Colombo: Bringing the finances of Sri Lanka into balance is the first priority for the new government of the country. The new administration under Prime Minister Ranil Wickremesinghe has been mulling selling its national airline to stabilise the losses to some extent. This step is an effort to steady the financial position of the country. Besides this, the authorities are forced to print money to pay government salaries.
Prime Minister Ranil Wickremesinghe said in a televised address to the nation Monday. The carrier lost 45 billion rupees ($124 million) in the year ending March 2021, he said, just days before the nation is set to formally default on foreign debt.
“It should not be that this loss has to be borne by the poorest of the poor who have not set foot on an aircraft,” Wickremesinghe said.
Wickremesinghe further added that he was forced to print money to pay salaries, which will put pressure on the nation’s currency. Wickremesinghe said the nation has only one day’s stock of gasoline and the government is working to obtain dollars in the open market to pay for three ships with crude oil and furnace oil that have been anchored in Sri Lankan waters.
“The next couple of months will be the most difficult ones of our lives,” Wickremesinghe said. “We must immediately establish a national assembly or political body with the participation of all political parties to find solutions to the present crisis.”
He has decided to announce a new “relief” budget to replace President Gotabaya Rajapaksa’s “development” budget that helped stoke Asia’s fastest inflation rate. Wickremesinghe said the cabinet will propose that parliament increase the treasury bill issuance limit to 4 trillion rupees from 3 trillion rupees, forecasting a budget deficit of 13% of gross domestic product for the year ending December 2022.
Amidst the resignation of Rajapaksa last week, Wickremesinghe took charge of the prime ministership of the country. The road for the new PM is not easy due to the economic crisis and unrest among the people of the country. Protests against the government have been continuing in the island country for the last two months. Protesters are blaming the government for the economic upheaval in the country.
Key points regarding Sri Lanka’s economy
Revenue in 2022 is likely to be 1.6 trillion rupees, versus a budget estimate of 2.3 trillion.
The country needs $75 million “within the next couple of days.”
The inflation rate will increase further in the coming days. The government can’t bear subsidies on gasoline and diesel further.