Sri Lanka faces ‘great danger’ as crisis drags on

Sri Lanka faces a “major risk” of fuel shortages triggered by its unprecedented economic crisis, which will last at least until the end of the year, President Ranil Wickremesinghe warned on Wednesday.

The 73-year-old, who came to power last month after his predecessor Gotabaya Rajapaksa was forced to flee the country and resign after months of protests, said the financial crisis had turned into a serious political crisis.

“Today we face an unprecedented situation that our country has never faced in recent history,” he said at the opening of a new parliamentary session.

“We are in great danger.”

Tens of thousands of people stormed Rajapaksa’s headquarters last month because of the acute food, fuel and medicine shortages that Sri Lanka’s 22 million residents have been suffering since late last year.

Wickremesinghe said the only way out of the crisis was “if we all face this challenge together as one people” and called on all parties in Parliament to join his initiative for a “unity government”.

Sri Lanka was considered a prosperous middle-income country before defaulting on its $51 billion external debt for the first time in mid-April.

The country is running out of foreign exchange to fund imports, and officials estimate the country urgently needs at least $4 billion to import essential goods to fill current shortages.

Wickremesinghe has held talks with the International Monetary Fund to secure a four-year bailout. He informed Parliament that negotiations are progressing but gave no timetable for concluding an agreement.

Motorists wait days to buy rationed fuel as the country faces protracted power outages. Inflation has exceeded 60 percent.

Wickremesinghe thanked India for providing credit lines to import petrol and diesel, but said Colombo must be able to pay with its own foreign exchange earnings and rationing will continue at least until the end of this year.

He also criticized Rajapaksa for rejecting two major infrastructure investments from Japan that could have raised $3 billion.

The cancellation of a light rail transit (LRT) and a deep sea terminal at the port of Colombo has also damaged Japan-Sri Lanka ties, Wickremesinghe said.

However, the pro-Western Wickremesinghe was not referring to China, which owns over 10 percent of Sri Lanka’s bilateral loans. Beijing’s approval is crucial to any debt restructuring deal.