Sri Lanka pushes airline privatization as debt grace period ends

A Sri Lankan plan to privatize its national airline has brought rare murmurs of optimism, mixed with a large dose of skepticism, as the country hits the end of a debt grace period and runs out of fuel. Newly appointed Prime Minister Ranil Wickremesinghe announced the decision on the airline Monday evening, offering no details of how the government intends to offload a carrier that lost 45b Sri Lankan rupees ($129m) in the 2020-2021 financial year. The premier said SriLankan Airlines' total losses stood at 372b rupees as of the end of March 2021 -- a burden, he warned, that all citizens would have to carry even if privatization succeeds. "You must be aware that this is a loss that must be borne even by the poor people of this country who have never stepped on an airplane," he said in his first address to the nation since he was sworn in last week. Economists welcomed the plan even as they questioned the prospects for achieving it. "This is long overdue and must be implemented as soon as possible," Malathy Knight, a research associate at Verite Research and consultant at the Advocata Institute think tank, told Nikkei Asia. The push to privatize SriLankan came just as a grace period on two unpaid foreign bonds was due to expire on Wednesday, likely marking its first such default. Last month, amid a worsening foreign exchange crisis and snowballing public protests against President Gotabaya Rajapaksa's government, the country announced that it would stop repaying foreign obligations and would instead use the money for food and fuel imports. But by early May, usable foreign reserves stood at less than $50m. <br/>