Devjyot and Uditha Jayasinghe

COLOMBO (Reuters – Sri Lanka’s prime Minister met Wednesday with protesters to demand that the government resign over the handling of an economic crisis. The opposition also threatened to introduce a motion to stop the government from entering parliament.

With 22 million inhabitants, the island nation is facing its most severe financial crisis in decades. The country’s currency shortage has made it impossible to import fuel or medicines. It also causes hours-long power outages.

Numerous protestors took to the streets to decry the government of President Gotabaya Rajapaksa as well his elder brother Prime Minister Mahinda Rajapaksa.

In a statement his office stated that “The prime minister will start negotiations with the protesters in Galle Face Green”, referring to a site where discontent has been the main focus.

The office stated that if protestors are willing to talk about their ideas to solve the problems facing the country, the prime minister will invite them to meet with him.

A few protesters living in the tent campment have stated that they will only be leaving if Rajapaksas step down.

After months of delays due to the worsening crisis, Sri Lanka will begin talks with the International Monetary Fund next week about a loan program.

S&P Global (NYSE:) Ratings on Wednesday lowered Sri Lanka’s foreign currency rating to “CC” from “CCC”, citing the economic crisis in the country and rising external funding pressures.

The ratings agency stated that Sri Lanka’s debt restructuring will be difficult and could take several months.

The negative outlook of Sri Lankan ratings is a result of high risks to repayments of commercial debt in Sri Lanka’s context, which includes external and fiscal pressures.” It added.

On Wednesday, Sri Lanka was revised by the World Bank to 2.4% growth, down from 2.1% earlier. But, they warned that there is still uncertainty in the economy’s future.

Tuesday’s statement by the chief of central banks stated that he will suspend payments to foreign creditors and use the dwindling reserves from foreign currency for imports.

JP Morgan analyst have stressed the importance of political instability in relation to government efforts to get external aid.

In addition to uncertainty, Samagi Jana Balawegaya (SJB), the opposition main alliance, stated that they would grant the president/prime minister one week each to stand down before moving a vote of no confidence to parliament.

IMF talks are only possible if there is political stability. “The people don’t trust this government,” Eran Wickramaratne (SJB national organiser) told Reuters.

Wickramaratne stated that “the president and prime minister must resign”, adding that the opposition has the required numbers in parliament.

Although more than two dozen legislators left the ruling coalition to declare themselves independent, the government claims it has a majority of the 225-member parliament.

Critics claim that the root of the crisis lies in poor management of public finances, which was exacerbated by tax cuts implemented by the government shortly before the COVID-19 pandemic.

(Reporting Uditha Jawasinghe, Devjyot ghoshal in Colombo; Editing done by Robert Birsel und Lisa Shumaker