stated that due to critically low reserves, Sri Lanka required IMF assistance.

After extensive discussions and Mahinda’s strong involvement, an agreement with the IMF was reached on March 20, 2023. By that time, Gotabaya had been removed from office and Ranil Wickremesinghe was President.

With the presidential election approaching, implementing IMF reforms was a major challenge for Ranil Wickremesinghe. His goal was not the election, but rebuilding the country. Even though it caused hardship, the country recovered.

Dollar reserves rose from USD 20 million to USD 6.4 billion. Economic growth reached 5.3%. Inflation dropped from 80% to negative levels. The dollar rate, which had reached 380, came down to 290. Goods became available, and queues disappeared.

He also reached agreements with creditor nations. Debt repayment was restructured and extended until 2028. Importers who previously could not open Letters of Credit (LCs) were able to do so again. Domestic banks were also strengthened through debt restructuring.

Regardless of political criticism, after 2024, President Anura Kumara Dissanayake also continued with the IMF program. Despite global challenges, this prevented Sri Lanka from falling into another severe crisis. His commitment to the IMF framework contributed to economic stability.

For all these developments, U.S. support was essential. Without it, everything could have collapsed. Mahinda Samarasinghe’s careful diplomatic effort in securing that support was extraordinary. His mission involved engagement with more than 65 members of the U.S. Congress and Senate—making it a highly significant diplomatic operation.