Sri Lanka will have to endure its unprecedented economic hardships for at least two more years, the country’s finance minister said Wednesday while warning of an imminent cash crunch.
Months of blackouts and acute shortages of food, fuel and pharmaceuticals have brought widespread suffering across the South Asian island nation.
Public anger has sparked sustained protests demanding the government resign over its mismanagement of the economic crisis, Sri Lanka’s worst since independence in 1948.
“People should know the truth. I don’t know if people realise the gravity of the situation,” Finance Minister Ali Sabry told parliament.
“We won’t be able to resolve this crisis in two years, but the actions we take today will determine how much longer this problem will drag.”
Sabry said the country now has less than $50 million in usable foreign exchange reserves, needed to finance essential goods to keep Sri Lanka’s import-dependent economy ticking over.
Official data shows $1.7 billion in reserves, but most of that figure includes a Chinese currency swap which cannot be used to pay for imports from other countries.
Sabry said the government had erred by delaying an approach to the International Monetary Fund for a bailout.
Negotiations with the IMF are ongoing but Sri Lanka’s central bank chief has said any assistance from the lender is months away.
The government will unveil a new budget soon and raise taxes to replenish state revenue.
“It was a historic mistake to sharply reduce taxes in 2019,” Sabry said, adding that the previous central bank chief had also blundered by exhausting foreign reserves to defend Sri Lanka’s overvalued currency. (Colombo AFP)
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