Sri Lanka's Economy Teeters, Budget Deficit At 13% Of GDP - Prime Minister

Newly elected Sri Lankan Prime Minister Ranil Wickremesinghe said on Monday that the country's economy is in a "precarious" condition amid severe energy shortages and budget deficit of 13% of the country's GDP, or 2.4 trillion rupees ($6.8 billion).

MOSCOW (UrduPoint News / Sputnik - 16th May, 2022) Newly elected Sri Lankan Prime Minister Ranil Wickremesinghe said on Monday that the country's economy is in a "precarious" condition amid severe energy shortages and budget deficit of 13% of the country's GDP, or 2.4 trillion rupees ($6.8 billion).

"At present, the Sri Lankan economy is extremely precarious... The budget deficit for the year is SLR 2.4 trillion. This amount equals 13% of the GDP," Wickremesinghe said, as quoted by the Sri Lankan media outlet news First.

The prime minister went on to say that although the former government's budget projected a revenue of 2.3 trillion rupees, a more realistic projection would be about 1.6 trillion rupees. At the same time, the estimated government expenditure for this year stands at 3.3 trillion rupees, maybe up to four trillion rupees given the increase in interest rates and additional expenditure of the former government, he added.

Wickremesinghe also said that so far Sri Lanka's petrol stocks have almost completely run out, with enough only for one day.

"At present, we only have Petrol to last for one day. The Diesel vessel that reached yesterday (15) will somewhat solve the diesel shortage.

Another two diesel shipments will reach Sri Lanka on the 19th of May and 1st June under the Indian Credit Line, while two vessels with Petrol will also reach Sri Lanka on the 18th & 29th of May," the official said, as quoted by the media outlet.

He added that the country's finance ministry is facing difficulties in obtaining $5 million for gas imports, adding that the daily blackouts may increase up to 15 hours amid energy shortages.

Last Thursday, Wickremesinghe from the center-right United National Party was sworn in as the country's new prime minister, for the fourth time running.

Sri Lanka is in a political deadlock caused by the country's worst economic crisis since gaining independence in 1948. The dire economic situation was caused by shortages of foreign Currency as tourist flows dried up during the COVID-19 pandemic, preventing the country from purchasing enough fuel. The pandemic has also negatively impacted remittances from Sri Lankans working abroad. There is an acute shortage of food and basic necessities, including fuel and gas, with many parts of the island nation facing continuous power blackouts.