Sri Lanka Crisis: 'Govt's Priority Should Be Seeking Financial Aid from India and China, Not Securing Majority in Parliament,' Says Ex-PM Ranil Wickremesinghe

Colombo, May 2: Sri Lanka's former prime minister Ranil Wickremesinghe has said that political leaders should focus on seeking financial assistance from a number of countries, including India and China, to get the debt-ridden island nation out of its worst economic crisis rather than worrying about securing a working majority in Parliament.

Addressing the United National Party's (UNP) Jathika Sevaka Sangamaya May Day ceremony at New Town Hall in Colombo on Sunday, Wickremesinghe said the government led by President Gotabaya Rajapaksa should give priority to resolving the ongoing economic crisis and take immediate action to control the prices of essential goods. Sri Lankan Inflation Rises to 29.8% in April 2022 from 18.7% in March.

"It should pay attention to saving the banking system from collapsing. It should. We saw how the banking sector collapsed in Greece and the same happened in Indonesia in 1998. The government should speak to India, China, Japan and South Korea to seek help,” he said. “Having 113 MPs in Parliament is no longer the solution for the present problem. The country is facing an economic crisis of unprecedented proportion,” he was quoted as saying by The Island newspaper.

Sri Lanka is in the grip of an unprecedented economic turmoil since its independence from Britain in 1948. The crisis is caused in part by a lack of foreign currency, which has meant that the country cannot afford to pay for imports of staple foods and fuel, leading to acute shortages and very high prices. Months of lengthy blackouts and acute shortages of food, fuel and pharmaceuticals have triggered widespread protests calling for the government's resignation. India Offers Additional USD 500 Million After China’s Muted Response to Sri Lanka’s Request.

"The national economy has almost collapsed. Agriculture is in death throes without fertilisers. Fishers have no diesel. Many have lost their jobs. Companies are downsizing at the expense of their workers. Some have already been closed down. Thousands of more jobs are likely to be lost," Wickremesinghe said.

"Medium scale enterprises have collapsed and small-scale enterprises are facing the same predicament. The value of money deposited in the banks has been lost by around 50 per cent. The value of the savings in the EPF and ETF has decreased by around 50 per cent. There are protests and demonstrations all over the country. People are asking the government to go home. The government has lost its mandates received at the 2019 and 2020 elections," he said.

The former premier said instead of giving priority to resolving the current economic crisis, the government was divided on whether President Gotabaya or his elder brother and  should quit.

"The prevailing problems cannot be solved by mustering 113 seats in Parliament. The problem, however, could be solved. For that purpose, income taxes have to be increased. Fuel prices and electricity prices would have to be increased. “The value of the US dollar which was at Rs. 185 rupees is likely to reach Rs 400. Therefore, government expenses have to be cut down. In the meantime, the government should talk to the international community to secure its assistance,” he said.

Sri Lanka needs at least USD 4 billion to tide over its mounting economic woes, and talks with international institutions such as the World Bank as well as countries like China and Japan for financial assistance have been going on.

The country has run out of foreign currency to import badly-needed essential goods.

Last month, the Sri Lankan government said it would temporarily default on USD 35.5 billion in foreign debt as the pandemic and the war in Ukraine made it impossible to make payments to overseas creditors. Sri Lanka has asked for an International Monetary Fund bailout, which could take up to three months to arrive.

Central bank governor Nandalal Weerasinghe earlier in the week said the staff-level agreement with the IMF could be reached during the next two months. The finance ministry has also noticed the registered importers apply to avail themselves of the facility of the Indian Credit Line of USD 1 billion at the Indian Credit Facility Coordinating Unit (ICFCU) of the ministry. India has agreed to extend an additional USD 500 million credit line to help Sri Lanka import fuel. New Delhi has also already agreed to defer USD 1.5 billion in import payments that Sri Lanka needs to make to the Asian Clearing Union.

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