Sri Lanka limits fuel to essential services with supplies set to run out in days | Sri Lanka

Sri Lanka’s energy minister says the country’s fuel supplies will run out within days, forcing nationwide school closures and prolonged power outages, as the country’s worst economic crisis story continues.

Kanchana Wijesekera said fuel stocks were sufficient to last less than a day given current demand, and that petrol and diesel were limited to essential services such as healthcare and public transport in order to ‘stretch the remaining supplies for a few more days and ensure the country hasn’t come to a complete halt.

Fuel sales for private vehicles were banned for at least the next week, but outside petrol stations across the country there were still mile-long queues of vehicles.

The fuel crisis affects almost every aspect of life in Sri Lanka, preventing people from going to work and school. On Sunday, school closures in Colombo and other major cities were extended for a week as teachers and students were unable to travel to classrooms. Power cuts of up to 14 hours were imposed to save fuel.

Another shipment of diesel is scheduled for the weekend and petrol is due in two weeks, but Wijesekera admitted Sri Lanka does not have the money to pay for the shipments. They will total about $587 million, and the country has only $125 million left in the bank.

The government already owes about $800 million to several fuel suppliers because its foreign currency reserves have run out and it has been barred from borrowing more money in international markets. He is negotiating with Russia to try to acquire cheap fuel.

Sri Lanka has faced fuel shortages for months as it grapples with a financial crisis that has prevented it from importing essentials such as food and medicine. In June, Prime Minister Ranil Wickremesinghe told parliament that “our economy had completely collapsed”, and the UN said the country was facing a serious humanitarian crisis.

Inflation has reached 54%, leaving many households unable to buy basic items, especially as most food items have more than doubled in price.

Sri Lanka was considered one of the fastest growing countries in South Asia, with an emerging and well-educated middle class, but many fear that decades of progress will be wiped out by this crisis.

The economic woes stem from a decades-long trade deficit and a culture of heavy foreign borrowing, which have left Sri Lanka with $51 billion in debt it cannot afford to repay. Since 2019, ill-advised decisions by President Gotabaya Rajapaksa’s government have resulted in a drop in state revenue of more than a billion rupees, and the island of 22 million people has also been hit hard financially by the impacts. of Covid on tourism.

The country is on the verge of bankruptcy after being forced to default on billions of dollars in foreign loan repayments. It is in talks with the International Monetary Fund over a $3 billion bailout and help with restructuring its loans, but officials have said a program could take months to agree. Countries like India, China and the United States have provided emergency financial assistance in recent weeks.

Michelle J. Kelley