‘Lanka’s economy totally collapsed, IMF only way out’

ON THURSDAY, AN INDIAN TEAM LED BY CHIEF ECONOMIC ADVISER VA NAGESWARAN WILL VISIT LANKA TO ASSESS ITS ECONOMIC STATE

COLOMBO: Sri Lanka’s economy has “completely collapsed” and an agreement with the International Monetary Fund is the only path to revival, Prime Minister Ranil Wickremesinghe told the parliament on Wednesday.

“We are now facing a far more serious situation beyond mere shortages of fuel, gas, electricity and food,” Wickremesinghe said, adding that the nation is unable to purchase imported fuel, even for cash, due to heavy debts owed by its petroleum corporation. “We are now seeing signs of a possible fall to rock bottom.”

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.

“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.

“The only safe option before us now is to hold discussions with the International Monetary Fund. In fact, this is our only option. We must take this path,” said the prime minister, adding that an IMF team arrived in Sri Lanka on Monday. “We intend to enter into an official level agreement with the IMF by the end of July.” His announcement came a day ahead of an Indian government delegation’s visit, led by chief economic adviser V Anantha Nageswaran, on Thursday to assess the country’s economic conditions and examine whether another tranche of financial package needs to be disbursed to the island nation, according to the Daily Mirror newspaper.

India has provided Sri Lanka with financial aid of $4 billion in credit lines so far. Lauding the assistance, Wickremesinghe, however, said India would not be able to keep Sri Lanka afloat for too long, as financial assistance provided by India are not “charitable donations” and Sri Lanka must plan to repay these loans.

Wickremesinghe took office in May after days of violent protests over the country’s economic crisis, its worst since its independence in 1948, forced his predecessor to step down. On Wednesday, he blamed the previous government for failing to act in time to turn the situation around, as foreign reserves dwindled. In April, the country announced that it is suspending nearly $7 billion foreign debt repayment due for this year out of about $25 billion due through 2026. Sri Lanka’s total foreign debt stands at $51 billion.