President Gotabaya Rajapaksa has urged the millions of Sri Lankans abroad to invest their savings in the country, which is facing the worst crisis since its independence from Britain 74 years ago.

"Expatriate Sri Lankans who provide foreign currency to the country are a major resource for us," President Rajapaksa said, "I invite all expatriate Sri Lankans to invest in their homeland."

Expatriate remittances, Sri Lanka's biggest source of foreign currency, fell nearly 60% in December, with 2021 as a whole recording a record drop of 22.7% to $5.49 billion. .

The government has since had to impose drastic restrictions in order to control its currency reserves, notably by closing certain diplomatic missions and above all by prohibiting many imports.

These measures have also had the effect of reducing certain economic activities and leading to serious shortages.

Since President Gotabaya Rajapaksa came to power in 2019, the country has seen its foreign exchange reserves drop from $7.5 billion to $3.1 billion at the end of December, an amount that could finance only two months of imports.

On Wednesday, Basil Rajapaksa, Minister of Finance, announced that he had requested technical advice from the International Monetary Fund (IMF), whose team is expected in Colombo in "the next few days".

In his address to the nation preceding the military parade, President Rajapaksa made no reference to a request for IMF assistance, but said he was trying to find short and long-term solutions, urging a " optimistic approach.

Power cuts are frequent even in the capital Colombo, February 2, 2022 ISHARA S. KODIKARA AFP

The international financial institution for its part said it was ready to discuss different "options" if the government of Sri Lanka asked for financial support.

"Although the IMF has not received a request for financial support from Sri Lanka, the staff of the Fund is ready to discuss possible options if requested," said Chief of Mission Masahiro Nozaki. in a written statement to AFP in Washington.

Financial analysts believe that under an IMF program, Colombo will have to raise interest rates and taxes, while cutting public spending.

The Central Bank also fears that the IMF will require a sharp depreciation of the local currency, which could further accelerate inflation, rising to 14.2% in January, and 25% for food products.

International rating agencies have lowered Sri Lanka's rating for fear of defaulting on its colossal $35 billion external debt.

© 2022 AFP