Sri Lanka‘s central bank has decided to hike interest rates by an unprecedented 700 basis points to tame high inflation amid the worst economic crisis that has led to protests across the country and put President Gotabaya Rajapaksa under mounting pressure to resign.

The move comes as Sri Lanka’s main Opposition party SJB on Friday announced that it will move a no-confidence motion against the government of President Rajapaksa and is prepared to impeach the embattled leader if he fails to address the concerns of the public facing hardships due to the economic crisis.

The Monetary Board of the Central Bank of Sri Lanka on Friday decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 700 basis points to 13.50 per cent and 14.50 per cent, respectively, effective from the close of business on April 8.

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The Board noted that the inflationary pressures could further intensify in the period ahead, driven by the build-up of aggregate demand, domestic supply disruptions, exchange rate depreciation and the elevated prices of commodities globally.

It was of the view that a substantial policy response is imperative to arrest the buildup of added demand-driven inflationary pressures in the economy and preempt the escalation of adverse inflationary expectations, to provide the required impetus to stabilise the exchange rate and also to correct anomalies observed in the market interest rate structure.

Meanwhile, protests continued across the country, demanding the resignation of the President and the entire Rajapaksa family from the government.

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Thousands of protesters gathered in the capital on Saturday, demanding President Rajapaksa’s resignation as the country experiences its worst economic crisis since independence from British rule in 1948.

Large crowds carrying the national flag and banners walked into Central Colombo’s Galle Face Esplanade, despite a government notice reading the place is out of bounds due to urgent construction work. One of the placards read: “Go home, Gota!” Protests are being organised via social media networks. According to users on Facebook, the number of people at the protest on Saturday in Central Colombo is set to swell to 1 million.

The main opposition Samagi Jana Balawegaya (SJB) said they will present a no-confidence motion against the govt in the next session of Parliament.

“We have begun signing the motion (from members of the Parliament) and will have an urgent session of our parliamentary group tomorrow to finalise it,” senior SJB leader Tissa Attanayaka said.

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The SJB has 54 seats in the 225-member Parliament.

The party is banking on other opposition groups – Tamil National Alliance with 10 seats and the Janatha Vimukthi Peramuna (JVP) with three seats — for its move against the government.

Rajapaksa’s ruling party, Sri Lanka Podujana Peramuna (SLPP) on Tuesday lost its majority in Parliament as 42 MPs announced they would sit independently.

On Monday night, Rajapaksa had said that he will not resign, but was ready to hand over the government to whichever party holds 113 seats in Parliament.

Rajapaksa earlier proposed the creation of a unity government, but the main Opposition party Samagi Jana Balawegaya (SJB) rejected the idea.

Persons close to President Rajapaksa dub the call for the president to resign an “unconstitutional demand”.

The Opposition backs the public protests happening all over the island, demanding the resignation of the President and the entire Rajapaksa family from the government.

Thousands of people from all walks of life have been demonstrating, demanding a solution to the crisis and calling for Rajapaksa to resign over economic mismanagement.

President Rajapaksa has resisted the demands to step down, even after members of his own coalition joined the anti-government demonstrations this week, with governing party lawmakers calling for the appointment of an interim government to avoid possible violence.

Parliament had failed to reach a consensus in three days of debate on how to deal with the economic crisis.

The President and his older brother, Prime Minister Mahinda Rajapaksa, continue to hold power, despite their family being the focus of public ire. Five other family members are lawmakers, including Basil Rajapaksa, Irrigation Minister Chamal Rajapaksa and a nephew, Sports Minister Namal Rajapaksa.

The government speakers have defended the ruling family, saying the President need not resign as protests were meant to achieve “extra constitutional aims”.

Sri Lanka is scheduled to start talks with the International Monetary Fund (IMF) on April 11. The talks would lead to a possible bailout, including assistance on restructuring foreign debt.

Sri Lanka’s foreign exchange reserves have plunged some 70 per cent in the past two years, hitting USD 1.93 billion at the end of March.

Inflation hit 18.7 per cent in March.

Sri Lanka may run out of diesel by the end of this month with the USD 500 million line of credit extended by India for fuel purchase exhausting fast amidst the unprecedented shortage of foreign reserves.

The Sri Lanka Medical Association (SLMA) has also warned President Rajapaksa about the shortage of even the most essential medicines in the island nation.

Many government institutions across the country have become inactive due to the token strike by the employees of state and semi-state institutions.

An Indian credit line in a special economic relief package has only provided a temporary solution.

Economists have warned with the exhaustion of the Indian credit line the country would come to a total collapse by May-June.

Rajapaksa has taken some desperate measures such as appointing an experts’ panel to advise on negotiations with the IMF while changing his younger brother Basil as finance minister and appointing a new governor to head the central bank.

President Rajapaksa has defended his government’s actions, saying the foreign exchange crisis was not his making and the economic downturn was largely pandemic driven with the island nation’s tourism revenue and inward remittances waning. The government has blamed the public protests as politically motivated and accused the Opposition party JVP of organising them.