Sri Lankans spend time as leaders seek solution to economic crisis

COLOMBO, Sri Lanka (AP) — The people of Sri Lanka, who have suffered fuel and food shortages for months, are facing more pain as a newly installed government scrambles to find solutions to the Indian Ocean nation’s economic emergency. .

Like many others, fish seller Gamini Mallavaracchi says he is pinning his hopes on President Ranil Wickremesinghe’s ability to revive the economy and restore stability after months of turmoil and protests.

“Things are really, really bad and my life is almost ruined,” Mallavarachi said, as he could not find fuel to go to the village where he used to buy it, and anyway His customers were buying less and less.

Mallavarachi said he considers Wickremesinghe his “last hope”.

“I think he will do something. With his experience and knowledge, I believe he has the potential,” Mallavaracchi said. “But, he has to show some results before the end of this year,” he said. Otherwise, they will also have to face the opposition of the people.

Sri Lanka moved closer to ending its dire economic and humanitarian crisis with the 20 July appointment of Wickremesinghe’s new government after months of protests and turmoil. But tough obstacles were ahead.

Lawmakers supported him in extending a national emergency that gives the president broad powers to crack down on any violence. That could give him time to try to strike a deal with the International Monetary Fund over a $3 billion bailout request.

By my own admission, doing so is easier said than done.

On Saturday, Wickremesinghe said he has pushed back a month from his target of reaching an agreement by early August after talks with the IMF were halted amid recent political turmoil.

So far there has been little sign of progress in negotiations with other Sri Lankan creditors of over $50 billion that is owed to lenders.

“Because the public debt is assessed as volatile,” the lending agency said in a statement, “the IMF’s approval would require “substantial financing assurances from Sri Lankan creditors that debt stability will be restored.” This would require both public and private lenders to agree to accept smaller payments on bonds, lower interest rates or extended repayment terms.

The IMF’s terms would include tax hikes, better safeguards against corruption and other reforms such as the privatization of state-owned companies such as national airlines.

The World Bank issued a statement last week expressing “deep concern” over Sri Lanka, saying it would not supply more funds pending plans for “deep structural reforms” to address the cause of the crisis.

“He is in a bind,” said Tamannaah Salikuddin of the US Institute of Peace, an independent institution based in Washington DC

The austerity measure is a bitter pill to swallow for those who are going hungry and walking or biking to work because they cannot buy fuel. He said raising the taxes would reduce the support of the ruling party stalwarts who have benefited from the tax cuts, which have eroded the state exchequer.

In June, Wickremesinghe, who was then prime minister for the sixth time, suggested a conference of major donors such as India, China and Japan. Sri Lanka, whose foreign exchange reserves have been largely depleted, is seeking “bridge financing” to be able to buy fuel and other essential supplies to keep the economy running.

“We expect friendly countries to support Sri Lanka in the short term,” said political analyst Jehan Perera.

On a visit to New Delhi last week, US Agency for International Development administrator Samantha Power likened India’s aid to China, and urged Beijing to do more. The Indian government says it has provided more than $1.5 billion in loans to purchase fuel, food, medicine and other essential items.

Asked about Sri Lanka’s debt impasse – and criticism that China’s debt is not transparent – Foreign Ministry spokesman Zhao Lijian accused the US and other “Western capital” of manipulating Sri Lanka’s credit rating, speculating in its markets and accused of preventing it from obtaining new financing.

Zhao said, “We hope that the United States can really help Sri Lanka overcome its current difficulties, reduce the debt burden and avoid using every possible opportunity to dishonestly, defame other countries and destroy geopolitics.” Instead of looking for political games, one can realize sustainable development.”

Official Chinese debt to Sri Lanka accounts for only 10% of its debt, but the amount of additional commercial borrowings from China is unclear.

“I don’t see China doing anything until the rest of their debt is restructured,” Salikuddin said. “They never make the first move.”

As negotiations with Sri Lanka’s lenders go on, people there move, searching for routes and often wait in line for gasoline, sometimes returning home empty-handed.

“Even if a deal is agreed (with the IMF), Sri Lanka still faces a tough road as far as its economic recovery is concerned. By no means is a deal agreed and things return to normal very quickly, Gareth Leather of Capital Economics said in a recent online briefing.

The state-owned gas company has started distributing LPG cylinders – a mixture of propane and butane – but most people have to wait at least overnight to be able to buy them and the price has tripled since October. has exceeded.

The government has also introduced an app to ration gasoline purchases: 4 liters (1 gallon) per week for motorcycles, 20 liters (5.3 gallons) a week for cars and 40 liters (10.6 gallons) a week for buses. .

It aims to reduce long queues at gas stations and crack down on the black market for fuel. Priority is being given to school buses, farming, fishing, tourism and public transport.

Many people say they have cut back or virtually gave up eating fish and meat because of the high prices. Milk powder is hard to get and the prices of most essentials, including roti and dal, have tripled.

“People will be more patient and ready to wait until the acute shortage is dealt with,” Pereira said. “Otherwise, it would be like a Tinder box – you can see angry people in their cars, motorbikes every day on the streets. Angry people, this is a Tinder box situation, and a spark of more turmoil. will be the reason.”

Mallavarachi, a fish seller, earned about 6,000 rupees ($16) a day. Now he is living on his savings.

Sithum Udara, an office clerk, still goes to work, but a quick, comfortable journey by motorbike that has become the misery of cramming in buses or trains.

“Going to office is a nightmare now. I am really fed up and I feel like this is the worst time of my life,” Udara said. “I have no choice but to go to work.”

But Udara believes that Wickremesinghe should be given “ample time” to revive the economy and address other problems. “He cannot do it overnight; People should understand that reality.”

For now, a big part of the president’s job is managing expectations.

“The first thing they have to do is work on economics,” Salikuddin said. “It’s the bankruptcy of the economy that got people on the road,” she said.