HomeIndiaSri Lanka crisis top developments: Protesters mark new year near president’s office;...

Sri Lanka crisis top developments: Protesters mark new year near president’s office; World Bank raises growth to 2.4%

As Sri Lanka continues to reel under its worst economic crisis, the country’s prime minister Wednesday offered to hold talks with protesters calling for the government to step down. The opposition, meanwhile, threatened to bring a no-confidence motion against the government in parliament.

The island nation of 22 million people is going through its worst financial crisis since independence in 1948, with a foreign exchange shortage making essential commodities, including fuel and medicines, scarce.

India is looking to provide another $2 billion in financial assistance to the island nation, which is also set to have talks with the International Monetary Fund (IMF) and the World Bank.

Here are the top developments on the Sri Lanka economic crisis:

World Bank raises Sri Lanka’s 2022 growth forecast from 2.1% to 2.4%

The World Bank has raised crisis-hit Sri Lanka’s 2022 growth forecast to 2.4 per cent from 2.1 per cent, but has also warned that its outlook is highly uncertain due to fiscal and external imbalances, according to news agency Reuters. Sri Lanka’s central bank said Tuesday that it had become “challenging and impossible” to repay external debt, as it tries to use its dwindling foreign exchange reserves to import essentials.

A woman waits in line to buy domestic gas on a main road in Colombo, Sri Lanka. (Reuters Photo)

Thousands of Sri Lankans celebrate New Year at anti-government protest site

Sri Lankan demonstrators on Thursday celebrated the Sinhalese and Tamil new year at the protest site opposite President Gotabaya Rajapaksa’s office, where they have been camped for six days demanding his resignation. Volunteers distributed traditional New Year delicacies like squares of kiribath or coconut milk rice, bananas, spicy pickles, and butter cake, that were donated by supporters, according to Reuters.

India finally on board, but Trincomalee oil farm now waits for economy crisis to lift

India’s prized agreement with Sri Lanka for the joint development of the Trincomalee Oil Tank farm, signed earlier this year after a 35-year wait, may take years to turn around and at least a 100 million dollars. However, the deal for 85 decrepit oil tanks in 850 acres of dense jungle, and a strategic natural harbour, could one day be key to Sri Lanka’s energy security while giving India additional capacity for reserves. Read more here.

Demonstrators take part in a ritual of boiling milk to mark the Shinala and Tamil new year during their protest in Colombo, April 14, 2022. (Reuters Photo)

Sri Lanka bondholders brace for big losses in debt restructuring

Sri Lanka’s creditors face losing a third to half of their investment in the country’s dollar bonds, according to Reuters, after the government announced it would restructure $11 billion worth of debt, the first such financial shake-up in its modern history.

S&P lowers Sri Lanka’s foreign currency rating to ‘CC’ from ‘CCC’

S&P Global Ratings has lowered Sri Lanka’s foreign currency rating to “CC” from “CCC”, citing the economic crisis in the country and rising external funding pressures. “Sri Lanka’s debt restructuring process is likely to be complicated and may take months to complete”, the ratings agency said in a statement.

“CC” rating stands for “Highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty”, according to the agency’s website.

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