‘Sri Lanka must restructure USD 1 billion debt’

Police officers try to stop medical students as they protest against Sri Lanka’s crippling economic crisis in Colombo on Wednesday. Pic/AFP

Sri Lanka must look at restructuring a $1 billion sovereign debt due for payment in July, the outgoing finance minister told parliament on Thursday, urging an end to calls for a change in government amid the country's worst economic crisis in decades. The opposition and some partners of the ruling coalition rejected calls this week for a unity government from President Gotabaya Rajapaksa after he disbanded his cabinet, in the hope of quelling weeks-long street protests over shortages of fuel, power, food and medicine.

With its foreign exchange reserves shrinking quickly, massive debt payments due and the rupee currency slumping, analysts say the government is running out of options. "We must look at how to structure the $1 billion international sovereign bond payment maturing in July. We must go to the IMF, there is no other solution that I can see," said Ali Sabry, who sent his resignation to Rajapaksa on Tuesday, a day after he was moved to finance from the justice ministry. It was not immediately clear if the president had accepted his resignation, which was submitted just days ahead of scheduled talks with the International Monetary Fund for emergency loans.

"We must have political stability to find solutions to the financial crisis," Sabry said. "We must discuss with the World Bank and we must have a bridge-financing plan with the ADB. If we don't have stability, who will conduct these talks?," he said, referring to the Philippines-based Asian Development Bank. Opposition lawmakers, however, continued to call for the president to step down.

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