Sri Lankan president warns economic crisis will continue into next year

Sri Lanka is facing a “great danger” from a fuel shortage caused by its unprecedented economic crisis that will continue until at least the end of the year, President Ranil Wickremesinghe warned on Wednesday.
The 73-year-old, who came to power last month after his predecessor Gotabayah Rajapaksa was forced to flee the country and resign after months of protests, said the financial collapse had turned into a major political crisis.
“Today we are faced with an unprecedented situation that our country has never faced in recent history,” he said, opening a new session of parliament.

“We are in great danger.”

Sri Lanka will resume bailout talks with the International Monetary Fund (IMF) in August, Wickremesinghe said on Wednesday, urging lawmakers to form a full party government to resolve the devastating economic crisis.
In his speech in Parliament, Mr. Wickremesinghe said constitutional amendments were needed to limit presidential powers, meaning he would meet a key demand from the protesters who ousted Mr. Rajapaksa.

“The president of a country does not have to be a king or a god who towers over the people. He or she is one of the citizens,” Mr Wickremesinghe said.

The island nation of 22 million is facing its worst financial crisis since independence from Britain in 1948, with its foreign exchange reserves at an all-time low and the economy hit by the COVID-19 pandemic and plummeting government revenues.
Angered by persistent shortages of basic necessities, including fuel and medicine, as well as skyrocketing inflation exceeding 60% year on year, hundreds of thousands took to the streets in early July, forcing Mr. Rajapaksa to first flee the country and then quit your post.
Mr Wickremesinghe, who was then prime minister, became acting president and was later confirmed in that position by parliament.

Discussions with the IMF for a four-year program that could provide up to $3 billion ($4.32 billion) will resume in August, Mr Wickremesinghe told lawmakers in his first major address to parliament since taking office.

The government is working with its financial and legal advisers, Lazard and Clifford Chance, to finalize a plan to restructure foreign debt, including about $12 billion owed to bondholders.
“In the near future, we will submit this plan to the International Monetary Fund and negotiate with the countries that have provided loan assistance,” said Mr. Wickremesinghe.
“Subsequently, negotiations with private lenders will also begin to come to a consensus.”
A veteran MP whose party won only one seat in parliament, Mr Wickremesinghe last month won a leadership vote in a 225-member house backed by the country’s ruling party, which is dominated by the Rajapaksa family.

But the new president reiterated his call for a unity government, adding that he had already begun discussions with some groups.

“I respectfully extend the hand of friendship to all of you. I strongly invite you to put aside the past and unite for the sake of the country,” said Mr Wickremesinghe.
Opposition MP Harsha de Silva supported the president’s proposal.

“We must come together, in particular, establish a one-party or multi-party government for a limited period of time to work towards the creation of this new Sri Lanka under a common minimum program,” he tweeted.

As the interim budget is likely to be presented within a few weeks, Mr Wickremesinghe said his government is working on a long-term economic plan.
This will include reducing the public debt from its current level of 140 percent of Sri Lanka’s GDP to less than 100 percent within 10 years and running a budget surplus by 2025. He didn’t give any details.
Mr Wickremesinghe, who has been accused by activists and human rights groups of cracking down on anti-government protests, said peaceful struggle is a fundamental right, but he will not tolerate violence.

“I will not allow anyone to act outside the law,” he said.