Providing a thorough and honest insight into the economic abyss Sri Lanka is currently in, Prime Minister Ranil Wickremesinghe yesterday (16) said the next couple of months will be the most difficult period for every citizen to tread on and urged Sri Lankans to pull their socks up to face challenges and make some serious sacrifices during that period.
In the short term the country will have to face an even more difficult time period. There is a possibility that inflation will increase further, he said, addressing the nation last evening,
Wickremesinghe said he did not request the Premier’s post.
“In the face of the challenging situation in the country, the President invited me to take up this position. I assumed this duty not only as a political leader, but also as national leader who has benefited from free education at the Faculty of Law of the University of Colombo,” he said.
“At present, the Sri Lankan economy is extremely precarious. Although the former government’s budget projected a revenue of Rs 2.3 trillion, Rs 1.6 trillion is the realistic projection of this year’s revenue.
The estimated government expenditure for this year is Rs 3.3 trillion. However, due to the increase in interest rates and additional expenditure of the former government, the total government expenditure is Rs 4 trillion. The budget deficit for the year is Rs 2.4 trillion. This amount equals to 13 per cent of the GDP.
The approved debt ceiling is Rs 3,200 billion. By the second week of May, we had spent 1,950 billion. Therefore, the remainder is Rs 1,250 billion. Yesterday, a cabinet decision was made to present a proposal to Parliament to increase the approved limit for issuing Treasury Bills from 3000 billion to 4000 billion.
In November 2019, our foreign exchange reserves were at USD 7.5 billion. However, today, it is a challenge for the Treasury to find USD 1 million,” he said.
The Premier said the Ministry of Finance is finding it difficult to raise USD 5 million required to import gas as well.
To ease the queues, Sri Lanka must obtain approximately USD 75 million within the next couple of days. At the moment, the country only has petrol stocks for a single day. Due to the diesel shipment that arrived on Sunday (15), the lack of diesel will be resolved to some extent. Under the Indian credit line, two more diesel shipments are due to arrive tomorrow (18) and on 1 June. In addition, two petrol shipments are expected on 18 and 29 May. For over 40 days, three ships with crude oil and furnace oil have been anchored within the maritime zone of Sri Lanka. We are working to obtain dollars in the open market to pay for these shipments,” he said.
Speaking about the power crisis, Wickremesinghe warned that there is a possibility that the daily power cuts will increase to 15 hours a day, as a quarter of electricity is generated through oil.
“However, we have already obtained money to avert this crisis. We must also immediately obtain USD 20 million to provide gas to consumers. The situation of kerosene and furnace oil is even more urgent. At present, the Central Bank, local state and private banks, and foreign banks functioning in Sri Lanka are all facing a dollar shortage. As you are already aware, we possess a very low amount of US dollars”, he said.
“Nevertheless, we succeeded in bringing in a diesel shipment on Sunday (15) despite these adverse circumstances with Indian assistance. Therefore, you can obtain that diesel from today onwards. We will also work towards making a payment for the gas shipment that arrived on Tuesday. Therefore, you will have some respite from the gas shortage,” Wickremesinghe said.
Another grave concern is the lack of medicine; Wickremesinghe said and added that payments have not been made for four months to suppliers of medicine, medical equipment, and food for patients.
“The payment owed to them amounts to Rs. 34 billion. In addition, payments have not been made for four months for medicine imported by the State Pharmaceuticals Corporation. As a result, pharmaceutical companies are taking steps to blacklist the SPC. Unfortunately, our Medical Supplies Division is unable to provide even two critical items of the 14 essential medicines that we currently need. These two are a medicine used in treating heart disease and the anti-rabies vaccine. The latter has no alternative treatment,” he said.
He said the Government has planned to present a new alternative Budget to the development Budget proposed for 2022 and intends to present it as a concessionary Budget.
“I further propose to privatise SriLankan Airlines which is incurring extensive losses. The loss for the year 2020-2021 alone amounts to Rs 45 billion. By 31 March 2021, the total loss was at Rs 372 billion. Even if we privatise SriLankan Airlines, this is a loss that we must bear. You must be aware that this is a loss that must be borne even by the poor people of this country who have never stepped on an airplane.”
At present, the Government incurs a loss of Rs 84.38 per litre of 92 octane petrol, Rs71.19 per litre of 95 octane petrol, Rs 131.55 per litre of diesel, Rs 136.31 per litre of super diesel, and Rs 294.50 per litre of kerosene oil. The Petroleum Corporation can no longer bear this loss. Similarly, although the Electricity Board charges Rs 17 per unit of electricity the cost of production is at around Rs 48 amounting to a loss of about Rs 30 per unit. This is also a serious problem, he said.
“Against my own wishes, I am compelled to permit printing money in order to pay State-sector employees and to pay for essential goods and services. However, we must remember that printing money leads to the depreciation of the rupee. Under the current circumstances, even the Petroleum Corporation and the Electricity Board are unable to obtain rupees.”
Speaking further, he said he has no desire to hide the truth and to lie to the public. Although these facts are unpleasant and terrifying, this is the true situation.
For a short period, our future will be even more difficult than the tough times that we have passed. We will face considerable challenges and adversity. However, this period will not be long. In the coming months, our foreign allies will assist us. They have already pledged their support. Therefore, we will have to patiently bear the next couple of months. However, we can overcome this situation. Doing so will require taking a new path, Wickremesinghe noted.
“I thank the Opposition leader and the leaders of the political parties who replied to the letters that I sent them informing them of the current situation.
We must immediately establish a National Assembly or political body with the participation of all political parties to find solutions for the present crisis. This will enable us to discuss with all parties and to arrive at decisions for short-, medium-, and long-term action plans that will enable us to rebuild our nation within a specified time frame.”
The Premier pledged to build a nation without queues for kerosene, gas, and fuel.
“We will build a nation free of power outages, a nation with plentiful resources where agriculture can freely flourish; a nation where the future of the youth is secure; a nation where people’s labour need not be wasted in queues and in struggles; a nation where everyone can lead their lives freely with three square meals a day,” he said and added,
“I am undertaking a dangerous challenge. In the Caucasian Chalk Circle, Grusha crossed the broken rope bridge carrying a child that was not her own. This is an even more difficult undertaking. The precipice is deep and its bottom cannot be seen. The bridge is made of thin glass and there is no handrail. I am wearing shoes with sharp nails that cannot be removed. My task is to safely take the child to the other side. I am accepting this challenge for our nation.
My goal and dedication is not to save an individual, a family, or a party. My objective is to save all the people of this country and the future of our younger generation. I will undertake this task willingly risking my life if needed and will overcome the challenges facing us. I ask you to extend your support to me in this endeavour.”