Sri Lanka

Sri Lankan economy ‘completely collapsed’, PM says in parliament –

On March 18, people lined up to buy gasoline near Colombo, Sri Lanka. /NurPhoto/Getty Images

Published Friday 2022.06.24 12:17 JST

Colombo, Sri Lanka (CNN) Sri Lankan Prime Minister Wickremesinghe said on Thursday that the country’s economy had “completely collapsed”. The crisis-hit country is becoming increasingly dire as millions suffer from fuel, power and food shortages.

“Our economy has completely collapsed,” Wickremesinghe told Sri Lanka’s parliament, adding that he was seeking help from global partners and the International Monetary Fund (IMF) to stabilize the economy.

But Wickremesinghe warned that the island nation of 22 million people “faces more serious problems than supply shortages”.

Sri Lanka is in the midst of its worst financial crisis in 70 years. Foreign exchange reserves have fallen to record lows, leaving the country short of dollars to pay for essential imports, including food, medicine and fuel.

In recent weeks, the government has taken drastic measures to tackle the crisis, including giving civil servants a four-day work week to give them more time to grow crops. But these measures have done little to ease the plight faced by many.

Protesters against the economic crisis in Sri Lanka near the official residence of Sri Lankan Prime Minister Wickremesinghe on the 22nd.

In some major cities, including the commercial city of Colombo, hundreds of people lined up for hours to buy fuel, sometimes clashing with police and the military.

Trains are running less frequently, fuel shortages are keeping patients from hospital admissions and food prices are skyrocketing. The staple food rice has disappeared from the shelves of many stores and supermarkets.

Eleven people have died this week alone while queuing for gas, police said.

Tuk-tuks and their drivers line up to buy fuel in Colombo, Sri Lanka, on May 20. /Tharaka Basnayaka/NurPhoto/Getty Images

Wickremesinghe, who took office days after protests forced former Prime Minister Rajapaksa to resign, made comments on Wednesday that appeared to hold the previous government accountable for the situation in the country.

“Reviving a completely broken economy, especially one with dangerously low reserves, is no easy task. I would not be in a bad situation,” he said.

On the 20th, in Colombo, Sri Lanka, people demanded the release of protesters who blocked the entrance of the Presidential Palace of Sri Lanka.

Sri Lanka’s electricity and energy minister told reporters last week that the country only had enough fuel for five days.

Sri Lanka is largely dependent on its neighbor India. It has secured a $4 billion line of credit, but that may not be enough, Wickremesinghe said. “We asked India for more loans, but even India cannot maintain this support,” he said.

The next step, he said, is to reach an agreement with the IMF. “It’s the only option.

It also said it was currently in talks with the World Bank, the Asian Development Bank and the United States to “access interim short-term financing” until it secured support from the International Monetary Fund.

Representatives from the U.S. Treasury Department are due to arrive in Sri Lanka next week, where they will also seek help from “major lenders” China and Japan.

“Once we get IMF approval, we can regain the trust of the world. We should be able to get low-interest loans from countries around the world,” Wickremesinghe said.

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