Colombo: Sri Lanka’s central bank has decided to raise interest rates by an unprecedented 700 basis points to tame high inflation amid the worst-ever economic crisis that has sparked nationwide protests and calls on President Gotabaya Rajapaksa to resign. pressure has increased. The move comes as Sri Lanka’s main opposition party, the SJB, announced on Friday that it would bring a no-confidence motion against President Rajapaksa’s government if it fails to address the concerns of the people facing public problems. Ready for impeachment. the economic crisis.
The Monetary Board of the Central Bank of Sri Lanka on Friday decided to increase the Central Bank’s Permanent Deposit Facility Rate (SDFR) and Permanent Credit Facility Rate (SLFR) by 700 basis points to 13.50 per cent and 14.50 per cent respectively. , effective from the close of business on April 8. The Board noted that inflationary pressures may intensify in the period ahead, driven by a build-up of aggregate demand, disruption in domestic supply, exchange rate depreciation and higher commodity prices globally. ,
The idea was to prevent the build-up of additional demand-driven inflationary pressures in the economy and to stem the growth of unfavorable inflationary expectations, providing the necessary stimulus to stabilize the exchange rate and correcting anomalies as an adequate policy response. mandatory. Viewed in the market interest rate structure. Meanwhile, protests continued across the country demanding the resignation of the President and the entire Rajapaksa family from the government.
Thousands of protesters gathered in the capital on Saturday to demand the resignation of President Rajapaksa in what was to be the country’s worst economic crisis since independence from British rule in 1948. Despite government notices, large crowds carrying national flags and banners marched to Galle Face Esplanade in central Colombo. Reading space is out of bounds due to urgent construction work. One placard read: “Go home, gotta!” The protests are being organized through social media networks. According to users on Facebook, the number of people protesting in Central Colombo on Saturday will increase to one million.
The main opposition party Samagi Jan Balvegaya (SJB) said they would move a no-confidence motion against the government in the next session of Parliament. We have started signing the resolution (from the members of Parliament) and there will be an urgent session of our parliamentary group tomorrow to finalize it.” The SJB has 54 seats in the 225-member parliament.
The party is relying on other opposition groups – Tamil National Alliance with 10 seats and Janata Vimukthi Peramuna (JVP) with three seats – for its move against the government. Rajapaksa’s ruling party, Sri Lanka Podujana Peramuna (SLPP), lost its majority in parliament on Tuesday as 42 lawmakers announced they would sit independently. Rajapaksa said on Monday night that he would not resign but was ready to hand over the government to any party with 113 seats in parliament.
Rajapaksa had previously proposed a unity government, but the main opposition Samagi Jana Balvegaya (SJB) rejected the idea. Those close to President Rajapaksa termed the president’s demand to resign as an “unconstitutional demand”. The opposition supports public protests across the island, demanding the resignation of the President and the entire Rajapaksa family from the government. Thousands of people from all walks of life are demonstrating, demanding a solution to the crisis and Rajapaksa’s resignation over economic mismanagement.
President Rajapaksa has resisted demands to step down, even as members of his own coalition joined anti-government protests this week, with party lawmakers calling for the appointment of an interim government to avoid potential violence. Parliament had failed to reach a consensus in three days of debate on how to deal with the economic crisis. The president and his older brother, Prime Minister Mahinda Rajapaksa, hold on to power, despite his family being the center of public anger. Five other members of the family are legislators, including Tulsi Rajapaksa, Irrigation Minister Chamal Rajapakse and a nephew, Sports Minister Namal Rajapaksa.
Government speakers defended the ruling family, saying the president did not need to resign as the protests were to achieve “extra-constitutional objectives”. Sri Lanka is scheduled to start talks with the International Monetary Fund (IMF) on 11 April. The talks will provide possible relief, including assistance on restructuring of foreign debt. Sri Lanka’s foreign exchange reserves have fallen nearly 70 per cent over the past two years, reaching USD 1.93 billion at the end of March. Inflation came down to 18.7 per cent in March.
Sri Lanka may face a diesel shortage by the end of this month and a USD 500 million line of credit given by India for fuel purchases is rapidly coming to an end amid unprecedented shortage of foreign reserves. The Sri Lanka Medical Association (SLMA) has also warned President Rajapaksa about the shortage of most essential medicines in the island nation. Many government institutions across the country have become inactive due to the symbolic strike by the employees of state and semi-state institutions. An Indian credit line has provided only a temporary solution in a special economic relief package.
Economists have warned of the exhaustion of the Indian credit line that the country will collapse completely by May-June. Rajapaksa has taken some desperate measures such as appointing a panel of experts to advise on talks with the IMF while replacing his younger brother Tulsi as finance minister and appointing a new governor to head the central bank. President Rajapaksa defended his government’s actions, saying the foreign exchange crisis was not his and the economic slowdown was largely driven by the island nation’s tourism revenue and inward remittances. The government has termed the public protests as politically motivated and accused the opposition JVP of organizing them.