The prime minister of Sri Lanka has declared that the country's debt-ridden economy has "collapsed" following months of food, gasoline, and energy shortages, and the government cannot purchase imported oil.

Prime Minister Ranil Wickremesinghe told Parliament on Wednesday that petrol, gas, power, and food shortages were only the tip of the iceberg.

"Our economy has fallen entirely. Wickremesinghe, the minister of finance tasked with stabilizing the economy, stated that this is the most pressing issue at hand.

Sri Lanka's economy is collapsing because of hefty debts, reduced tourism revenue, other pandemic-related effects, and rising commodity prices.

The country has been surviving with the assistance of $4 billion credit lines from its neighbor India. However, Wickremesinghe stated that India would not be able to sustain Sri Lanka for very long.

Billions in debt

"The Ceylon Petroleum Corporation is currently in debt for $700 million," Wickremesinghe told legislators.

"Consequently, no nation or organization is willing to give us fuel. Even for pay, many are hesitant to supply fuel, he continued.

As Sri Lanka's foreign reserves declined, Wickremesinghe said that the government had failed to act in time to reverse the situation.

If initial actions had been done to at least slow down the economic collapse, we would not be in this difficult situation today. But we missed out on this chance," he remarked.

Now, there are indications of a potential collapse to rock bottom.

Sri Lanka has already indicated that it will delay the repayment of $7 billion in foreign debt due this year, awaiting the conclusion of negotiations with the International Monetary Fund regarding a rescue package.

It must pay an average of $5 billion per year through 2026.

The foreign currency issue has resulted in enormous shortages that have compelled people to wait in lengthy queues to purchase necessities, such as fuel, cooking oil and medicine.