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The next couple of months will be the most difficult of our lives, PM informs the nation

17 May 2022 - {{hitsCtrl.values.hits}}      

 

 

By Yohan Perera  

Prime Minister Ranil Wickremesinghe, in his maiden televised address to the nation, presented a gloomy picture of the economy and said the next couple of months will be the most difficult in  people’s lives.  He said,” We must prepare ourselves to make some sacrifices and face the challenges of this period.”  

  • Although the projected revenue earlier stood at SLR 2.3 trillion, SLR 1.6 trillion is the realistic revenue.   
  • The total government expenditure is SLR 4 trillion  
  • Though the approved debt ceiling is SLR 3200 billion, the country had spent 1950 billion  
  • To ease the queues, we must obtain approximately USD 75 million within the next few days.   
  • Possibility that the daily power outages will increase to 15 hours a day. However, we have already obtained money to avert this crisis.  
  • Sri Lanka must also immediately obtain USD 20 million to provide gas to consumers  
  • The payment owed to the medicine and medical equipment suppliers amounts to SLR 34 billion  
  • There is a severe shortage of a number of medicines including medicine for heart disease.  
  • It has been planned to present a new budget.   
  • Srilankan Airlines has to be privatised as it is a burden to the state   
  • Next couple of months will be the most difficult ones in the lives of all citizens and the country  
  • Due to the diesel shipment that arrived yesterday, the diesel shortage will be resolved to some extent.  
  • Under the Indian credit line, two more diesel shipments are due to arrive on the 18th May and 1st June.  
  • Two petrol shipments are expected on 18th and 29th May.  
  • We must also immediately obtain USD 20 million to provide gas to consumers.  
  • The situation of kerosene and furnace oil is even more urgent.  
  • We must immediately establish a national assembly or political body with the participation of all  political parties to find solutions for the present crisis  
  • My goal and dedication is not to save an individual, a family, or a party  
  • Against my own wishes, I am compelled to permit printing money in order to pay state-sector employees    

 

 

He said, “At present, the Sri Lankan economy is extremely precarious. Although the former government’s budget projected revenue of Rs. 2.3 trillion, SLR 1.6 trillion is the realistic projection of this year’s revenue.  
The estimated government expenditure for this year is Rs. 3.3 trillion. However, due to the increase in interest rates and additional expenditure of the former government, the total government expenditure is Rs. 4 trillion. The budget deficit for the year is Rs. 2.4 trillion. This amount equals 13 percent of the GDP.  


The approved debt ceiling is SLR 3200 billion. By the second week of May, we had spent 1950 billion. Therefore, the remainder is SLR 1250 billion. Yesterday, a cabinet decision was made to present a proposal to parliament to increase the approved limit for issuing treasury bills from 3000 billion to 4000 billion.   


In November 2019, our foreign exchange reserves were at USD 7.5 billion. However, today, it is a challenge for the treasury to find USD 1 million. The Ministry of Finance is finding it difficult to raise USD 5 million required to import gas.   Amidst all these issues, we are faced with several grave concerns. To ease the queues, we must obtain approximately USD 75 million within the next couple of days. At the moment, we only have petrol stocks for a single day. Due to the diesel shipment that arrived yesterday, the lack of diesel will be resolved to some extent. Under the Indian credit line, two more diesel shipments are due to arrive on 18th May and 1st June. In addition, two petrol shipments are expected on 18th and 29th May. For over 40 days, 3 ships with crude oil and furnace oil have been anchored within the maritime zone of Sri Lanka. We are working to obtain dollars in the open market to pay for these shipments.  


A quarter of electricity is generated through oil. Therefore, there is a possibility that the daily power outages will increase to 15 hours a day. However, we have already obtained money to avert this crisis. We must also immediately obtain USD 20 million to provide gas to consumers. The situation of kerosene and furnace oil is even more urgent. At present, the Central Bank, local state and private banks, and foreign banks functioning in Sri Lanka are all facing a dollar shortage. As you are already aware, we possess a very low amount of US dollars. Nevertheless, we succeeded in bringing in a diesel shipment yesterday despite these adverse circumstances with Indian assistance. Therefore, you can obtain that diesel from today onwards. We will also work towards making a payment for the gas shipment that arrived on Tuesday. Therefore, you will have some respite from the gas shortage.  


Another grave concern is the lack of medicine. There is a severe shortage of a number of medicines including medicine required for heart disease as well as surgical equipment. Payments have not been made for four months to suppliers of medicine, medical equipment, and food for patients. The payment owed to them amounts to SLR 34 billion. In addition, payments have not been made for four months for medicine imported by the State Pharmaceuticals Corporation. As a result, pharmaceutical companies are taking steps to blacklist the SPC. Unfortunately, our Medical Supplies Division is unable to provide even two critical items of the 14 essential medicines that we currently need. These two are a medicine used in treating heart disease and the anti-rabies vaccine. The latter has no alternative treatment.  


We have planned to present a new alternative budget to the development budget proposed for 2022. Intend to present it as a concessionary budget.  


I further propose to privatise SriLankan Airlines which is incurring extensive losses. The loss for the year 2020-2021 alone amounts to SLR 45 billion. By 31st March 2021, the total loss was at 372 billion. Even if we privatise SriLankan Airlines, this is a loss that we must bear. You must be aware that this is a loss that must be borne even by the poor people of this country who have never stepped on an airplane.  At present, the government incurs a loss of SLR 84.38 per litre of 92 octane petrol, 71.19 per litre of 95 octane petrol, 131.55 per litre of diesel, 136.31 per litre of super diesel, and 294.50 per litre of kerosene oil. The Petroleum Corporation can no longer bear this loss. Similarly, although the Electricity Board charges SLR 17 per unit of electricity, the cost of production is at around SLR 48 amounting to a loss of about SLR 30 per unit. This is also a serious problem.  
Against my own wishes, I am compelled to permit printing money in order to pay state-sector employees and to pay for essential goods and services. However, we must remember that printing money leads to the depreciation of the rupee. 


Under the current circumstances, even the Petroleum Corporation and the Electricity Board are unable to obtain rupees.  
The next couple of months will be the most difficult ones of our lives. We must prepare ourselves to make some sacrifices and face the challenges of this period. 

 

 

  • today, it is a challenge for the treasury to find USD 1 million
  • To ease the queues, we must obtain approximately USD 75 million within the next couple of days
  • I further propose to privatise SriLankan Airlines which is incurring extensive losses. The loss for the year 2020-2021 alone amounts to SLR 45 billion