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Sri Lanka doubles interest rates to tame inflation amid protests

Protesters raise slogans against the Sri Lanka President in front of the secretariat in Colombo. Reuters

Tribune News Service

New Delhi, April 9

The Sri Lankan Central Bank, under new Governor Nandalal Weerasinghe, has nearly doubled the interest rates to tame high inflation amid protests across the country.

The Governor and Finance Minister Ali Sabry said the country would need about $3 billion in external assistance within the next six months to help restore supplies of essential items. Sri Lanka is scheduled to start talks with the IMF on April 11.

Sri Lanka may run out of diesel by the end of this month as the $500 million line of credit by India for fuel purchase will exhaust. Economists have warned that with the exhaustion of the Indian credit line, the country will come to a total collapse by May or June.

The country is facing prolonged power cuts while medicines, fuel and even rice is in short supply, bringing protesters on the streets. Thousands gathered in Colombo on Saturday, demanding President Rajapaksa’s resignation. The government’s warnings against the gathering and its placement of a mobile jammer did not deter protesters from gathering in numbers at the famous Galle Face Esplanade.

Meanwhile, the main opposition, Samagi Jana Balawegaya (SJB), said it would present a no-confidence motion in the next session of Parliament. The SJB has 54 seats in the 225-member Parliament and will align with other opposition parties such as the Tamil National Alliance (10 seats) and the Janatha Vimukthi Peramuna with three seats. But their main hope would be a breakaway group of 42 MPs who are Independent. Rajapaksa has refused to resign and has offered to hand over the government to the party that holds 113 seats in Parliament.

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