Sri Lanka ponders on privatizing its insolvent SriLankan Airlines

Sri Lanka’s newly appointed Prime Minister Ranil Wickremesinghe announced today that he is planning to propose a new national special relief budget that would replace the development-oriented budget approved earlier.

Wickremesinghe has been appointed by Sri Lanka’s President Gotabaya Rajapaksa as new prime minister last Thursday in a bid to thwart the island nation’s political and economic crisis.

According to PM Wickremesinghe, the newly proposed budget would re-direct funds previously slated for infrastructure development to public welfare instead.

Privatizing the country’s loss-making national flag carrier, SriLankan Airlines, would be an important part of the reforms aimed at solving the country’s worst economic crisis in decades, Wickremesinghe added.

SriLankan Airlines, that was managed by Emirates Airlines from 1998 to 2008, has reportedly lost about $123 million in the 2020-2021 fiscal year, which ended in March, and its aggregate losses exceeded $1 billion as of March 2021.

“Even if we privatize SriLankan Airlines, this is a loss that we must bear. You must be aware that this is a loss that must be borne even by the poor people of this country who have never stepped on an airplane,” Prime Minister said.

Prime Minister acknowledged that Sri Lanka’s financial state is so poor that the government has been forced to print money to pay the salaries of government workers and buy other goods and services.

Wickremesinghe said about $75 billion is needed urgently to help provide people with essential items, but the country’s treasury is struggling to find even $1 billion.

For months, Sri Lankans have been forced to wait in long lines to buy scarce imported essentials such as medicines, fuel, cooking gas and food because of a severe shortage of foreign currency. Government revenues have also plunged.

Sri Lanka’s finance ministry says the country currently has only $25 million in usable foreign reserves.

Sri Lanka is nearly bankrupt and has suspended repayment of about $7 billion in foreign loans due this year out of $25 billion to be repaid by 2026. The country’s total foreign debt is $51 billion.

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