August 10, 2022

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A Looming Crisis Threatens Sri Lanka

A Looming Crisis Threatens Sri Lanka

President Ranil Wickremesinghe alerted on Wednesday that it seems that Sri Lanka’s unprecedented economic crisis will continue until at least the end of the year, causing fuel shortages. 

A major political crisis has been caused by the financial meltdown, he said.

While opening the new session in parliament, he said that in the recent past, our country has never faced a situation like this. The country is in great danger.

The 22 million people of Sri Lanka have been living in a state of acute food, fuel, and medicine shortages since late last year, when thousands stormed Rajapaksa’s residence.

In his speech, Wickremesinghe said that facing the crisis would be possible only if we work together, and urged all parties to get along for a “unity government.”

Prior to mid-April, the island nation had a foreign debt of USD 51 billion, placing it in the middle income range.

There is a shortage of foreign exchange in the country, and officials estimate that the country needs at least USD four billion to import essential goods and alleviate shortages.

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A four-year bailout programme has been negotiated by Wickremesinghe with the International Monetary Fund. An update on negotiations was given to Parliament, but the timeline for finalising the deal was not stated. 

In the midst of lengthy electricity blackouts, motorists spend days waiting for rationed fuel. A 60 per cent inflation rate has been reached.

Despite receiving credit lines from India for petrol and diesel imports, Wickremesinghe held that Colombo must be able to pay for them with its own earnings, and rationing  will remain in effect till the year ends.

A USD three billion investment from Japan, with the potential to bring in considerable investment revenue, was rejected by Rajapaksa.

Wickremesinghe said the Sri Lanka-Japan ties were also damaged when the Colombo deep-sea terminal and light rail transit (LRT) were cancelled.

Sri Lanka’s bilateral loans are owned over 10 per cent by China, according to pro-West Wickremesinghe. Debt restructuring deals require Beijing’s approval.

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Doonited Affiliated: Syndicate News Hunt

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