Sri Lanka PM takes finance minister role to lead debt talks with IMF

Ranil Wickremesinghe plans to present an interim budget within six weeks

Sri Lanka's President Gotabaya Rajapaksa, right, greets Prime Minister Ranil Wickremesinghe in Colombo on Wednesday during his oath-taking ceremony as the new finance minister. AP

Sri Lanka's Prime Minister Ranil Wickremesinghe was on Wednesday given dual charge as finance minister and will lead bailout talks with the International Monetary Fund.

Mr Wickremesinghe was sworn in by President Gotabaya Rajapaksa as Minister of Finance and Economic Stabilisation and National Policies, two weeks after he was invited to form a unity government, following his predecessor's resignation.

On Tuesday, Mr Wickremesinghe told Reuters he would present an interim budget within six weeks, slashing infrastructure projects to redirect funds into a two-year relief programme.

The move to appoint Mr Wickremesinghe as finance minister comes as opposition parties refuse to take key Cabinet roles in the so-called unity government, highlighting the risk of further political instability.

“The president's party had wanted the finance portfolio, but the PM insisted he wanted it if he is to lead the country out of the economic chaos,” a senior politician involved in the negotiations told AFP.

As a member of the opposition, Mr Wickremesinghe criticised the president’s policies, highlighting falling foreign currency reserves and calling for the government to seek help from the IMF.

“Ranil Wickremesinghe is the better option, but we'll have to see if he has a majority in parliament and if he can do the job of both the prime minister and finance minister,” Lakshini Fernando, a macroeconomist for Sri Lanka-based investment firm Asia Securities, told Reuters.

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  Catholic priests and sisters hold placards during a demonstration against the economic crisis in Colombo, the capital of Sri Lanka. All photos: AFP

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  Catholic priests and sisters hold placards during a demonstration against the economic crisis in Colombo.

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  Protesters lash out after a surge of prices and a shortage of fuel and other essential commodities outside the president's office in Colombo.

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  All 26 Cabinet ministers resigned after thousands defied a national state of emergency and curfew, and joined street protests denouncing the government.

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  The curfew has been lifted but the president and his elder brother Prime Minister Mahinda Rajapaksa continue to hold on to power.

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  Sri Lankans have endured long queues to buy fuel, cooking gas, foods and medicine, most of which come from abroad and are paid for in hard currency.

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  The fuel shortage has caused rolling power cuts lasting several hours a day.

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  The extent of the crisis became clear when Sri Lanka could not pay for imports of basic supplies because of its mounting debts and dwindling foreign reserves.

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  Sri Lanka’s usable foreign reserves reportedly amount to be less than $400 million, yet it is saddled with about $7 billion in foreign debt obligations for this year.

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  Police used water cannon to disperse angry protesters who marched toward the Rajapaksa family home in southern Sri Lanka, demanding that they quit.

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  The president had appealed to people to limit their use of power and ‘extend their support to the country’ but the crisis has intensified since the main opposition party rejected his call to form a unity government. Reuters

The World Bank said late on Tuesday that it did not plan to offer new financing to Sri Lanka “until an adequate macroeconomic policy framework is in place”.

Mr Wickremesinghe has held talks with foreign envoys, including those from India, China and the US, and discussed with representatives from the Asian Development Bank and World Bank ways to replenish food, fertiliser and medicine supplies.

Sri Lanka needs $4 billion over the next eight months to pay for imports as it faces a severe shortage of foreign currency required to buy essentials such as fuel and medicine.

Meanwhile, public protests continue, calling for Mr Rajapaksa to step down following the resignation of his brother, and Mr Wickremesinghe’s predecessor, Mahinda Rajapaksa.

The island nation of 22 million people has fallen into default for the first time in its history after the expiry of a 30-day grace period for missed interest payments on two of its sovereign bonds.

The country’s central bank also gave a warning that headline inflation will worsen to 40 per cent over the next few months.

The World Bank is repurposing resources from previously approved projects to help the government with some essential medicine, temporary cash transfers for poor and vulnerable households, and to support farmers and small businesses.