Sri Lanka’s prime minister tackles thorny finances, economy

Sri Lankan President’s Office via AP
In this handout photograph provided by the Sri Lankan President’s Office, President Gotabaya Rajapaksa, right, greets prime minister Ranil Wickremesinghe during the latter’s oath taking ceremony as the new finance minister in Colombo, Sri Lanka, Wednesday, May 25, 2022.

COLOMBO, Sri Lanka (AP) — Sri Lanka’s new Prime Minister Ranil Wickremesinghe has been sworn in as finance minister as this Indian Ocean island nation confronts its worst economic crisis in memory.

President Gotabaya Rajapaksa named Wickremesinghe minister of Finance, Economic Stability and National Policies in an apparent bid to regain Sri Lanka’s credibility as the government negotiates a bailout package with the International Monetary Fund.

Sri Lankans have been enduring shortages of food and fuel, power outages and other privations. The country lacks the financial wherewithal to buy imported necessities and pay its debts, and the economic crisis has fueled political turmoil, with protesters demanding Rajapaksa’s resignation.

Wickremesinghe’s appointment followed a government announcement that Sri Lanka was hiring firms to restructure its $51 billion external debt. Lazard of France will provide financial advice and Clifford Chance LLP will assist with legal help in restructuring Sri Lanka’s debts to international creditors.

A five-time former prime minister, Wickremesinghe was appointed to the post two weeks ago after his predecessor Mahinda Rajapaksa — who is the president’s elder brother — resigned following violent attacks by his supporters on peaceful anti-government protesters.

Sri Lankans for months have been forced to stand in long lines to buy scarce essentials, with many returning home empty-handed. There is a severe shortage of many goods, from food, cooking gas, medicine and fuel to toilet paper and matchsticks.

The economy has suffered under the pandemic, which has kept tourists away, and surging costs for most imports.

Nearly bankrupt, the country has suspended repayments of $7 billion in foreign loans due this year. The IMF has said any short or long-term assistance will hinge on talks with creditors on restructuring loans. Sri Lanka must repay about $25 billion in foreign loans by 2026.

The finance ministry said earlier this month that the country’s usable foreign reserves had plummeted to $25 million.

Wickremesinghe, 73, has been in Parliament for 45 years. His political party split in 2020 amid a leadership crisis and its most senior members left to form a new party, which is currently the country’s main opposition.

He said last week that petrol stocks had dwindled to a single day, but shipments of gasoline paid for by an Indian credit line started arriving over the weekend.

Protesters have been occupying the entrance to the president’s office for more than 40 days demanding Rajapaksa’s resignation.

Attacks on peaceful protesters by government supporters triggered countrywide riots in which nine people died including a lawmaker and 200 were hurt. Homes and properties of government ministers and their supporters were burned down. The violence has nearly dismantled the Rajapaksa dynasty after Mahinda Rajapaksa resigned as prime minister.

Apart from being tasked with reviving the economy, Wickremesinghe is working on a constitutional amendment to dilute presidential powers and better empower the Parliament.