Sri Lanka’s crisis: Prime Minister Ranil Wickremesinghe estimates $5 billion is required this year

Image credit: Ceylon Today

Sri Lanka’s prime minister has stated that the government will require at least $5 billion (£4 billion) in the next six months to pay for necessities as it faces its worst economic crisis in more than 70 years.

The money, according to Ranil Wickremesinghe, is needed for necessities such as food, gasoline, and fertilizer.

For the first time in its history, Sri Lanka defaulted on its international loans in May.

The country has been in talks with the International Monetary Fund about a bailout.

Mr Wickremesinghe, who is also the country’s finance minister, told parliament on Tuesday that more money was needed to meet Sri Lanka’s fundamental demands this year.

He stated that the island nation, which has a population of about 22 million people, required $3.3 billion in fuel imports, $900 million in food imports, $600 million in fertiliser imports, and $250 million in cooking gas imports.

Mr Wickremesinghe stated that the UN is planning a global appeal for Sri Lanka and has given $48 million for food, agriculture, and healthcare.

Mr Wickremesinghe also stated that the South Asian country will try to renegotiate a $1.5 billion financial aid agreement with China.

Sri Lanka is experiencing its worst economic crisis since independence from the United Kingdom in 1948.

In May, Sri Lanka’s official rate of inflation, which measures the rate at which prices grow, increased by 39.1 per cent year on year. In the same period, food prices in Colombo, the country’s largest city, soared by 57.4%.

Mr Wickremesinghe will present an interim budget next month, facing the difficult task of reducing overall government spending while maintaining social assistance payments.

Sri Lanka’s agricultural minister this week urged farmers to cultivate more rice, claiming that the country’s “food situation is deteriorating.”

The administration also stated that the value-added tax (VAT) would be raised from 8% to 12% immediately. The move was intended to increase revenue by 65 billion rupees ($181 million; £144 million). It also stated that the corporation tax rate would increase from 24% to 30% in October.

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