Sri Lanka averts $1.5bn foreign debt default
Dec 22, 2018 21:50 PM GMT+0530 | 0 Comment(s)
Colombo, Sri Lanka | AFP | The Sri Lankan government Friday secured parliamentary approval to avert a debt default of $1.5 billion after the annual budget was blocked by a seven-week political crisis.
During the last day of the legislature for 2018, MPs voted 102 to six to approve an interim budget to pay for urgent government expenditure in the first four months of 2019.
Finance Minister Mangala Samaraweera said he was finalising an appropriation bill for next year when President Maithripala Sirisena sacked the government on October 26, plunging the country into a constitutional crisis.
"We don't have time to present a new budget, but we need to meet our (debt and salary) obligations," Samaraweera told parliament to introduce the vote on the interim budget.
Legislators approved four months of government spending pending a full-fledged budget around February.
Sirisena sacked Ranil Wickremesinghe as prime minister but he refused to quit and parliament and Sri Lanka's courts blocked Sirisena's candidate Mahinda Rajapakse, a fervent nationalist former president.
During the power struggle, three international credit rating agencies downgraded Sri Lanka making foreign borrowings more expensive.
There were fears that Sri Lanka could default on $1.5 billion sovereign bonds maturing on January 10.
Sirisena finally gave in and reinstated Wickremesinghe as prime minister on Sunday. He named a 30-member cabinet on Thursday.
While UN Secretary General Antonio Guterres led the international welcome for the end to the power struggle, Sirisena has made it clear it will be difficult to work with Wickremesinghe.
Sirisena came to power in 2015 with the help of Wickremesinghe's United National Party (UNP), but personal and political clashes came to a head with the October sacking.