COLOMBO (AFP) – Sri Lanka’s Prime Minister said yesterday the country was struggling to pay back its ballooning foreign debt, blaming a recent political crisis for dealing a “death blow” to the economy.
Ranil Wickremesinghe said his government was scrambling to raise USD1.9 billion to help service a first debt payment of USD2.6 billion, that is due on Monday.
Sri Lanka faces USD5.9 billion in foreign debt repayments in 2019, a record for the cash-strapped island.
The country lost USD1 billion in foreign reserves during a power struggle between Wickremesinghe and President Maithripala Sirisena in late 2018.
Sirisena sacked Wickremesinghe in October and later dissolved Parliament to quell any opposition, but Sri Lanka’s courts deemed the move unconstitutional.
Wickremesinghe was reinstalled 51 days later but not without a cost, the Prime Minister said.
“We are yet to quantify the losses, but it was a death blow to an economy that was struggling to recover,” Wickremesinghe told Parliament.
Three global ratings agencies downgraded Sri Lanka during the crisis, making it more expensive for the Indian Ocean nation to access foreign loans.
Sri Lanka hopes to raise USD1 billion from the international debt market, another USD500 million from China and Japan and a further USD400 million from the Reserve Bank of India.
Wickremesinghe has dispatched his Finance Minister to Washington to try to revive a loan arrangement with the International Monetary Fund that was suspended during the chaos.