Sri Lanka’s Prime Minister says economy has collapsed

Sri Lanka’s prime minister has said its debt-laden economy has “collapsed” after months of shortages of food, fuel and electricity.

On Wednesday 22nd June; Prime Minister, Ranil Wickremesinghe, has informed Sri Lanka’s parliament that the South Asian country is: “facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food. Our economy has completely collapsed.”

Mr Wickremesinghe is also the finance minister tasked with stabilising the economy.

He said Sri Lanka is unable to purchase imported fuel, even for cash, due to heavy debts that is owed to its petroleum corporation.

He has informed that the government has missed out on the opportunity to turn the situation back around with that and has warned that: “we are now seeing signs of a possible fall to rock bottom”.

He told legislators: “Currently, the Ceylon Petroleum Corporation is $700 million in debt. 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 muddling through, mainly supported by the four billion dollars (£3.25 billion) in credit lines from neighboring countries such as India.

Despite this, Mr Wickremesinghe has alerted that India would not be able to keep Sri Lanka afloat for too long.

Sri Lanka has already announced that it is suspending repayment of seven billion dollars (£5.7 billion) in foreign debt which is due for repayment this year- pending the outcome of negotiations with the International Monetary Fund on a rescue package.

It must pay five billion dollars (£4.07 billion) on average annually until 2026.

The foreign currency crisis has resulted in massive shortages that have forced people to stand in long queues to purchase what are commodity items for people. This includes items such as fuel, oil for cooking and medicine.