“Sri Lanka’s economy has faced a complete collapse”

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Prime Minister Ranil Wickremesinghe says we are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food, where Sri Lanka’s economy has faced a complete collapse.

Speaking in Parliament today (22), he said in order to solve these issues, Sri Lanka must first resolve the foreign reserves crisis.

He added that it is no easy task to revive a country with a completely collapsed economy and that if steps had at least been taken to slow down the collapse of the economy at the beginning, the country would not be facing this difficult situation today, especially one that is dangerously low on foreign reserves.

“But we lost out on this opportunity. We are now seeing signs of a possible fall into the very bottom. However, we must come out of this situation. If not, we will be unable to seek solutions to any other issue in the country.”

The Premier said that currently, the Ceylon Petroleum Corporation is USD 700 million in debt. As a result, no country or organisation in the world is willing to provide fuel to Sri Lanka. They are even reluctant to provide fuel for cash.

“We have taken loans amounting to USD 4 billion under the Indian credit line. We have requested more loan assistance from our Indian counterparts. But even India will not be able to continuously support us in this manner. Even their assistance has its limits. On the other hand, we too must have a plan to repay these loans. These are not charitable donations.”

He said the way out of this dire situation is to hold discussions with the International Monetary Fund.

“Our aim is to hold discussions with the IMF and arrive at an agreement to obtain an additional credit facility. As the next step, we hope to form a foundation to stabilise the economy and implement an immediate programme to increase our export revenue.”

He revealed that following discussions with the Central Bank, Treasury, relevant government officials, professionals and experts this plan has already been formulated.

I urge you to inform us of a better solution if available. In fact, if you are in possession of a practical and more favourable plan for the country we call on you to put it forward.

If political parties wish we can take up any solutions presented by them in parliament. We are prepared to provide them with the necessary space and opportunity.”

The Prime Minister said that an IMF team on revenue and taxation visited Sri Lanka for discussions and presented the relevant report. Further, on Monday, the main IMF team arrived in Sri Lanka and the talks with the group will continue for the next several days.

“We have concluded the initial discussions and we have exchanged ideas on various sectors such as public finance, finance, debt sustainability, stability of the banking sector and the social security network.”

Representatives of the financial and legal advisory firms Lazard and Clifford Chance are now in Sri Lanka to assist in debt restructuring efforts and the framework for debt repayment restructuring is being formulated.

Meanwhile, next Monday, a team of representatives from the U.S. Department of the Treasury will also arrive in Sri Lanka.

If Sri Lanka were to receive the IMF seal of approval, he said the world will once again trust the country.

“It will help us to secure loan assistance as well as low-interest loans from other countries in the world.

Sri Lanka is also currently holding discussions with the World Bank, Asian Development Bank, the United States, other friendly nations and heads of state to secure interim short-term loans till we receive IMF support, he added.

“We will be able to lay the foundation to ensure economic stability following the successful completion of these tasks. But this by no means will be the end. In fact, it will be the beginning of our journey. A new journey toward a stronger economy.

We will then have to forge ahead with our plans to strengthen and create a new Sri Lankan economy.”