Sri Lanka Economic Crisis: Reports that PM Mahinda Rajapaksa has resigned are false

Colombo, Apr 03: Amid unrest over the economic crisis in Sri Lanka, reports have claimed that Prime Minister Mahinda Rajapaksa has tendered his resignation to President Gotabaya Rajapaksa on Sunday. However, the Prime Minister's office has termed such reports as false.

"Reports that Prime Minister Mahinda Rajapaksa has resigned are false, no such plan at present," said Sri Lanka's Prime Minister's Office.

The Daily Mirror first reported on the possible resignations of the prime minister and said their brother President Gotabaya Rajapaksa plans to form an interim government including members of the current opposition. A proposal has been submitted by the ruling coalition to ensure political stability, the newspaper added.

Sri Lanka is currently reeling under a severe foreign exchange crisis with falling reserves and the government is unable to foot the bill for essential imports. The Island country is on the verge of bankruptcy.

According to the World Bank estimates, 5 lakh people in Sri Lanka have fallen below the poverty line since the pandemic struck, which it described as a "huge setback equivalent to five years' worth of progress".

A major problem that the country is facing is a huge foreign debt burden as it owes over $5 billion in debt to China alone. It is paying an additional $1 billion loan to Beijing that it took in 2021. It also owes big money to India and Japan. As of November, foreign currency reserves available with the country were just $1.58 billion, down from $7.5 billion when Rajapaksa became the president in 2019.

Sri Lanka's high dependence on imports for its essential items such as sugar, pulses, cereals and pharmaceuticals has only added to the troubles as the country is facing a shortage of foreign currency to pay the import bills.