Sri Lankan PM says economy ‘collapsed’, unable to buy oil

Sri Lankan PM says economy ‘collapsed’, unable to buy oil

COLOMBO, Sri Lanka (AP) – Sri Lanka’s economy has “collapsed” after months of shortages of food, fuel and electricity, its prime minister told lawmakers Wednesday, commenting on the country’s plight as it seeks help from international lenders.

Prime Minister Ranil Wickremesinghe told parliament that the South Asian country “is facing a much more serious situation than simple shortages of fuel, gas, electricity and food.” “Our economy has completely collapsed.”

While the Sri Lankan crisis is considered the worst in recent memory, Wickremesinghe’s claim that the economy has collapsed did not indicate any specific new developments. He seemed to intend to stress to his critics and opposition MPs that he had inherited a difficult task that could not be rectified quickly, as the founders of the economy were burdened by heavy debts, lost tourism revenue and other effects from the pandemic, as well as rising costs for goods.

Lawmakers from the country’s two main opposition parties are boycotting parliament this week to protest against Wickremesinghe. who became prime minister just a month ago and is also finance minister because he did not keep his commitments to overthrow the economy.

Wickremesinghe said Sri Lanka could not buy imported fuel, even in cash, because of the large debt owed by its oil company.

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

Wickremesinghe took office after days of violent protests over the country’s economic crisis that forced his predecessor to resign. In comments Wednesday, he accused the previous government of failing to act promptly as Sri Lanka’s foreign exchange reserves plummeted.

The currency crisis has curtailed imports, creating severe shortages of food, fuel, electricity and other basic necessities such as medicines, forcing people to stand in long queues for basic necessities.

“If at least steps had been taken to slow down the economy in the beginning, we would not be facing this difficult situation today. But we missed this opportunity. “Now we see signs of a possible fall to the bottom,” he said.

So far, Sri Lanka has been confused, backed mainly by $ 4 billion in credit limits from neighboring India. But Wickremesinghe said India would not be able to keep Sri Lanka alive for long.

It has also pledged $ 300-600 million from the World Bank to buy drugs and other essentials.

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

Wickremesinghe said IMF assistance seemed to be the country’s only option now. Service officials are visiting Sri Lanka to discuss a rescue package. An agreement at staff level is likely to be reached by the end of July.

“We completed the initial discussions and exchanged ideas on various areas such as public finances, finance, debt sustainability, banking sector stability and the social security network,” said Wickremesighe.

Representatives of the government’s financial and legal advisers for debt restructuring, Lazard and Clifford Chance, are also visiting the island and a team from the US Treasury Department will arrive next week, he said.

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