Sri Lanka economy has ‘completely collapsed’
Sri Lanka’s economy has “completely collapsed” and is facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food, Prime Minister Ranil Wickremesinghe warned on Wednesday, underscoring the urgency of arriving at an early agreement with the IMF to obtain an additional credit facility.
Sri Lanka has been facing the worst economic crisis since independence in 1948 which has prompted an acute shortage of essential items like food, medicine, cooking gas and fuel across the island nation.
Giving an update to parliament on the government’s mitigation measures taken so far, Wickremesinghe, also the finance minister, said it is no easy task to revive a country with a “completely collapsed” economy, specially one that is dangerously low on foreign reserves.
“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 into the very bottom.
“However, we must come out of this situation. If not, we will be unable to seek solutions to any other issue in the country,” he said.
“We are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food. Our economy has faced a complete collapse. That is the most serious issue before us today. These issues can only be resolved through the reviving of the Sri Lankan economy.
“In order to do this, we must first resolve the foreign reserves crisis faced by us,” he said.
For Sri Lanka, the Prime Minister said, the only safe option now is to hold discussions with the IMF.
“In fact, this is our only option. We must take this path. Our aim is to hold discussions with the IMF and arrive at an agreement to obtain an additional credit facility.”
The nearly-bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, had announced in April that it is suspending nearly $7 billion foreign debt repayment due for this year out of about $25 billion due till 2026.
Sri Lanka’s total foreign debt stands at $51 billion.