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Prime Minister of Sri Lanka Says $5bn Needed to Survive This Year

Prime Minister of Sri Lanka Says $5bn Needed to Survive This Year
Source: BBC

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 basic necessities as it faces its worst economic crisis in more than 70 years.

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

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

The government has been in negotiations 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 satisfy Sri Lanka’s fundamental demands this year.

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

It comes after Sri Lankan MPs approved a $55 million loan from India’s Exim Bank for fertilisers.

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

He also predicted a halt in government payments to firms and workers across the country as monies were diverted to pay for food.

“A lot of people will go hungry,” Mr Wickremesinghe said, “therefore the food program we’re launching will ensure that all families, including those with no income, receive food.”

“To provide food, we may set up communal kitchens in temples and churches. It is necessary for the community to become involved “He went on to say.

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 greatest economic crisis since independence from the United Kingdom in 1948.

The epidemic, rising oil prices, and populist tax cuts have all had a negative impact on the country’s economy.

A scarcity of medications, gasoline, and other necessities has also contributed to the expense of life reaching new highs.

In May, Sri Lanka’s official rate of inflation, which measures the rate at which prices grow, increased by 39.1 percent year on year. At the same period, food costs 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 total 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) will be raised from 8% to 12% immediately. The move was intended to increase income by 65 billion rupees ($181 million; £144 million). It also said that the corporation tax rate will increase from 24% to 30% in October.