Sri Lanka's Prime Minister, Ranil Wickremesinghe, on Tuesday told the parliament that the island nation is bankrupt and the effects of the economic crisis will linger throughout 2023.

The country's inflation reached 54.6 percent in June as Sri Lanka continues to struggle with economic recession and shortage of food, fuel, and medicine. The island nation has run out of its foreign reserve to import vital goods, Wickremesinghe said. The central bank is expected to increase rates further at the next policy announcement on Thursday.

Wickremesinghe further said that Sri Lanka is now participating in bailout talks with the International Monetary Fund (IMF) as a bankrupt nation. Sri Lanka's bailout talks with IMF depends on finalising a debt restructuring plan by August, he added.

Sri Lanka still has nearly USD 21 billion lined up in payments until the end of 2025, despite suspending repayments of about USD 12 billion of foreign debt.