Sri Lankan Prime Minister Ranil Wickremesinghe on Wednesday assumed additional charge as Finance Minister, possibly the toughest job when the island nation’s economy experiences a rapid decline amid an unprecedented crisis.
President Gotabaya Rajapaksa’s office said Mr. Wickremesinghe was sworn in “Minister of Finance, Economic Stabilisation, and National Policies”, about a fortnight after Mr. Gotabaya appointed him Premier in place of his elder brother Mahinda Rajapaksa, amid political tumult.
There were few takers for the role of Finance Minister, with former minister Ali Sabry reportedly declining to accept the position, and economists in opposition refusing to take on the role unconditionally.
Mr. Wickremesinghe on Wednesday said he would present an interim Budget within six weeks and slash infrastructure projects to divert funds to a relief programme aimed at supporting Sri Lankans worst-hit by the crisis. “With the interim Budget, it is just about cutting down expenditure, cutting to the bone where possible and transferring it to welfare,” he told Reuters .
After taking charge as Prime Minister, Mr. Wickremesinghe had warned citizens of the “most difficult” next few months and “impending food shortages” — a consequence of Mr. Gotabaya’s abrupt policy shift to organic farming in May 2021. His government reversed the policy following wide criticism and farmer protests, but experts have flagged a drastic drop, of upto 50 %, in harvest this year.
The new Prime Minister’s emphasis has so far been on tapping external help, including from the International Monetary Fund and bilateral partners. Colombo opted for a preemptive default on its foreign loans and is attempting to “restructure” its debt totalling $50 billion. While the government’s negotiations with the IMF are yet to conclude, the World Bank on Tuesday ruled out any new assistance to Sri Lanka. “Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka,” the Bank said in a statement, adding that it was working with the IMF and other development partners in “advising on appropriate policies to restore economic stability and broad-based growth.”
In his address to the nation on March 16, Mr. Wickremesinghe outlined three main policy initiatives – a new Budget, a decision to privatise Sri Lanka’s loss-making national carrier; and printing more money to pay state sector employees. Mr. Wickremesinghe has indicated that 1 trillion Sri Lankan rupees are about to be printed. As the new Finance Minister, he has the task of not only obtaining emergency assistance from different sources, but also resurrecting the island nation’s domestic economy, by boosting production and exports, to generate revenue and foreign exchange.
Meanwhile, public protests continue across the island, including in front of the sea-facing Presidential Secretariat in Colombo and outside the official residence of the Prime Minister. The demonstrators chant slogans asking President Gotabaya and Prime Minister Ranil to quit, as citizens face acute shortages of food items, fuel, medicines, and cooking gas. Inflation rose to another record high of 33.8% year-on-year in April, from 21.5% in March, government data showed.