Sri Lankan economy has ‘completely collapsed’, leader says

Sri Lanka’s Prime Minister Ranil Wickremesinghe has said the country’s economy has “completely collapsed”, leaving it unable to pay for essentials such as oil imports.

It follows months of shortages of food, fuel, and electricity, and the realisation that even the credit lines from neighbouring India that have sustained the country so far will not be enough.

Mr Wickremesinghe told Sri Lanka’s parliament: “We are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food.

“Our economy has completely collapsed – that is the most serious issue before us today.”

Mr Wickremesinghe said that the state-owned Ceylon Petroleum Corporation is $700m (£572m) in debt, adding: “As a result, no country or organisation in the world is willing to provide fuel to us.

“They are even reluctant to provide fuel for cash.”

Sri Lanka has been struggling under the weight of its debt, combined with the impacts of the coronavirus pandemic, including a loss of tourism revenue and the rising cost of commodities.

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Sri Lankan Prime Minister Ranil Wickremesinghe arrives at a Buddhist temple after his swearing-in ceremony amid the country's economic crisis, in Colombo, Sri Lanka, May 12, 2022. REUTERS/Dinuka Liyanawatte/File Photo/File Photo
Image: Sri Lankan Prime Minister Ranil Wickremesinghe

Mr Wickremesinghe said that efforts to turn the situation around had failed, adding: “If steps had at least been taken to slow down the collapse of the economy at the beginning, we would not be facing this difficult situation today.

“But we lost out on this opportunity.

“We are now seeing signs of a possible fall to rock bottom.”

Members of Samagi Vanitha Balawegaya, a part of the main opposition party Samagi Jana Balawegaya, try to move a barrier during a protest near Sri Lanka's Prime Minister Ranil Wickremesinghe's private residence, amid the country's economic crisis, in Colombo, Sri Lanka, June 22, 2022. REUTERS/Dinuka Liyanawatte
Image: Protests continued on Wednesday, with opposition supporters pictured here near Mr Wickremesinghe’s home

Last month, Mr Wickremesinghe blamed the previous government for the problems, accusing them of “running down the economy”.

Previous prime minister Mahinda Rajapaksa resigned in May after months of protests and clashes between government supporters and those demanding a change in leadership.

This brought veteran Mr Wickremesinghe to the role for a sixth time, in a move that opposition politicians said was aimed at protecting President Gotabaya Rajapaksa and his family from protesters’ anger.

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