"Without a stable government, Sri Lanka will cease to function"
According to the Governor of the State Central Bank, "We have been able to finance three shipments of diesel and two shipments of fuel, which will be sufficient by the end of the month. After that, it is not clear whether we will be able to supply enough foreign currency to finance necessary energy products.
News agencies
17/07/2022
Sunday, 17 July 2022, 12:04 Updated: 12:10
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In the video: Thousands broke into the official residence of the President of Sri Lanka and then set it on fire (Photo: Reuters)
The Governor of the Central Bank of Sri Lanka, Nandalal Virasing, has warned that the country could collapse completely if a stable government is not formed soon.
In an interview with the BBC, he said that "there is a lot of instability", regarding the question of whether there is enough foreign currency to pay for essential fuel.
Progress on an international aid package depends on a stable administration, he added.
Former President fled to Singapore (Photo: Reuters)
Sri Lanka is in an unprecedented economic crisis and as a result protests have spread across the country, leading to the resignation of President Gautvia Rajapaxa who fled the country.
The interim president is now former Prime Minister Renil Wickermasing.
Sri Lanka's economy has collapsed, the cost of living and fuel prices and other basic products have soared.
Many accuse the Rajapaxa administration of poorly managing the crisis, including the prime minister.
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Protesters take over president's house (Photo: Reuters, Dinuka Liyanawatte)
According to Virasing, who was appointed central bank governor only in April, he said he "sees no way forward" without a stable government.
"We were able to finance three shipments of diesel and two shipments of fuel, which will be enough by the end of the month. After that, it is not clear whether we will be able to supply enough foreign currency to finance energy products necessary for the country.
If this does not happen, the whole country will cease to function.
"That is why I need a president, a prime minister, a cabinet, who can make decisions ... otherwise people will suffer," he said
. The center ruled out the possibility of serving as president himself. "I have no interest in a political position," he said.
Protesters take over president's house (Photo: Reuters)
Sri Lanka is now in a state of emergency.
The army received an order from the prime minister to restore order on the street "by all necessary means" after protesters stormed his residence.
Inflation in Sri Lanka has reached more than 50%.
Residents have difficulty due to power outages during the day and a shortage of basic products, such as fuel, food and medicine.
Schools are closed and people have been asked to work from home.
Sri Lanka is unable to pay for the imports of their products it needs.
In May, the state failed to pay interest on its foreign debt for the first time in history.
Failure to pay the interest rate could damage its reputation among investors, making it difficult for it to borrow money in international markets, which could hurt Sri Lanka's currency and economy.
Sri Lanka owes more than $ 51 billion to foreign lenders, including $ 6.5 billion to China.
The World Bank has agreed to lend $ 600 million to Sri Lanka, India has offered at least $ 1.9 billion.
The International Monetary Fund (IMF) is discussing the possibility of a $ 3 billion loan.
But a stable government will be needed that can raise interest rates and taxes to finance the loans, so any aid package will be delayed until such a government is formed.
Protesters take over presidential palace (Photo: Reuters, Dinuka Liyanawatte)
According to Virasing, the government could print money to pay workers' salaries, but warned that such a move could increase inflation.
Another option is to privatize the state-owned Sri Lankan Airlines.
Sri Lanka has also asked Russia and Qatar to supply it with oil at cheap prices.
Sri Lanka currently imports more than it exports in a year, which is why it has run out of foreign exchange reserves. As of the end of 2019, Sri Lanka had $ 7.6 billion in foreign exchange reserves, which fell to just $ 250 million.
Rajapaxa also cut taxes in 2019, leading to a loss of more than $ 1.4 billion in government revenue.
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