Sri Lanka economic crisis: PM announces Rs 200 billion financial safety net for social security

COLOMBO: Sri Lanka aims to set up a financial safety net of Rs 200 billion to provide social security support to the needy amidst the worst economic crisis in the country, Prime Minister Ranil Wickremesinghe has announced.

"The government is making maximum effort to reduce the impact through providing financial and logistical support," said Wickremesinghe, who also holds the post of finance minister of the debt-ridden economy.

"A Rs 200 billion financial safety net is being raised for social sector support," he said while addressing the owners of Sri Lankan media organisations late on Thursday.

He said a team from the International Monetary Fund (IMF) would visit the country on June 20 and hoped that a staff-level agreement with the IMF would be reached by the end of June.

Wickremesinghe also explained that due to the pending food shortage, he was launching the food security programme in the country.

He was hopeful that through the food security programme, the government of the crisis hit country would be able to provide food free of charge to 10 per cent of the population, who were unable to afford three meals.

He had previously warned of a food crisis in addition to the ongoing economic crisis, which has also left the country in a shortage of fuel, gas, medicines as well as essential supplies.

When asked to respond to the government's initiatives to combat the current crisis, the prime minister explained the country would have to suffer the consequences of the damage caused to the economy by the Covid-19 pandemic.

Discussions were underway with Japan to regain their confidence and secure their support, the prime minister added.

Wickremesinghe said that countries were stepping forward with assistance in food and medical supplies, however, no country was providing fuel free of charge.

Long queues at fuel retail stations are a common sight in the island currently despite the supplies being made available by India through a credit line.

Sri Lanka, which has been grappling with unprecedented economic turmoil since its independence from Britain in 1948, is also facing political unrest with protesters demanding President Rajapaksa's resignation.

The economic crisis has prompted an acute shortage of essential items like food, medicine, cooking gas and other fuel, toilet paper and even matches, with Sri Lankans for months being forced to wait in lines lasting hours outside stores to buy fuel and cooking gas.

An IMF bailout programme is being currently worked out and expected to be available in the last quarter of the year.

Wickremesinghe had earlier announced that extended credit lines from India were being sought until the availability of the IMF facility.