Sri Lanka govt plans to sell airline; prints money to pay salaries

23 May 2022


Sri Lanka’s new government is forced to print money to pay government salaries, even as the authorities are weighing plans to sell state assets, including national carrier Sri Lankan Airlines, as part of its efforts to stabilise the nation’s finances.

Prime Minister Ranil Wickremesinghe announced the new administration’s plans to privatise Sri Lankan Airlines, in a televised address to the nation Monday. The prime minister also said the government was forced to print money to pay salaries, which will pressure the nation’s currency.
The state-run airline lost 4,500 crore rupees ($124 million) in the year ended March 2021, he added.
It may be noted that the Sri Lankan government bought back a stake in Sri Lankan Airlines from Dubai’s Emirates in 2010.
The national carrier, which has a fleet of 25 Airbus SE planes, flies to destinations in Europe, the Middle East as well as South and Southeast Asia, according to FlightRadar24.
“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 days before the nation is set to formally default on foreign debt.
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.
Wikramsinghe said the government’s revenue in 2022 is likely to be 1,60,000 crore rupees against a budget estimate of 2,30,000 crore rupees.
Need $75 million “within the next couple of days”
“There is a possibility that inflation will increase further”; government can no longer bear subsidies on gasoline and diesel, he said.
“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 high inflation rate.
The cabinet will propose that parliament increase the treasury bill issuance limit to 4,00,000 crore rupees from 3,00,000 crore rupees, Wickremesinghe said, adding that it could raise the budget deficit to 13 per cent of the gross domestic product for the year ending December 2022.
Wickremesinghe, who took charge as prime minister last week following violent clashes between government supporters and protesters demanding resignation of the Rajapaksa government, is currently seeking bridge loans from nations, including India and China. He is yet to appoint a finance minister to lead bailout talks with the International Monetary Fund. 
In what is seen as the latest blow to a country rattled by economic pain and social unrest, Sri Lanka is sliding into a default as the grace period on two unpaid foreign bonds ended on Wednesday.

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