Foreign debt payments default will put pressure on banking sector: Sri Lanka's ex-PM Wickremesinghe

Reacting to the Sri Lanka government's temporary suspension of payment of all foreign debts, former Prime Minister Ranil Wickremesinghe said that this will place further pressure on the banking sector in the country.

Addressing the nation on the eve of the Sinhala and Tamil New Year, Wickremesinghe said, "Sri Lanka is unable to make a USD 200 million loan repayment next week. The government hasdecided to suspend all external debt repayments. This will place further pressure on the banking sector in the country."

"This decision is an announcement by the Government that the country is bankrupt. The responsibility is now on the new Finance Minister to travel to Washington and discuss the prevailing situation with the IMF," he added.

Demanding that the government take responsibility for the bankruptcy of the country, the former PM said, "By mid-May, the Indian Line of Credit will be exhausted. By June, private businesses will be unable to operate due to a lack of foreign exchange. This government must take full responsibility for the bankruptcy of the country."

He further said that the government must now engage all other political parties without any conditions. "Last week in Parliament, we from the Opposition apologised to the public for failing them. However, elections or constitutional amendments at this point will not solve the crisis in the country," he stated.

"After discussions are held with the government and a plan is formulated, conditions can belaid down. It is our responsibility to give everyone an equal hearing," he added.

Wickremesinghe further asked the government to follow the example of Lebanon. "In Lebanon, the IMF agreement was reliant on it being tabled in Parliament for their approval. This must happen in Sri Lanka as well. We are in a very difficult situation. We are ending the year as a bankrupt country," he said.

"However, we can solve this crisis. It will take a national effort to do so. We will face a tough period, but we must face it. We can overcome this crisis and strengthen our economy. But this can only be done if we work together and to a plan," he added.

Expressing hope for better days, the former PM said that the country will end this year as a bankrupt nation, but begin the new year on a new journey. "This can be done if everyone joins together. I wish you and your loved ones a happy Sinhala and Tamil New Year," he said wishing people a New Year.

Notably, the Sri Lanka government has temporarily suspended the payment of its foreign debts.

According to an interim policy released by the Finance Ministry regarding the servicing of the country's external public debt, the government has announced that it would default on its USD 51 billion external debt pending a bailout from the International Monetary Fund (IMF).

Meanwhile, protests in Colombo intensified on Tuesday against the Sri Lankan government amidst the ongoing economic crisis, despite Prime Minister Mahinda Rajapaksa's appeal to the people to keep patience in order to enable the government to resolve the situation.

The island nation is facing its worst economic crisis since independence with food and fuel shortages, soaring prices and power cuts affecting a large number of the people in the island nation resulting in massive protests over the government's handling of the situation.

( With inputs from ANI )

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