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Sri Lanka PM: Our economy has

By: Riya Jha
26 Jun 2022 12:46:13 PM Shoolini University, Solan, Himachal Pradesh

“Our economy has completely collapsed,” Sri Lankan Prime minister Ranil Wickremesinghe told the parliament on Wednesday. He also mentioned that the country is “facing a far more serious situation beyond the shortages of fuel, gas, electricity, and food.”

 

Wickremesinghe also revealed the government is seeking help from the International Monetary Fund (IMF) to help stabilise the economy.

 

Opposition lawmakers are boycotting parliament to protest against Wickremesinghe for failing to meet the promises of reviving the economy. However, the Prime Minister blamed the previous government for the drowning economy of the country. Wickremesinghe's predecessor Mahinda Rajapaksha resigned from his post under the pressure of the crumbling economy and mass protests across the country.

 

"It is no easy task to revive a country with a completely collapsed economy, especially one that is dangerously low on foreign reserves," he said. "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," reported CNN.

 

Due to the heavy debt owed by its petroleum corporation, the nation is struggling to import fuel. The Ceylon Petroleum Corporation is $700 million in debt, he told lawmakers. “As a result, no country or organisation in the world is willing to provide fuel to us. They are even unwilling to provide fuel for cash.”

 

The fuel shortage has affected the country's entire transportation network, leaving commuters stranded at their places. According to the officials, 11 people died while waiting in queues for fuel this week, reported CNN.

 

Surging food prices are reaching their all-time highs. In May 2022, the cost of food increased to 57.40%, according to a report. The scarcity of food has led to the disappearance of food items from the shelves of shops and increased prices.

 

In desperate attempts to keep the economy running, government officials have been given every Friday off for three months to save on fuel and grow their fruits and vegetables.

 

Sri Lanka’s middle class makes up 15% to 20% of the 22 million population. A senior researcher at the Centre for Policy Alternatives in Colombo, Bhavani Fonseka, said a crisis like no other in the last three decades has hit the country. “If the middle class is struggling like this, imagine how hard hit the more vulnerable are,” Fonseka added.

 

With the exchange reserves draining, Sri Lanka is rushing towards bankruptcy after gathering $51 billion in foreign debt and no capital source to afford the basic amenities.

 

Sri Lanka has mainly been relying on neighbouring India to remain afloat – it has received $4 billion in credit lines – but Wickremesinghe said that too might not be enough.

 

“We have requested more loan assistance from our Indian counterparts. But even India will not be able to support us in this manner continuously,” he said.

 

Sri Lanka is witnessing its worst economic crisis since its independence in 1948. A mix of factors has contributed to the nation's dire situation, including heavy debts, lost tourism revenue due to the pandemic, and surging costs for commodities. 

 

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