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COLOMBO, Sri Lanka , Jul 3 (AP) \u2014 Sri Lankans who have endured months of fuel and food shortages are bracing for more pain as a newly installed government scrambles to find solutions to the Indian Ocean nation\u2019s economic emergency.<\/p>\n
Like many others, fish monger Gamini Mallawarachchi says he is pinning his hopes on President Ranil Wickremesinghe \u2019s ability to revive the economy and restore stability after months of turmoil and protests.<\/p>\n
\u201cThings are really, really bad now and my life is almost ruined,\u201d said Mallawarachchi, who has given up on selling fish because he can\u2019t find fuel to get to the village where he used to buy it, and anyway his customers were buying less and less.<\/p>\n
Mallawarachchi said he views Wickremesinghe his \u201clast hope.\u201d<\/p>\n
\u201cI think he will do something. With his experience and knowledge, I believe he has the capability,\u201d said Mallawarachchi. \u201cBut, he must show some results before the end of this year, otherwise, he will also have to face protests from the people,\u201d he said.<\/p>\n
Sri Lanka inched closer to ending its dire economic and humanitarian crisis with the July 20 appointment of Wickremesinghe\u2019s new government after months of protests and turmoil. But daunting hurdles lay ahead.<\/p>\n
Lawmakers backed him in extending a national emergency that gives the president broad powers to crack down on any violence. That may buy him time to try to reach a deal with the International Monetary Fund on a requested $3 billion bailout.<\/p>\n
By his own admission, that\u2019s easier said than done.<\/p>\n
On Saturday, Wickremesinghe said he has pushed back by a month his aim of getting an agreement by early August since talks with the IMF stalled amid recent political turmoil.<\/p>\n
So far there are scant signs of progress in negotiations with Sri Lanka\u2019s other creditors on more than $50 billion that it owes to lenders.<\/p>\n
\u201cBecause public debt is assessed as unsustainable,\u201d the IMF\u2019s approval would \u201crequire adequate financing assurances from Sri Lanka\u2019s creditors that debt sustainability will be restored,\u201d the lending agency said in a statement. That would require lenders, both public and private, to agree to accept smaller payouts on bonds, lower interest rates or extended repayment terms.<\/p>\n
IMF conditions also would likely involve tax increases, better safeguards against corruption and other reforms such as privatizing state-owned companies like the national airline.<\/p>\n
The World Bank issued a statement last week expressing \u201cdeep concern\u201d over Sri Lanka and saying it wouldn\u2019t supply more funding, pending plans for \u201cdeep structural reforms\u201d to address the causes of the crisis.<\/p>\n
\u201cHe\u2019s in a bind,\u201d said Tamanna Salikuddin of the U.S. Institute of Peace, an independent institute based in Washington, D.C.<\/p>\n
Austerity measures are a bitter pill to swallow for people who are going hungry and walking or biking to work because they cannot buy fuel. And raising taxes would likely undercut support from stalwarts in the ruling party who benefited from the tax cuts that helped deplete state coffers, she noted.<\/p>\n
In June, Wickremesinghe, who was then prime minister for the sixth time, suggested a conference of major donors such as India, China and Japan. Sri Lanka, whose foreign exchange reserves are largely exhausted, is seeking \u201cbridge financing\u201d to be able to buy fuel and other essential supplies to keep the economy running.<\/p>\n
\u201cWe have to hope that friendly countries will support Sri Lanka in the short term,\u201d said political analyst Jehan Perera.<\/p>\n
On a visit last week to New Delhi, Samantha Power, administrator for the U.S. Agency for International Development, contrasted India\u2019s aid to China\u2019s, and urged Beijing to do more. India\u2019s government says it has provided more than $1.5 billion in credit for purchases of fuel, food, medicine and other essentials.<\/p>\n
Asked about Sri Lanka\u2019s debt impasse \u2014 and criticism that China\u2019s lending is not transparent \u2014 Foreign Ministry spokesperson Zhao Lijian accused the U.S. and other \u201cwestern capital\u201d of manipulating Sri Lanka\u2019s credit rating, speculating in its markets and preventing it from obtaining new financing.<\/p>\n
\u201cWe hope the U.S. can genuinely help Sri Lanka overcome the current difficulties, ease the debt burden and realize sustainable development instead of unscrupulously using every opportunity possible to shift the blame, smear other countries and seek geopolitical games,\u201d Zhao said.<\/p>\n
Official Chinese lending to Sri Lanka accounts for only about 10% of its debt but the amount of additional commercial borrowing from China is unclear.<\/p>\n
\u201cUnless and until the rest of their debt is restructured I don\u2019t see the Chinese doing anything,\u201d said Salikuddin. \u201cThey never take the first step.\u201d<\/p>\n
As talks with Sri Lanka\u2019s lenders drag on, its people carry on, finding ways to get by and often waiting days in lines for gasoline, sometimes still returning home empty handed.<\/p>\n
\u201cEven if a deal (with the IMF) is agreed, Sri Lanka still faces a tough road ahead as far as its economic recovery goes. By no means is it that a deal is agreed and things get back to normal very quickly,\u201d Gareth Leather of Capital Economics said in a recent online briefing.<\/p>\n
The state-owned gas company has begun distributing cylinders of cooking gas \u2014 a mixture of propane and butane \u2014 but most people have to wait at least overnight to be able to buy them and the price has more than tripled since October.<\/p>\n
The government also has introduced an app to ration gasoline purchases: 4 liters (1 gallon) a week for motorcycles, 20 liters (5.3 gallons) a week for cars and 40 liters (10.6 gallons) a week for buses.<\/p>\n
The aim is to reduce the long queues at gas stations and crack down on a black market in fuel. Priority is being given to school buses, farming, fishing, tourism and public transport.<\/p>\n
Many people say they\u2019ve cut back or virtually given up on eating fish and meat due to high prices. Milk powder is hard to come by and prices of most essentials including bread and lentils have tripled.<\/p>\n
\u201cPeople will be more patient and will be prepared to wait as long as the acute shortages are dealt with,\u201d said Perera. \u201cOtherwise, it will be like a tinder box \u2014 you can see angry people on the roads every day in their cars, motorbikes. Angry people, it\u2019s a tinder box situation, and a spark would lead to more turmoil.\u201d<\/p>\n
Mallawarachchi, the fish monger, used to earn about 6,000 rupees ($16) a day. Now he\u2019s living off his savings.<\/p>\n
Sithum Udara, an office clerk, still goes to work, but what used to be a quick, comfortable commute by motorbike has become a misery of cramming onto buses or a train.<\/p>\n
\u201cGoing to office is a nightmare now. I am really fed up and I think this is the worst time of my life,\u201d Udara said. \u201cI have no choice but to go to work.\u201d<\/p>\n
But Udara believes Wickremesinghe should be given \u201cconsiderable time\u201d to revive the economy and solve other problems. \u201cHe can\u2019t do it overnight; people must understand that reality.\u201d<\/p>\n
For now, a big part of the president\u2019s job is managing expectations.<\/p>\n
\u201cThe first thing he has to do is deliver on the economics,\u201d Salikuddin said. \u201cIt\u2019s the bankruptcy of the economy that brought people into the street,\u201d she said.<\/p>\n
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