Sri Lanka PM tells bankrupt nation to prepare for ‘difficult journey’

The Sri Lanka prime minister told the nation to prepare for “a difficult and bitter journey” as he declared the country bankrupt and prepared to approach the International Monetary Fund for a loan.

PM Ranil Wickremesinghe yesterday declared Sri Lanka “bankrupt” before making public that he had approached the IMF to figure a way out of the nation’s worst financial crisis in years.

“We are now participating in the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation than in previous negotiations.

“Due to the state of bankruptcy our country is in, we have to submit a plan on our debt sustainability to (the IMF) separately. Only when they are satisfied with that plan can we reach an agreement at the staff level. This is not a straightforward process.”

Sri Lanka’s foreign exchange reserves plunged to record lows, with money running out to pay for essential imports such as food, medicine, and fuel, leaving millions of people alarmed.

As a consequence of the crisis, schools have been suspended and fuel has been limited to essential services. In several major cities, including the commercial capital, Colombo, hundreds continue to queue for hours to buy fuel, where they clash with the authorities as they wait.

Sri Lanka’s Energy Minister, Kanchana Wijesekera, said on Sunday that the country had less than a day’s worth of fuel left.

“In terms of fuel and food, our country was going to have to face this crisis at some point in time. Fuel was scarce. Food prices went up. Due to the recent global crises, this situation has become more acute and we who were in the frying pan fell into the oven.”

The 73 year old PM says he hopes to have a debt restructuring plan ready for the IMF by August. Once there is an agreement in place, a comprehensive loan assistance program would be prepared over the next four years.

Wickremesinghe added that he expects inflation to rise to 60% by the end of the year.

“This will be a difficult and bitter journey. But we can get relief at the end of this journey. Progress can be made.”

SOURCE: CNN