Sri Lanka's embattled President Gotabaya Rajapaksa has agreed to form an interim government to tackle the unprecedented economic crisis, a senior Buddhist monk claimed on Monday, as the debt-ridden country stepped up efforts to keep the economy afloat.

Thousands of demonstrators have hit the streets since April 9, as the government ran out of money for vital imports; prices of essential commodities have skyrocketed and there are acute shortages in fuel, medicines and electricity supply.

Rajapaksa expressed his intention to form the interim government in a letter to the powerful Buddhist clergy on Sunday.

Rajapaksa had responded to a letter from the chief monks of the four Buddhist chapters dated April 4 in which they had asked Rajapaksa to dissolve the Cabinet to set up an interim government, Madagoda Dhammananda, Chief Registrar of one of the chapters, said.

A few days ago high-ranking Buddhist monks, who oversee and regulate the Buddhist clergy, have urged the President, Prime Minister, Leader of the Opposition and all MPs to take effective steps to put the country in order and also said that they will be forced to issue a Sangha Convention if they fail to do so, Daily Mirror newspaper reported.

There was no immediate reaction from the President's Office.

Buddhist chapters

The four Buddhist chapters - Malwathu, Asgiri, Amarapura and Ramanya chapters - wield power to influence Sri Lanka's political leaders.

To form an interim government, President Rajapaksa would either have to remove his older brother Mahinda Rajapaksa as the prime minister or volunteer to resign.

Prime Minister Mahinda Rajapaksa on Saturday dismissed the proposal for an interim government. He had said it was futile to form an interim government with individuals pursuing different political ideals and even if such a government is to be formed it should happen only under his premiership.

Six proposals on table

The Buddhist clergy had submitted six proposals to the president, including forming an advisory council which would run the country's interim government leading to a parliamentary election six months later. Dhammananda did not provide information if Gotabaya Rajapaksa, 72, had responded to the advisory council proposal.

Last week, the monks threatened to issue an anti-government decree if they did not get a favourable response to their proposals.

Street protests

Meanwhile, the street protest opposite the presidential secretariat entered its seventeenth day on Monday, demanding the resignations of Gotabaya Rajapaksa and Mahinda Rajapaksa, his 76-year-old elder brother.

The ruling dispensation had reached out to the Opposition parties and protesters for talks, but all efforts were rebuffed as the agitators said they want the government to resign.

A group of over 40 parliamentarians from the ruling coalition have declared independence and have demanded the formation of an interim government comprising all political parties to tackle the economic crisis.

Lanka needs $4 billion

Sri Lanka needs at least USD 4 billion to tide over its mounting economic woes, and talks with international institutions such as the World Bank as well as countries like China and Japan for financial assistance have been going on.

Sri Lankan officials were in Washington last week to negotiate with the International Monetary Fund for a bailout.

India assures help

India has agreed to extend an additional USD 500 million credit line to help Sri Lanka import fuel.

India has already agreed to defer USD 1.5 billion in import payments that Sri Lanka needs to make to the Asian Clearing Union.

Last week, the Sri Lankan government said it would temporarily default on USD 35.5 billion in foreign debt as the pandemic and the war in Ukraine made it impossible to make payments to overseas creditors.