Investment

Opposition in Sri Lanka threatens motion without confidence, industry warns ‘fall into abyss’

Sajith Premadasa, leader of the opposition alliance Samagi Jana Balawegaya, marched with other opposition lawmakers towards Independence Square as they shouted slogans against President Gotabaya Rajapaksa after the government imposed a curfew following the clash between of police and protesters near the residence of Sri Lankan President Gotabaya Rajapaksa during a protest on Thursday, amid the country’s economic crisis, in Colombo, Sri Lanka April 3, 2022. REUTERS/Dinuka Liyanawatte

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  • The opposition is threatening the motion of no confidence in parliament
  • Requires crisis action, improved management
  • Industry leaders warn of a 20-30% fall in exports in 2022
  • The industry is asking for immediate help from the IMF, ADB, World Bank

COLOMBO, April 8 (Reuters) – Sri Lanka’s main opposition party on Friday urged the government to take effective action to resolve an economic crisis or face a motion with no confidence, as business leaders from garments, tea and other industries are warning that exports could fall 20- 30% this year.

The heavily indebted country has little money left to pay for imports, which has led to shortages in fuel, electricity, food, and increasingly, medicine. Street protests have been virtually non -stop for more than a month, despite a five -day state of emergency and a two -day curfew.

President Gotabaya Rajapaksa is running his administration with just a handful of ministers after his entire cabinet resigned this week, while the opposition and even some coalition partners have rejected calls for a unity government to deal with the worst. crisis in the country for decades.

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At least 41 lawmakers have left the ruling coalition to become independents, though the government says it still has a majority in parliament. read more

“The government needs to address the financial crisis and work to improve governance, or we will move a motion of no confidence against the government,” Sajith Premadasa, Samagi leader Jana Balawegaya, told parliament.

“Sri Lanka needs to avoid an unsettled debt default.

Parliament proceedings were twice suspended in the morning after parliamentarians laughed, with two members temporarily removed from the room at the speaker’s command.

Nearly two dozen associations, representing industries that collectively employ a fifth of the country’s 22 million people, have jointly urged the government to quickly seek financial assistance from the International Monetary Fund (IMF), World Bank. and Asian Development Bank (ADB).

“We need a solution in a few weeks or the country will fall into the abyss,” Rohan Masakorala, director-general of the Sri Lanka Association of Manufacturers And Exporters of Rubber Products, said at a news conference.

“Our estimate is that both exports of goods and services could drop by 20-30% this year due to a dollar shortfall, higher freight costs and electricity cuts.”

RESERVE PLUNGE

Rajapaksa is struggling to find a new finance minister to talk to this month with the IMF for emergency loans, after Ali Sabry submitted his resignation on Tuesday with just one day in office. It is unclear whether the president accepted Sabry’s resignation.

“We urge the government and opposition to establish political stability as soon as possible and give us a way forward,” Masakorala said. “The IMF should have happened yesterday.”

Sri Lanka’s foreign exchange reserves have fallen by about 70% over the past two years, reaching $ 1.93 billion at the end of March. It has $ 1 billion in debt due in July, and more later this year.

Meanwhile, inflation has risen to its highest level in more than a decade, and on Friday night, the Central Bank of Sri Lanka is expected to raise key interest rates by up to 400 basis points (bps) following the hike. of 100 bps in early March.

The government has secured credit lines and currency swaps of billions of dollars from India and China but industry leaders have said it needs to do more, urging the central bank governor to start negotiations. immediately.

“India’s credit lines will only last until the end of April,” said Russell Juriansz, chairman of the Sri Lanka Shippers ’Council.

“We are appealing to the president to make the right decision or it will haunt him for the rest of his life.”

In addition to importing essential medicines through India’s $ 1 billion line of credit, Sri Lankan authorities are also in talks with the World Health Organization, World Bank and ADB for supplies of medicines, government health official Saman Rathnayake told Reuters.

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Writing by Krishna N. Das; Edited by Muralikumar Anantharaman and Raju Gopalakrishnan

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