President Ranil Wickremesinghe said in a televised speech, "We have reached the point of destruction."
"Let's seek to heal this wound though it's difficult and painful. If we endure the suffering and pain for a short period of time, we can get the wound healed completely," Wickremesinghe said.
He added that everyone in the country was to blame for the nation's woes, from politicians to regular citizens, as the country had long been divided by race, religion and region since the nation's inception.
Sri Lanka faces its worst financial crisis since it declared independence from Britain in 1948. A severe shortage of dollars has added to inflation woes, a drop in the currency and the country's slide into an economic recession.
Economic crisis fuels poverty
Some relief has appeared in the form of fewer acute shortages. Wickremesinghe said the first half of 2023 would be met with challenging economic times.
What is the state of independence celebrations in Sri Lanka?
Religious leaders of the Buddhist and Christian faiths announced they would boycott the festivities in Colombo, the capital. Citizens and activists alike expressed outrage over the costs of the ceremony at a time when the country is in dire straits.
On Friday, several activists began a silent protest in Colombo over the cost of the independence celebrations and the failure to ease the country's economic burden. Police later blocked a protest organized by students at the university.
Soldiers armed with assault rifles stood every few meters around the grounds of the independence ceremony festivities.
Rev. Cyril Gamini, a Catholic priest, told AP that it was a "waste and a crime" to hold celebrations rich with military pageantry at a time when the country was suffering extreme economic hardship.
"We ask the government what independence they are going to proudly celebrate by spending a sum of 200 million rupees (roughly $550,000)," Gamini said, noting the Church's disapproval and the absence of members of the clergy.
Seven percent of Sri Lanka's population of 22 million is Catholic. Despite the small numbers, the influence of the Church is greater as its views are highly regarded by the people of Sri Lanka.
Omalpe Sobitha, a Buddhist monk, told AP the celebrations were a showcase of weapons manufactured elsewhere.
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How dire is the situation in Sri Lanka?
Sri Lanka was forced to suspend repayment of nearly $7 billion (€6.46 billion) in foreign debt due this year as talks with the International Monetary Fund (IMF) for a bailout package drag on.
In his speech, Wickremesinghe said the country was completing talks for a $2.9 billion bailout with the IMF.
"We expect to get their consent without delay," he said.
In total, Sri Lanka owes in excess of $51 billion. Of that, $28 billion must be repaid by the end of 2027. Unsustainable debt coupled with a severe balance of payment crisis, in addition to the economic complications brought on by the COVID-19 pandemic, resulted in serious shortages of food, medicine and fuel, particularly last year.
To manage the country's balance of payments, income taxes have been increased sharply and every ministry has seen its budget cut by 6%. The military is to be downsized by half by 2030 after it had grown to more than 200,000 during the country's long civil war.
Wickremesinghe acknoweldged in his speech on Saturday that many of the changes he said he had been forced to undertake were unpopular, but said he would continue with the reforms.
Sri Lanka's central bank is rooting for an economic turnaround in the second half of the year and for inflation to dip into the single digits.
In his speech, Wickremesinghe noted measures were in place to bring the country together again by releasing military land in the ethnic Tamil-majority north. Wickremesinghe said suspects connected to the now defunct Tamil Tigers, who fought for an independent state in the north of the country, would be released.