Band Uditha Jayasinghe and Devjyot Ghoshal
COLOMBO, April 8 (Reuters) – On Friday, Sri Lanka’s main opposition party called on the government to resolve an economic crisis or face a motion of no confidence, as business owners clothes for tea and other industries have warned that exports could fall Up to 30% this year.
The heavily indebted country has little money to pay for imports, which has led to crippling shortages of fuel, electricity, food and, increasingly, medicine. Street protests have continued almost uninterrupted for more than a month, despite a five-day state of emergency and a two-day curfew.
President Gotabaya Rajapaksa leads his administration with just a handful of ministers after his entire cabinet resigned this week, while opposition and even some coalition partners have rejected calls for a unity government to deal with the worst crisis in decades.
At least 41 lawmakers left the ruling coalition to become independents, although the government says it still has a majority in parliament.
“The government must tackle the financial crisis and work to improve governance, otherwise we will propose a motion of no confidence,” said Sajith Premadasa, head of Samagi Jana Balawegaya. opposition grouptold parliament.
“It is imperative that Sri Lanka avoids a disorderly default. The government must work to suspend the debt and appoint financial advisers to start the process of debt restructuring.”
The work of Parliament was suspended twice in the morning as rivals were heckling, with two members temporarily removed from the chamber by order of the Speaker.
Nearly two dozen associations, representing industries that collectively employ a fifth of the country’s 22 million people, together urged the government to quickly seek financial assistance from the International Monetary Fund (IMF), World Bank and from the Asian Development Bank (ADB).
“We need a solution within a few weeks, otherwise the country will fall into a precipice,” Rohan Masakorala, chief executive of the Sri Lanka Association of Rubber Products Manufacturers and Exporters, told a meeting. press conference.
“Our estimate is that exports of goods and services could drop 20-30% this year due to a shortage of dollars, higher transport costs and power cuts.
Rajapaksa is struggling to find a new finance minister to talk to the IMF for emergency loans this month, after Ali Sabry tendered his resignation on Tuesday having spent just a day at the office. A The ruling party lawmaker said Rajapaksa has yet to accept Sabry’s resignation.
“We are pushing the government and the opposition to establish political stability as soon as possible and give us a way forward,” Masakorala said. “The IMF should have arrived yesterday.”
Sri Lanka’s foreign exchange reserves have plunged by around 70% over the past two years, reaching $1.93 billion at the end of March. He has a $1 billion debt due in July, and later in the year.
Inflation, meanwhile, hit its highest level in more than a decade, and on Friday evening the Central Bank of Sri Lanka is expected to raise its key interest rates by 400 basis points (bp) after a hike of 100bp in early March.
The government has secured billions of dollars in credit lines and currency swaps from India and China, but industry leaders say it needs to do more, urging the central bank governor to begin urgent negotiations.
“Indian lines of credit will only last until end of April,” said Russell Juriansz, Chairman of the Sri Lanka Shippers’ Council.
“We call on the president to make the right decision or this will haunt him for the rest of his life.”
In addition to importing essential medicines through a billion dollar line of credit with India, the Sri Lankan authorities are also in talks with the World Health Organization, the World Bank and the AfDB for the drug supply, government health official Saman Rathnayake told Reuters.
(Writing by Krishna N. Das; Editing by Muralikumar Anantharaman and Raju Gopalakrishnan)
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