Sri Lankan Prime Minister Ranil Wickremesinghe in Colombo, Sri Lanka, on June 11.
(AP Photo/Eranga Jayawardena)
Colombo, Sri Lanka (CNN) --
Sri Lanka is "bankrupt," Prime Minister Ranil Wickremesinghe said Tuesday, as the country suffers its worst financial crisis in decades, leaving millions struggling to buy food, medicine and fuel.
Wickremesinghe told lawmakers that negotiations with the International Monetary Fund (IMF) to revive the country's "collapsed" economy are "difficult" because the South Asian nation of 22 million people entered the talks as a bankrupt country, rather than a developing one.
"Now we are participating in the negotiations as a bankrupt country. Therefore we have to face a more difficult and complicated situation than the previous negotiations," Wickremesinghe told parliament.
"Because of the state of bankruptcy our country is in, we have to present a plan on the sustainability of our debt (to the IMF) separately," Wickremesinghe added.
"Only when they are satisfied with that plan can we come to an agreement at the personnel level. This is not an easy process."
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Activists from Sri Lanka's main opposition hold banners during a rally to denounce shortages of cooking gas, kerosene oil and some other basic goods as the country grapples with a major economic crisis. Colombo, June 30, 2022. (Credit: AFP via Getty Images)
The financial crisis and bankruptcy of Sri Lanka
Sri Lanka is in the midst of its worst financial crisis in seven decades after its foreign exchange reserves plummeted to record lows, with dollars running low to pay for essential imports including food, medicine and fuel.
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Schools have been suspended and fuel has been limited to essential services.
In several major cities, including the commercial capital Colombo, hundreds continue to queue for hours to buy fuel, sometimes clashing with police and the army as they wait.
On Sunday, Sri Lanka's Energy Minister Kanchana Wijesekera said the country had less fuel left for one day.
"In terms of fuel and food, our country was going to have to face this crisis at some point. Fuel was in short supply. Food prices went up," he said, adding that international crises such as Russia's war in Ukraine have worsened. things.
“Due to recent global crises, this situation has become more acute and those of us who were in the pan fell into the oven,” said Wijesekera.
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A group of people block a road as they protest fuel shortages near a fuel station in Colombo on June 24, 2022. (Credit: AFP via Getty Images)
On Tuesday, Prime Minister Wickremesinghe said he expected a report on debt restructuring and sustainability to be submitted to the IMF in August.
Once there is an agreement, a comprehensive credit assistance program would be prepared for a period of four years, Wickremesinghe said.
His speech in parliament was interrupted by opposition lawmakers chanting "Gota go Home," a reference to President Gotabaya Rajapaksa, who was present.
For months, large numbers of Sri Lankans have called for Rajapaksa's resignation over accusations of financial mismanagement.
Wickremesinghe said that by the end of this year inflation will rise to 60%.
"This will be a difficult and bitter journey," Wickremesinghe said.
"But we can get relief at the end of this journey. You can move forward."
The British government said on Tuesday that it is now advising against all but essential travel to Sri Lanka due to the impact of the economic crisis.
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