After months of food, gasoline, and electricity shortages, Sri Lanka’s debt-ridden economy has ‘collapsed,’ the country’s prime minister warned legislators on Wednesday, emphasising the severe circumstances the nation is in as it looks to foreign lenders for assistance.
The South Asian nation, according to Prime Minister Ranil Wickremesinghe, ‘faces a considerably more serious crisis than the ordinary shortages of petrol, gas, power, and food.’ Our nation’s economy is in shambles.
Despite the fact that Wickremesinghe said the economy had collapsed, the crisis in Sri Lanka is thought to be the worst in recent memory. It seemed to be meant to emphasise to his detractors and opposition lawmakers that he has been given a difficult task that will take time to complete as the economy collapses under the weight of massive debts, lost tourism revenue, and other pandemic-related effects, along with rising commodity prices.
This week, lawmakers from the two major opposition parties in the country are abstaining from attending Parliament in protest of Wickremesinghe, the country’s finance minister and newly-elected prime minister, for failing to fulfil his promises to revive the economy.
Due to significant debts owing by its petroleum firm, Wickremesinghe claimed Sri Lanka is unable to buy imported fuel, even with cash.
He informed MPs that the Ceylon Petroleum Corporation is currently $700 million in debt. Because of this, no nation or organisation in the world is willing to give us gasoline. Even providing fuel in exchange for money is a turnoff, he claimed.
After his predecessor was forced to resign due to weeks of violent protests over the nation’s economic difficulties, Wickremesinghe assumed power in May. In his remarks on Wednesday, he accused the previous administration of failing to take action quickly enough to reverse the situation while Sri Lanka’s foreign reserves were depleting.
Imports have been severely restricted by the foreign exchange crisis, leading to acute shortages of food, fuel, electricity, and other necessities like medicines, causing people to wait in line to meet their most basic requirements.
We wouldn’t be in this difficult situation right now if at least some measures had been made to slow down the economy’s downfall in the beginning. But we lost out on this opportunity. We are now seeing indicators of a possible descent to rock bottom,’ he warned.
With the help of $4 billion in credit lines from nearby India, Sri Lanka has been scraping by. India, according to Wickremesinghe, will not be able to keep Sri Lanka afloat for very long.
Additionally, the World Bank has pledged between $300 million and $600 million for the purchase of medicine and other necessities.
In anticipation of the conclusion of talks with the International Monetary Fund over a rescue package, Sri Lanka has already declared that it will postpone repayment of $7 billion in foreign debt that is due this year. Up until 2026, it must pay an average of $5 billion yearly.
Officials from International Monetary Fund are presently visiting Sri Lanka to discuss a bailout plan. A staff-level agreement will probably be reached by the end of July, according to Wickremesinghe.