Sri Lanka opposition threatens no-confidence motion, industry warns of ‘fall off precipice’ -Breaking
Devjyot & Uditha Jayasinghe
COLOMBO, (Reuters) – Sri Lanka’s main opposition party asked for effective government action or a no confidence motion. This comes after business leaders representing garments and tea warned that exports could drop 20-30% in the coming year.
Due to its high level of debt, the country doesn’t have enough money to purchase imports. This has caused crippling shortages in fuel, power and, increasingly, medicines. The country has been experiencing street protests for over a month despite the imposition of a state-of-emergency and two-day curfew.
After his resignation this week, President Gotabaya Rajapaksa now runs his government with just a few ministers. Opposition and some coalition partners have rejected the calls for unity governments to address the worst crisis since decades.
Although at least 41 legislators have left the ruling coalition in order to be independent, the government maintains that it has the majority of parliamentarians.
Sajith Premadasa (leader of Samagi Jana Baliwegaya) stated in parliament, “The government must address the financial crisis”
Sri Lanka should avoid disorderly debt defaults. It is imperative that the government suspend all debts and appoint financial advisors in order to begin restructuring debt.
After parliamentarians jostled with each other in the morning, proceedings at Parliament were temporarily suspended. Two members of the Chamber were removed on orders from the Speaker.
Nearly twenty-two associations representing the industries employing a fifth the nation’s 22million people, urged government officials to urgently seek financial assistance from the International Monetary Fund, the World Bank, and the Asian Development Bank.
Rohan Masakorala was the director-general of Sri Lanka Association of Manufacturers And Exporters of Rubber Products. He stated, “We must find a solution in the next weeks” at a press conference.
According to our estimates, both service and merchandise exports may drop between 20-30% and 30% this year because of a shortage in dollars and higher freight prices.
Rajapaksa continues to struggle to find a finance minister who will hold negotiations with IMF this month for emergency loans. Ali Sabry, Rajapaksa’s resignation submitted on Tuesday after only a few days in office. It wasn’t clear whether the president accepted Sabry’s resignation.
Masakorala declared, “We’re pushing both the government (and opposition) to create political stability and provide us with a path forward.” Masakorala stated that the IMF should have been established yesterday.
Sri Lanka’s foreign reserves dropped by 70% during the past 2 years to $1.93Billion at the March 31st. The country has $1 billion in outstanding debt that must be paid by July and even more this year.
The inflation rate has risen to the highest point in over a decade. On Friday, the Central Bank of Sri Lanka will raise its key interest rates by up to 400 basis points (bps). This follows a 100-bps increase in March.
Although the government is able to secure currency swaps and credit lines worth billions of dollars in India and China, industry experts say that it must do more. They are urging central bank Governor to immediately begin negotiations.
Russell Juriansz (chairman of the Sri Lanka Shippers’ Council) stated that “The Indian credit lines won’t last until end-April.”
We appeal to President Obama to make the right decision, or it will be a haunting memory for him the rest of his days.”
Sri Lankan authorities have also agreed to import medicines from India through a credit line worth $1 billion, according to Saman Rathnayake, a government official in the health sector.