Lanka to sell national airline, print salary money amid crisis
In a televised speech on Monday, Sri Lanka's new Prime Minister Ranil Wickremesinghe announced plans to privatize its national carrier SriLankan Airlines. In the fiscal year that ended in March 2021, the airline lost LKR 45 billion ($124 million). The initiative is part of the Wickremesinghe administration's efforts to stem losses even as the government is compelled to print money to pay government salaries.
Why does this story matter?
Sri Lankan President Gotabaya Rajapaksa recently appointed Wickremesinghe, a seasoned politician with good ties with India, as the PM to bail the country out of its worst economic crisis. As the new prime minister is widely accepted in political circles, the people of the island nation hope he will be able to repair the economy with far-sighted policies and international cooperation in the future.
Loss shouldn't be borne by the poor: PM
Lanka's national carrier reportedly flies to destinations across Europe, the Middle East, and South and Southeast Asia with a 25-aircraft fleet. "It should not be that this loss has to be borne by the poorest of the poor who have not set foot in an aircraft," Wickremesinghe stated. Wickremesinghe also stated he was compelled to print salary money, putting pressure on the country's currency.
Next few months will be the most difficult: PM
"The next couple of months will be the most difficult ones of our lives," Wickremesinghe said in the address. "We must immediately establish a national assembly or political body with the participation of all political parties to find solutions for the present crisis," he added.
New 'relief' budget to replace Rajapaksa's 'development' budget
Wickremesinghe further said Lanka only has one day's worth of gasoline and the government is attempting to obtain US dollars in the open market to pay for three ships carrying crude oil and furnace oil anchored in Lankan waters. The premier also promised a new "relief" budget to substitute Gotabaya Rajapaksa's "development" budget, which contributed to accelerating Sri Lanka's inflation rate to Asia's fastest.
Key takeaways from Sri Lanka PM's public address
Wickremesinghe said that Sri Lanka's revenue in 2022 is expected to be LKR 1.6 trillion, while the budget estimate is LKR 2.3 trillion. He also stated the country needs $75 million in foreign exchange "within the next couple of days" for essential imports. "There is a possibility that inflation will increase further," he said, citing the government's inability to subsidize gasoline and diesel.
Sri Lanka's current economic status
Sri Lanka is on the verge of defaulting as the time limit for two outstanding foreign bonds expires on Wednesday, the newest setback for a country beset by economic and social unrest. Meanwhile, the new PM is yet to hire a finance minister to lead bailout negotiations with the International Monetary Fund and is looking for bridge loans from countries like India and China.
