Get Ready For Tougher Times

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Prime Minister Ranil Wickremesinghe requested the public to use fuel and gas as carefully as possible and warned that the next three weeks will be a tough time for the country when it comes to fuel supply.

“The country spends USD 500 million per month on fuel. Some estimate that global oil prices will rise by as much as 40 per cent by the end of this year. In this context, the idea of ​​introducing a coupon system for fuel cannot be ruled out. Somehow, we have to find USD 3.3 billion worth of fuel for the next six months. It costs USD 40 million a month to import gas. We are currently using multilateral assistance, local currency and Indian loans to import gas. We will require USD 250 million over the next six months for gas.”

In terms of rice, the country’s annual rice requirement is 2.5 million metric tons. But, we have only 1.6 million metric tons of rice in stock. We need to import food items to meet our daily requirements. It costs about USD 150 million a month, he said.

Saying that chemical fertiliser was needed to boost local agriculture, the PM said, it costs USD 600 million a year to import fertiliser for paddy, vegetables, fruits, other major crops as well as for tea, rubber, coconut and export crops. The country is losing its export market owing to this, he warned.

However, Sri Lanka does not need large amounts of foreign exchange for health for the next six months as those groups and countries have provided substantial support for the health system.

“In this context, we need $5 billion to ensure our daily lives are not disrupted for the next six months. We need to strengthen the rupee in line with the daily requirements of the citizens. Another USD 1 billion is needed to strengthen the rupee. That means we need to find $6 billion to keep the country afloat for the next six months.”

According to the Central Bank, the average GDP growth in 2022 will be -3.5 According to the International Monetary Fund, the situation is even worse. According to them, its growth will be -6.5 per cent, he said and added,

“The Government has lost between Rs 600 – Rs 800 billion in revenue with the abolition of the tax system we implemented in 2019. That was the beginning of the decline of our economy. Therefore, we must immediately return to the 2019 tax system. It is a fact that we all know that money has been printed indefinitely in recent times. Rs 2.5 billion has been released from 2020 to 20 May 2022.”

“Many Government agencies do not have proper financial management. The Road Development Authority is one such example. Although they had the funds, they failed to manage those funds in accordance with Treasury regulations. In the current situation in our country, the Government is unable to provide funds to cover the losses of any state-owned enterprises. That debt burden can no longer be borne by the state or state-owned banks. We are currently in talks with the International Monetary Fund. Our discussions are based on our future economic plan. Accordingly, 2023 will see us face all the challenges. We need to achieve economic stability by the end of this year. Then by 2024, we will have the opportunity to create economic stimulus through financial stimulus. By 2025, our goal is to balance our budgets or create a primary surplus,” the PM added. 

“We call on the IMF to hold a conference to help unite our lending partners. Holding such a conference under the leadership of India, China and Japan will be a great strength to our country. China and Japan have different credit approaches. It is our hope that some consensus on lending approaches can be reached through such a conference.

Alongside the economic hubs of Singapore and Dubai, we too have the potential to grow into another economic hub. Vietnam is a great example of having undertaken such a task successfully. Our ultimate goal is to create a new economy for Sri Lanka. The goal is to transform Sri Lanka into a developed country by 2048, the centenary of Independence,” he said.

Wickremesinghe said the Government is focusing on six key areas to overcome the crisis situation. They are: Taking maximum action to ensure food safety, increase in grant limit, writing off farmer loans one hundred per cent, free ownership of lands by residents, granting ownership of urban flats to occupants on a concessional basis and opening of flats built by China for the public.

“While the economy is in turmoil, people are facing various hardships. We will take action to alleviate their suffering as much as possible. The current annual expenditure on providing various relief to the economically backward is USD 350 million. This amount is expected to increase to US $550 million.

At the request of China when I was previously the Prime Minister, they donated 1,888 apartments to our country. One hundred and eight of these houses are reserved for artistes. We will take steps to provide all these houses to the deserving without any political influence. My hope is to set up a programme to provide those 1,888 homes for free,” Wickremesinghe said.

BY Gagani Weerakoon and Methmalie Dissanayake