Sri Lankan PM says economy ‘has collapsed’, unable to buy oil

Sri Lankan Prime Minister Ranil Wickremesinghe (AP Photo/Eranga Jayawardena)

COLOMBO (AP) — Sri Lanka’s prime minister says its debt-ridden economy has “collapsed” after months of food, fuel and power shortages, and the South Asian island nation cannot not even buy imported oil.

“We are now facing a much more serious situation beyond just shortages of fuel, gas, electricity and food. Our economy has completely collapsed. This is the most serious problem facing us today,” Prime Minister Ranil Wickremesinghe told parliament.

Wickremesinghe is also the finance minister tasked with stabilizing the economy, which is collapsing under the weight of heavy debt, loss of tourism revenue and other impacts from the pandemic and soaring commodity costs.

“Currently the Ceylon Petroleum Corporation is $700 million in debt,” he told lawmakers. “As a result, no country or organization in the world is willing to provide us with fuel. They are even reluctant to provide fuel for cash,” he said.

Wickremesinghe said the government failed to act in time to reverse the situation as Sri Lanka’s foreign exchange reserves dwindled.

“If measures had at least been taken to slow the collapse of the economy at the beginning, we would not be facing this predicament today. But we missed this opportunity. We are now seeing signs of a possible drop to the bottom,” he said.

Sri Lanka got by, mostly backed by $4 billion in lines of credit from neighboring India. But Wickremesinghe said India would not be able to keep Sri Lanka afloat for too long.

Women wait in a queue to buy kerosene in Colombo, Sri Lanka, Saturday, June 11, 2022. Sri Lanka’s economic crisis, the worst in its history, has completely reshaped the lives of the country’s rampant middle class country. (AP Photo/Eranga Jayawardena)

Sri Lanka has already announced that it is suspending repayment of $7 billion in foreign debt due to be repaid this year, pending the outcome of negotiations with the International Monetary Fund on a bailout package. It must pay $5 billion on average annually until 2026.

The foreign currency crisis has led to massive shortages that have forced people to line up to buy basic necessities including fuel, cooking and medicine.

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