Sri Lanka

Sri Lanka is selling Airline, Printing money to Pay Wages

Sri Lanka ’s new government plans to sell its national airline to stem losses, part of efforts to stabilize the nation’s finances even as authorities are forced to print money to pay government salaries. 

The new administration plans to privatize Sri Lanka Airlines, Prime Minister Ranil Wickremesinghe said in a televised address to the nation Monday. The carrier lost 45 billion rupees ($124 million) in the year ending March 2021, he said just days before the nation is set to formally default on foreign debt.

“It should not be that this loss has to be borne by the poorest of the poor who have not set foot in an aircraft,” Wickremesinghe said.

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Wickremesinghe — less than a week into the job — said he was forced to print money to pay salaries, which will pressure the nation’s currency. The nation has only one day’s stock of gasoline and the government is working to obtain dollars in the open market to pay for three ships with crude oil and furnace oil that have been anchored in Sri Lankan waters, Wickremesinghe said.

Sri Lanka

“The next couple of months will be the most difficult ones of our lives,” Wickremesinghe said. “We must immediately establish a national assembly or political body with the participation of all political parties to find solutions for the present crisis.”

The premier pledged to announce a new “relief” budget to replace President Gotabaya Rajapaksa’s “development” budget that helped stoke Asia’s fastest inflation rate. The cabinet will propose that parliament increase the treasury bill issuance limit to 4 trillion rupees from 3 trillion rupees, Wickremesinghe said, forecasting a budget deficit of 13% of gross domestic product for the year ending December 2022.

Wickremesinghe’s appointment last week followed violent clashes between Sri Lanka government supporters and protesters demanding Rajapaksa’s resignation. He has yet to appoint a finance minister to lead bailout talks with the International Monetary Fund, and is seeking bridge loans from nations including India and China. But it’s unclear if the government will get the cash in the absence of a full cabinet. 

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