Sri Lanka’s economy has “completely collapsed” and is facing a situation far more dire than just shortages of fuel, gas, electricity and food, Prime Minister Ranil Wickremesinghe warned on Wednesday, following a preliminary meeting with the IMF. Underlined the urgency of reaching an agreement. To get an additional loan facility. Sri Lanka is facing the worst economic crisis since independence in 1948, which has prompted severe shortages of essential commodities such as food, medicine, cooking gas and fuel in the island nation. Giving an update to Parliament on the government’s mitigation measures taken so far, Wickremesinghe, who is also the finance minister, said, reviving a country with a “completely collapsed” economy is no easy task, especially a Which is dangerously low on foreign reserves.
“If steps were taken to slow the collapse of the economy at least initially, we would not have faced this difficult situation today. But we missed out on this opportunity. Now we are seeing signs of a possible downturn. Down. However, we have to come out of this situation. If not, we will not be able to find a solution to any other issue in the country.” “We are now facing a situation much more dire than just lack of fuel, gas, electricity and food. Our economy has completely collapsed. This is the most serious issue we face today. These issues are only needed to revive. of the Sri Lankan economy. To do so, we must first solve the foreign reserves crisis facing us,” he said.
For Sri Lanka, the prime minister said, the only safe option now is to hold discussions with the International Monetary Fund. In fact, it is our only option. We should take this path. We aim to discuss with the IMF and reach an agreement to get an additional credit facility.” The nearly bankrupt country, with an acute foreign exchange crisis resulting in foreign loan defaults, announced in April that it would Nearly suspending foreign debt repayments of USD 7 billion for this year out of about USD 25 billion due by 2026. Sri Lanka’s total external debt stands at USD 51 billion. The foreign exchange crisis has limited imports, Which has created severe shortage of food, fuel, electricity and other essential items like medicines, forcing people to stand in long lines to meet basic needs.
Since January this year, Indian credit lines have provided a lifeline to Sri Lanka amid growing public discontent over the deteriorating economic situation. But Wickremesinghe said that India will not be able to save Sri Lanka for long.
“We have taken a loan of USD 4 billion under the Indian line of credit. We have requested more credit support from our Indian counterparts. But India will not be able to support us consistently like this. Even with their assistance. It also has its limits. But on the other hand, we should also have a plan to repay these loans. These are not charitable donations,” he said. Wickremesinghe said Ceylon Petroleum Corporation currently has a debt of $700 million. As a result, no country or organization in the world is ready to give us fuel. They are also shying away from providing fuel for cash, he said.
He informed the lawmakers that USD 70 million from the World Bank and USD 20 million from the Sri Lankan government fund would soon be paid to import 100,000 metric tonnes of gas to resolve the issue. He said an IMF team arrived in Sri Lanka on Monday and talks with the group would continue for the next several days.
“We have completed preliminary discussions and we have exchanged views on various areas such as public finance, finance, credit stability, stability of the banking sector and social security networks,” he said. “We intend to have an official-level agreement with the IMF by the end of July,” he said.
He said representatives from financial and legal advisory firms Lazard and Clifford Chance are now in Sri Lanka to assist with its debt restructuring efforts. He said that a roadmap for loan repayment restructuring is being prepared. He said a team of representatives of the US Treasury Department will also reach Sri Lanka next Monday.
He said Sri Lanka will organize a credit assistance conference which will be led by the main lending countries – India, Japan and China. “We have had some conflicts and disagreements in recent times. We are working towards resolving these and promoting friendly relations once again. Each country has different procedures for granting credit. Credit assistance Through the conference, we hope to reach a common agreement on the lending process,” he said.
“If we get the IMF’s seal of approval, the world will once again trust us. This will help us to get low-interest loans along with credit support from other countries of the world,” the Prime Minister said. The government is in discussions with the World Bank, the Asian Development Bank, the United States, other allies and heads of state to secure interim short-term loans until the country receives IMF support.
“We will be able to lay the foundation to ensure economic stability after the successful completion of these works. But it will by no means be the end. In fact, this will be the beginning of our journey. A new journey towards a stronger economy will be its end. After that, we have to move forward with our plans to strengthen and build the new Sri Lankan economy.” Underlining that the government was also working towards introducing political reforms, he urged the country’s two main opposition parties to immediately attend Parliament and support the passage of the 21st Amendment to the Constitution and the new parliamentary committee system. agreed to establish.
MPs from the country’s two main opposition parties are boycotting parliament this week in protest against Wickremesinghe, who became prime minister just a month ago and also finance minister, for not fulfilling his promises to transform the economy. “As I mentioned earlier, the situation we are facing today is by no means normal. I have said time and again that Sri Lanka has not faced a crisis of this magnitude in its recent past. “Once we have established a strong economic foundation you can hand it over. Give power to any political party you want in elections and elect 225 suitable representatives to Parliament.”
He said currently Sri Lanka needs $550 million to meet its monthly fuel requirements. “However, in the face of the economic crisis, we are facing difficulties in securing the funds required for this purpose. As a result, we will take steps to import maximum fuel stock based on our dollar earnings. Fuel Solutions The reduction will take more time. So I request you to be economical while using fuel.”
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