Acute shortages of food, fuel, and medicine will continue, warned PM Wickremesinghe
Sri Lankan Prime Minister Ranil Wickremesinghe on Tuesday told the Parliament that the country has gone bankrupt and its unprecedented economic crisis is expected to linger until at least the end of next year.
Prime Minister said the once-prosperous country will go into deep decline this year and acute shortages of food, fuel and medicine will continue.
“We will have to face difficulties in 2023 as well,” the premier said. “This is the truth. This is the reality.”
Sri Lanka’s bailout talks with the International Monetary Fund (IMF) are reliant on the approval of a debt restructuring plan with creditors by August, the Prime Minister told the lawmakers.
According to Wickremesinghe, recent discussions with the IMF sparked hope but the situation is different this time as in the past they have been going into negotiations as a “developing country” and now they are a “bankrupt country”.
“We are now participating in the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation,” he said as he explained a possible roadmap for recovery from Sri Lanka’s worst economic crisis since it gained independence from Britain in 1948.
“Due to the state of bankruptcy our country is in, we have to submit a plan on our debt sustainability to them separately. Only when [the IMF] are satisfied with that plan can we reach an agreement.”
Sri Lanka’s 22 million people have endured months of surging inflation and prolonged power cuts after the government ran out of foreign currency to import essential goods. Sri Lanka’s inflation in the month of June peaked to 54.6% as the Island Nation battles its worst economic crisis in decades, and the central bank is expected to raise rates at its next policy announcement on Thursday to rein in prices.