Sri Lanka’s Central Bank chief on Wednesday warned that the economy would “collapse completely” unless political stability is urgently restored, and a new government is appointed.

Addressing reporters in Colombo, Nandalal Weerasinghe, who assumed charge as Governor of the Central Bank of Sri Lanka just over a month ago, said: “If there is no government in the next two days, the economy will completely collapse, and cannot be salvaged by anyone.”

His remarks came as a stark reminder of the dire situation of the island’s economy, crashing after a much-neglected Balance of Payments crisis over the last two years led to a severe dollar crunch. The country is preoccupied with violent clashes and unrest this week, triggered by Rajapaksa supporters who recklessly attacked peaceful protesters demanding the ruling clan’s resignation over the economic crisis.

Subsequently, Mahinda Rajapaksa stepped down from Premiership, and the Cabinet stands dissolved constitutionally, with just the President at the helm and no opposition party willing to work under him unconditionally. The parties, civil society groups, and student organisations have come up with specific proposals that include Gotabaya’s resignation and the abolition of executive presidency.

Distressed citizens endure severe food, fuel, and cooking gas shortages as fears of starvation loom. The provocative assault by a pro-Rajapaksa mob and the retaliatory attacks by infuriated citizens have heightened fears of further escalation in violence, even as sporadic incidents are reported.

At least eight persons were killed and about 200 were injured in the clashes. In the widespread counter attacks, arsonists torched over 100 buildings belonging to government members and burnt dozens of vehicles.

They pulled down a statue of the Rajapaksas’ father and torched their ancestral home in the southern Hambantota district. An island-wide police curfew is in place, and both, military and the police have been given orders to go on the offensive to “contain riots”.

'Mahinda evacuated to safety'

Addressing a media conference on Wednesday, Kamal Gunaratne, Secretary to the Defence Ministry, said: “The former PM Mahinda is at the Naval Dockyard in Trincomalee. He will be there for a few more days. We will provide him with whatever security he needs and for as long as he wants.” He was evacuated from his official residence in Colombo for his safety on Tuesday.

Meera Srinivasan is The Hindu Correspondent in Colombo