The country is in dire need of help as it is still planning to hold talks with the International Monetary Fund (IMF) for additional credit.

The PM told the Parliament that the country is going through a far more serious problem than the shortages alone and he warned of “a possible fall to rock bottom”.

Not citing any new developments, he stated the ongoing crisis that the island nation of 22 million is currently facing is to be considered its worst in recent memory.

By giving out all these comments, PM Ranil tried to emphasize that he was handling the most difficult task which was nearly impossible to fix quickly.

Considering all the factors such as the Russia-Ukraine crisis which has led to the surge in prices for the commodities, and lost tourism revenue, the after-effects of the pandemic have made the country stumble under the heavyweights of a huge debt.

This is slowly forcing the country to move towards bankruptcy with close to no money to import even basic commodities such as cooking gas, fuel, milk, etc.

Even lawmakers from the two prominent opposition parties had boycotted Parliament this week to protest against the recently elected Prime Minister who is also the Finance Minister, as he is unable to deliver the promises he had made.

Recently, the government officials have been given every Friday off for the next three months to save on fuel and grow their own fruits and vegetables in their backyards.

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When the 30-day grace period for missed coupons on dollar bonds expires, it might be declared defaulting. It would be the country’s first default on foreign debt.

Sri Lanka’s government stated in mid-April that it had stopped repaying its foreign debt to save money for food and fuel imports as the country struggled with a dollar shortage. It prompted officials to impose financial controls and import restrictions.

Carlos de Sousa, a money manager at Vontobel Asset Management in Zurich, said that without an agreement there would be a formal default. He also said that for the markets, Sri Lanka is already de facto in default. So, the price impact of such an event is unlikely to be considerable.

Sri Lanka is going through widespread power cuts, food, medicine & oil shortages, and a depreciating currency, which fuelled protests and pushed Prime Minister Mahinda Rajapaksa to resign.

Last week, his brother, President Gotabaya Rajapaksa, appointed a long-time opponent to run the government, hoping to bring a modicum of stability amid bailout talks with the International Monetary Fund.

On May 16, Prime Minister Ranil Wickremesinghe, who has just been in office for a week, announced that the government intends to sell the national airline and promised to propose a new relief budget.

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