Sri Lanka’s state-owned petroleum corporation announced fuel rationing for vehicles with effect from Friday, as an unprecedented economic crisis roils the country. According to the Ceylon Petroleum Corporation (CPC) statement, now motorcycles and other two-wheelers can purchase fuel upto worth Rs 1,000 per visit to a fuel station.
Similarly, three-wheelers can purchase fuel worth Rs 1,500, cars, jeeps and vans upto Rs 5,000. Buses, lorries and commercial vehicles have been exempted from the rationing. With the economic crisis and the shortage of forex, an Indian credit line of USD 500 million for fuel imports provided a lifeline to the island nation. India recently announced to extend a USD 1 billion line of credit to Sri Lanka as part of its financial assistance to the country to deal with the economic crisis following a previous USD 500 billion line of credit in February to help it purchase petroleum products.
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Meanwhile as the country continued to reel under its worst economic crisis, the prime minister on Wednesday offered to hold talks with protesters calling for the government to step down. The opposition, meanwhile, threatened to bring a no-confidence motion against the government in parliament.
The island nation of 22 million people is going through its worst financial crisis since independence in 1948, with a foreign exchange shortage making essential commodities, including fuel and medicines, scarce.
Here are the top developments on the Sri Lanka economic crisis:
Crisis-hit Lanka seeks India’s help for cooking gas supply
Sri Lanka has started a process to import cooking gas through a credit line arrangement with India, the chair of the country’s state-run gas company Litro Gas said on Friday as he resigned from his post alleging that a gas mafia was engaged in corruption amidst the country’s worst economic crisis, news agency PTI reported.
Sri Lanka is currently experiencing its worst economic crisis in history. With long lines for fuel, cooking gas, essentials in short supply and long hours of power cuts, the public has been suffering for months.
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Theshara Jayasinghe, the Chairman and CEO of Litro Gas, the country’s largest importer and supplier of cooking gas, said in his resignation letter to President Gotabaya Rajapaksa: “I had initiated a process through the Indian High Commission to obtain an Indian credit line to import gas. This could be easily implemented”.
Sri Lanka starts fuel rationing amidst economic crisis
Sri Lanka’s state-owned petroleum corporation announced fuel rationing for vehicles with effect from Friday, as a historic economic crisis roils the country. According to the Ceylon Petroleum Corporation (CPC) statement, now motorcycles and other two-wheelers can purchase fuel upto worth Rs 1,000 per visit to a fuel station, news agency PTI reported.
Similarly, three-wheelers can purchase fuel worth Rs 1,500, cars, jeeps and vans upto Rs 5,000. Buses, lorries and commercial vehicles have been exempted from the rationing. Long queues at fuel stations have resulted in massive public anger. Further, households are experiencing nearly 12-hour-long powercuts and there is a massive shortage of essentials, due to falling value of the Sri Lankan rupee.
Allow TN to ship essentials to Sri Lanka from Thoothukudi port: CM Stalin
Tamil Nadu Chief Minister M K Stalin on Friday urged the Centre to allow the State to ship essential commodities from the Thoothukudi port to Sri Lanka as humanitarian aid to the people, especially Tamils, severely affected by the food crisis there.
Recalling his discussion with Prime Minister Narendra Modi on the issue on March 31, the Chief Minister reiterated Tamil Nadu government’s commitment to ship foodgrains, vegetables and medicines from the port for the Tamils in northern and eastern parts of Lanka and its capital Colombo as well as those working in the plantations.
“It has now been reported that the Union government has enabled the shipping of food and other essential commodities to Sri Lanka…(hence) I request that this may be facilitated at the earliest in view of the worsening situation in Lanka,” Stalin said in a letter addressed to Union External Affairs Minister S Jaishankar.
World Bank raises Sri Lanka’s 2022 growth forecast from 2.1% to 2.4%
The World Bank has raised crisis-hit Sri Lanka’s 2022 growth forecast to 2.4 per cent from 2.1 per cent, but has also warned that its outlook is highly uncertain due to fiscal and external imbalances, according to news agency Reuters. Sri Lanka’s central bank said Tuesday that it had become “challenging and impossible” to repay external debt, as it tries to use its dwindling foreign exchange reserves to import essentials.
A woman waits in line to buy domestic gas on a main road in Colombo, Sri Lanka. (Reuters Photo)
Thousands of Sri Lankans celebrate New Year at anti-government protest site
Sri Lankan demonstrators on Thursday celebrated the Sinhalese and Tamil new year at the protest site opposite President Gotabaya Rajapaksa’s office, where they have been camping for six days demanding his resignation. Volunteers distributed traditional New Year delicacies like squares of kiribath or coconut milk rice, bananas, spicy pickles, and butter cake, that were donated by supporters, according to Reuters.
India finally on board, but Trincomalee oil farm now waits for economy crisis to lift
India’s prized agreement with Sri Lanka for the joint development of the Trincomalee Oil Tank farm, signed earlier this year after a 35-year wait, may take years to turn around and at least a 100 million dollars. However, the deal for 85 decrepit oil tanks in 850 acres of dense jungle, and a strategic natural harbour, could one day be key to Sri Lanka’s energy security while giving India additional capacity for reserves. Read more here.
Demonstrators take part in a ritual of boiling milk to mark the Shinala and Tamil new year during their protest in Colombo, April 14, 2022. (Reuters Photo)
Sri Lanka bondholders brace for big losses in debt restructuring
Sri Lanka’s creditors face losing a third to half of their investment in the country’s dollar bonds, according to Reuters, after the government announced it would restructure $11 billion worth of debt, the first such financial shake-up in its modern history.
S&P lowers Sri Lanka’s foreign currency rating to ‘CC’ from ‘CCC’
S&P Global Ratings has lowered Sri Lanka’s foreign currency rating to “CC” from “CCC”, citing the economic crisis in the country and rising external funding pressures. “Sri Lanka’s debt restructuring process is likely to be complicated and may take months to complete”, the ratings agency said in a statement.
“CC” rating stands for “Highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty”, according to the agency’s website.
Sri Lanka Economic Crisis by The Indian Express on Scribd
Plan by SriLankan Airlines to lease 21 aircraft draws criticism
A plan by Sri Lanka’s state-owned national airline to lease nearly two dozen aircraft has sparked public criticism and opposition condemnation as the country struggles with its worst financial crisis in decades.
Sri Lanka is struggling with low reserves that have declined more than 70% over the past two years to $1.93 billion at the end of March, news agency Reuters reported. The dollar crunch has caused acute shortages of fuel, food and medicines, with rolling power cuts for hours a day for more than a month.
On Tuesday, Sri Lanka suspended some external debt repayments and said it would instead use meagre dollar cache to focus on essential imports. Protesters demanding President Gotabaya Rajapaksa resign have been staging daily sit-ins outside his office.
Tender notices for the lease of 42 aircraft were published on the airline’s website on Thursday. SriLankan Airlines has been struggling with a fall in tourism because of the COVID-19 pandemic and the economic crisis. In 2019/20, SriLankan Airlines reported a loss of 44.14 billion Sri Lankan rupees ($140.90 million) against 41.70 billion Sri Lankan rupees in the previous year.
