Wickremesinghe told lawmakers that talks with the International Monetary Fund (IMF) to revive the country’s “collapsed” economy are “difficult” because the South Asian nation of 22 million entered the talks as a bankrupt country rather than a developing one.
“Now we are participating in the negotiations as a bankrupt country. Therefore, we have to face a more complex and difficult situation than in previous negotiations,” Wickremesinghe said in Parliament.
“Due to the state of bankruptcy that our country is in, we have to separately submit our debt sustainability plan (IMF),” he added. “Only when they are satisfied with this plan can we reach an agreement at the staff level. It’s not an easy process.”
Sri Lanka is facing its worst financial crisis in seven decades after its foreign exchange reserves fell to record lows and dollars ran out to pay for essential imports, including food, medicine and fuel.
Schools were suspended and fuel was limited to essential services. In several major cities, including the commercial capital of Colombo, hundreds of people continue to queue for hours for fuel, sometimes clashing with police and the military.
On Sunday, Sri Lankan energy minister Kanchana Wijesekera said the country had less than a day’s worth of fuel left.
“Due to the recent global crises, this situation has escalated and we, who were in the frying pan, have ended up in the oven,” Wijesekera said.
On Tuesday, Prime Minister Wickremesinghe expressed hope that a debt restructuring and sustainability report would be submitted to the IMF by August. Once an agreement is reached, a comprehensive four-year loan assistance program will be prepared, Wickremesinghe said.
His speech in parliament was interrupted by opposition MPs chanting “Gotha, go home,” a nod to President Gotabai Rajapaksa, who was present.
For months, a large number of Sri Lankans called for Rajapaksa to step down due to allegations of mismanagement.
Wickremesinghe said inflation will rise to 60% by the end of this year.
“It will be a difficult and bitter road,” Wickremesinghe said. “But we can get relief at the end of this journey. We can make progress.”
The British government said Tuesday it is now advising against all but essential travel to Sri Lanka due to the impact of the economic crisis.