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Sri Lanka’s prime minister tackles thorny finances and economy

Colombia, Sri Lanka — Sri Lanka’s new prime minister, Ranil Wickremesinghe, has been sworn in as finance minister as the Indian Ocean island nation faces its worst economic crisis in memory.

President Gotabaya Rajapaksa has appointed Wickremesinghe Minister of Finance, Economic Stability and National Policies in an apparent attempt to regain Sri Lanka’s credibility as the government negotiates a bailout package with the International Monetary Fund.

Sri Lankans have endured food and fuel shortages, power outages and other deprivations. The country lacks the financial means to buy imported basic necessities and pay its debts, and the economic crisis has fueled political unrest, with protesters demanding Rajapaksa’s resignation.

Wickremesinghe’s appointment follows the government’s announcement that Sri Lanka was hiring two international firms to restructure its $51 billion foreign debt. Lazard of France will provide financial advice and Clifford Chance LLP will provide legal assistance to restructure Sri Lanka’s debts to international creditors.

A five-time former prime minister, Wickremesinghe was appointed to the post two weeks ago after his predecessor Mahinda Rajapaksa – who is the president’s older brother – resigned following violent attacks by his supporters on peaceful protesters. anti-government.

For months, Sri Lankans have been forced to queue to buy basic necessities, and many have returned home empty-handed. There is a severe shortage of many goods, from food, cooking gas, medicine and fuel to toilet paper and matches.

The economy has been hurt by the pandemic, which has kept tourists away, and soaring costs for most imports.

On the brink of bankruptcy, the country has suspended repayments of $7 billion in foreign loans due this year. The IMF said any short- or long-term aid will depend on talks with creditors on loan restructuring. Sri Lanka must repay around $25 billion in foreign loans by 2026.

The Ministry of Finance said earlier this month that the country’s usable foreign exchange reserves had fallen to $25 million.

Wickremesinghe, 73, has served in parliament for 45 years. His political party split in 2020 amid a leadership crisis and its oldest members left to form a new party, which is currently the country’s main opposition.

He said last week that gasoline stocks had shrunk to a single day, but shipments of gasoline paid for by an Indian line of credit started arriving over the weekend.

Protesters have occupied the entrance to the president’s office for more than 40 days to demand Rajapaksa’s resignation.

Attacks on peaceful protesters by government supporters sparked riots across the country in which nine people died, including a lawmaker, and 200 were injured. Homes and properties of government ministers and their supporters were set on fire. The violence nearly dismantled the Rajapaksa dynasty after Mahinda Rajapaksa resigned as prime minister.

As well as being tasked with reviving the economy, Wickremesinghe is working on a constitutional amendment to dilute presidential powers and better empower parliament.