Sri Lanka on Tuesday admitted bankruptcy, proving earlier warnings by leading economists to be true.
Declaring bankruptcy, Prime Minister Ranil Wickremesinghe told parliament that the acute pain of the unprecedented economic crisis will linger at least until the end of next year, BSS reports, quoting AFP.
Wickremesinghe said the once-prosperous country will go into deep recession this year and acute shortages of food, fuel and medicine will continue.
"We will have to face difficulties in 2023 as well," the premier said. "This is the truth. This is the reality."
After Sri Lanka ran out of foreign currency to import vital goods, the country's 22 million were hit by record inflation and seemingly never-ending power cuts.
The South Asian island's hopes of an International Monetary Fund may also be dashed.
Wickremesinghe told lawmakers that recent discussions with a visiting IMF mission were fruitful but not as straightforward as in the past as it was now a bankrupt nation.
"Our country has held talks with the IMF on many occasions before. But this time the situation is different from all those previous occasions. In the past, we have held discussions as a developing country," Wickremesinghe said, different news outlets reported.
"But now the situation is different. We are now participating in the negotiations as a bankrupt country. Therefore, we have to face a more difficult and complicated situation," he said in explaining a roadmap for an economic recovery.
The IMF last week said more work was needed to set the nation's finances right and repair its runaway fiscal deficit before a deal could be struck on a funding arrangement to address its balance of payments crisis.
In another blow, Japanese Ambassador in Colombo Mizukoshi Hideaki reportedly said that there is a risk of financial assistance to Sri Lanka being mismanaged and hence Japan will not support the country at this point, Daily Mirror Online reported.
Direction Sri Lanka, consisting of Sri Lankan professionals, on Tuesday declared that the resignation of President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe is a prerequisite for the resolution of the current political-economic-social crisis, The Island Online reported.
Sri Lanka is currently almost completely without petrol with LITRO Gas Lanka Limited announcing yesterday that the 3,724 metric tonnes shipment of gas scheduled to reach the country will be delayed due to inclement weather conditions.
The government has also shut down non-essential public services in an effort to conserve fuel.
The Bar Association of Sri Lanka has called upon President Gotabaya Rajapaksa to instruct the Defence Secretary, the Commanders of the Tri Forces and the Inspector General of Police to ensure that there is an immediate de-escalation of tensions in different parts of the country – especially at fuel stations – understanding the difficulties faced by the public."
"Whilst keeping in mind that the police and armed forces are acting under very trying circumstances, nevertheless it is necessary to give strict instructions to the police and the forces to desist from violence in dealing with the public and to act with utmost restraint", the BASL has said in a media statement.
The United Nations estimates that about 80% of the public are skipping meals to cope with food shortages and record prices.