Sri Lanka’s new government plans to sell off its national carrier to prevent losses, part of an effort to stabilize the country’s finances, even forcing authorities to print money to pay government salaries.
Prime Minister Ranil Wickremesinghe said in a televised address to the nation on Monday that the new administration was planning to privatize SriLankan Airlines. The carrier lost 45 billion rupees ($ 124 million) in the year ending March 2021, he said, just days before the nation officially defaulted on its foreign debt.
“It should not be that this loss should be borne by the poorest of the poor who did not set foot on the plane,” said Vikramasinghe.
Vikramasinghe – less than a week into his job – said he was forced to print money to pay his salary, which would put pressure on the country’s currency. The country has only one-day gas reserves and the government is working to get dollars in the open market to pay for three ships, including crude oil and furnace oil anchored in Sri Lankan waters, Vikramasinghe said.
“The next few months will be the most difficult month of our lives,” said Vikramasinghe. “To resolve the current crisis we must immediately establish a national assembly or political body with the participation of all political parties.”
The prime minister has promised to announce a new “relief” budget to replace President Gotabaya Rajapaksa’s “development” budget, which has helped boost Asia’s fastest-growing inflation rate. The cabinet will propose raising the threshold for issuing treasury bills from Rs 3 trillion to Rs 4 trillion, Bikram Singh said, predicting a budget deficit of 13% of GDP for the year ending December 2022.
Vikramasinghe’s appointment came last week after violent clashes between government supporters and protesters demanding Rajapaksa’s resignation. He has not yet appointed a finance minister to lead the bailout talks with the International Monetary Fund and is seeking bridge loans from countries including India and China. It is unclear whether the government will receive cash in the absence of a full cabinet.
With the grace period for two unpaid foreign bonds ending on Wednesday, Sri Lanka is heading into a default, the latest blow to a country plagued by economic woes and social unrest.
The country’s dollar bonds rose on Monday, although they remained deep in the troubled region. JPMorgan Chase & Co. According to its data, surplus yield investors have demanded that the sovereign notes on the US Treasuries be reduced by 22 basis points to 37.29 percentage points.
In 2010, the Colombo government bought a stake in SriLankan Airlines from Emirates in Dubai. According to FlightRadar24, the national carrier, which has a fleet of 25 Airbus SE planes, flies to destinations in Europe, the Middle East as well as South and Southeast Asia.
Key points from the speech:
Revenue in 2022 could be Rs 1.6 trillion versus budget estimate of Rs 2.3 trillion
“In the next few days” প্রয়োজন 75 million is needed
“Inflation is likely to rise further”; The government will no longer be able to subsidize gasoline and diesel
(Except for the title, this story was not edited by NDTV staff and was published from a syndicated feed.)