Since then, the Sri Lankan government has banned the import of a range of "non-essential items", from cars to certain types of food and even shoes. The government also refused to allow Sri Lanka’s currency to depreciate against other currencies for exports, but a decision was finally made in March 2022, with the rupee falling more than 30 percent against the dollar. 3. How did the Sri Lankan authorities respond to the crisis? After protesters occupied his official residence, President Rajapaksa promised to step down and fled Sri Lanka on a military plane in the early hours of July 13, local time. Prime Minister Ranil Wickremesinghe was acting president in his absence.
Wickremesingh has declared a national emergency and imposed a curfew in the western province while he tries to stabilize the situation. But on Wednesday (July 13) hundreds of protesters stormed his office demanding his resignation. Sri Lanka has a virtual power vacuum as the president fled the country at a time when a functioning government is needed to deal with number list the financial crisis. Wickremesingh has said the government will print money to pay employees, but he warned that this could drive inflation and lead to further price increases. He also said state-owned SriLankan Airlines could be privatized. Sri Lanka has asked Russia and Qatar to supply it with oil at low prices to help reduce the cost of gasoline. 4. How much foreign debt does Sri Lanka need to repay? The Sri Lankan government has accumulated a foreign debt of $51 billion. Including the $6.5 billion owed to China,
China has begun discussions to restructure its loans. The G7 countries, namely Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, have all expressed support for Sri Lanka's efforts to restructure its economy. The World Bank has agreed to provide Sri Lanka with a $600 million loan, while India has provided at least $1.9 billion. The International Monetary Fund (IMF) is discussing a possible $3 billion loan. But it requires a stable government that can raise interest rates and taxes to help fund the deal, so any bailout could be delayed until a new government takes office. This year, Sri Lanka needs to pay $7 billion in debt repayments, and the payments will be about the same in the coming years. 5. What has China done and could still do? Sri Lanka owes China $6.5 billion and the two countries are in talks on how to restructure the debt. More than $5 billion in Chinese loans have fueled an infrastructure boom after Sri Lanka ended a nearly 30-year civil war.