Debt-ridden Sri Lanka will privatise its state-run national carrier, Sri Lankan Airlines, Prime Minister Ranil Wickremesinghe said in a televised address on Monday. The island nation’s revenues have dropped sharply and its banks are out of dollars, leaving the country short of funds for essential goods, Wickremesinghe added.
However, the country is working to try and ease the shortages of food, fuel and other essential items, the premier said, calling for patience as he tries to address the country’s dire economic crisis.
Sri Lanka is sliding into a default as the grace period on two unpaid foreign bonds ends on Wednesday, the latest blow to a country rattled by economic pain and social unrest. Wickremesinghe was appointed last week following violent clashes between government supporters and protesters who’re demanding the resignation of President Gotabaya Rajapaksa.
The island nation could be formally declared in default if it fails to make an interest payment to bondholders before Wednesday, when the 30-day grace period for missed coupons on dollar bonds ends. That would mark its first default.
Sri Lanka’s government announced in mid-April it would stop paying back its foreign debt to preserve cash for food and fuel imports as it struggled with a dollar crunch that’s led officials to implement capital controls and import curbs.
A few days later, it failed to service a $78 million coupon on its dollar bonds due in 2023 and 2028, leading S&P Global Ratings to declare a selective default.