Sri Lanka Crisis
Scooterists and motorists wait in long queues at a fuel station in in Colombo, Sri Lanka, Saturday, June 11, 2022. Sri Lanka's economic crisis, the worst in its history, has completely recast the lives of the country's once galloping middle class. For many families that never had to think twice about fuel or food, the effects have been instant and painful, derailing years of progress toward lifestyles aspired to across South Asia. (AP Photo/Eranga Jayawardena)
world

Sri Lankan PM says economy 'has collapsed'

7 Comments
By KRISHAN FRANCIS

Sri Lanka's debt-laden economy has “collapsed” after months of shortages of food, fuel and electricity, its prime minister told lawmakers Wednesday, in comments underscoring the country's dire situation as it seeks help from international lenders.

Prime Minister Ranil Wickremesinghe told Parliament the South Asian country is “facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food. Our economy has completely collapsed.”

While Sri Lanka's crisis is considered its worst in recent memory, Wickremesinghe’s assertion that the economy has collapsed did not cite any specific new developments. It appeared intended to emphasize to his critics and opposition lawmakers that he has inherited a difficult task that can’t be fixed quickly, as the economy founders under the weight of heavy debts, lost tourism revenue and other impacts from the pandemic, as well as surging costs for commodities.

Lawmakers of the country's two main opposition parties are boycotting Parliament this week to protest against Wickremesinghe, who became prime minister just over a month ago and is also finance minister, for not having delivered on his pledges to turn the economy around.

Wickremesinghe said Sri Lanka is unable to purchase imported fuel, even for cash, due to heavy debts owed by its petroleum corporation.

“Currently, the Ceylon Petroleum Corporation is $700 million in debt,” he told lawmakers. “As a result, no country or organization in the world is willing to provide fuel to us. They are even reluctant to provide fuel for cash,” he said.

Wickremesinghe took office in May after days of violent protests over the country’s economic crisis forced his predecessor to step down. In his comments Wednesday, he blamed the previous government for failing to act in time to turn the situation around, as Sri Lanka’s foreign reserves dwindled.

The foreign currency crisis has crimped imports, creating severe shortages of food, fuel, electricity and other essentials like medicines, forcing people to stand in long lines to fulfill basic needs.

“If steps had at least been taken to slow down the collapse of the economy at the beginning, we would not be facing this difficult situation today. But we lost out on this opportunity. We are now seeing signs of a possible fall to rock bottom,” he said.

Sri Lanka has been muddling through mainly supported by $4 billion in credit lines from neighboring India. But Wickremesinghe said India would not be able to keep Sri Lanka afloat for too long.

It also has gotten pledges of $300 million-$600 million from the World Bank to buy medicine and other essential items.

Sri Lanka has already announced that it is suspending repayment of $7 billion in foreign debt due for repayment this year, pending the outcome of negotiations with the International Monetary Fund on a rescue package. It must pay $5 billion on average annually until 2026.

Officials from International Monetary Fund are now visiting Sri Lanka to discuss a rescue package. Wickremesinghe said that a staff-level agreement is likely to be reached by the end of July.

© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

©2022 GPlusMedia Inc.


7 Comments
Login to comment

Where is China now? Promises of modernising Sri Lanka, I guess this is what China really means, first you have to break, before you can make.

2 ( +2 / -0 )

Guess this is what China’s belt and road means. The belt will be used to strangle you and drag you on the road to hell.

2 ( +2 / -0 )

mindblowing facts that any billionaire now can buy Sri Lanka as a country. imagine Elon Musk or Bezos having a country as an asset.

0 ( +0 / -0 )

mindblowing facts that any billionaire now can buy Sri Lanka as a country. imagine Elon Musk or Bezos having a country as an asset.

But who would buy it?

0 ( +0 / -0 )

@EvilBuddah, good one! It would have been beneficial for someone from the Sri Lankan diplomatic corps to appear at that BRICS meeting to tell the delegates what really happens when you tie your fate to the likes of China.

2 ( +2 / -0 )

With the financial chaos in Sri Lankan government, it is hard to say just how much is owed and to whom - however of that $7 billion in "foreign debt" figures as high as $5 billion owed to China at interest rates 4.5x higher than much longer term loans at 0.7% to Japan have been reported. Sri Lankans had best beware the repo man from China. Other emerging economy and 3rd world countries had best beware falling into "easy money" debt traps from China.

1 ( +1 / -0 )

They will come here on student visas and work in combinis.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites