Economic Crisis in Sri Lanka: Only enough fuel for about five more days, Minister says

Sri Lanka’s fuel supplies will last about five days, Sri Lanka’s energy and energy minister said Thursday, while the island nation awaits official confirmation from the Indian government for a new $500 million credit line for fuel.

The country of 22 million people is in the middle of its worst financial crisis in seven decades after its foreign exchange reserves dwindled to record lows and dollars to pay for essential imports such as food, medicine and fuel ran out.

The chronic fuel shortage has worsened this week with miles-long lines at some petrol stations across the country, prompting sporadic protests while vehicle owners wait for petrol and diesel, sometimes overnight.

Stocks include fuel for vehicles, some industries and essential services. A month ago the Prime Minister said there was only enough petrol for one day.

Sri Lanka is unable to make $725 million in overdue payments to suppliers and is also struggling to open letters of credit for future supplies, Energy and Energy Minister Kanchana Wijesekera said.

“Due to our foreign exchange problems, we are struggling to get fuel supplies and the government is working to manage existing diesel and gasoline stocks until June 21,” he told reporters. “We are finding it very difficult to meet demand and stocks could run out faster unless we cut unnecessary travel and stop fuel hoarding.”

“We expect one delivery of gasoline within the next three days and two more deliveries in the next eight days,” he added.

Sri Lanka is awaiting official confirmation of a $500 million credit line from the Indian government’s Exim Bank, which Wijesekera said will be used to fund fuel supplies for the next few weeks.

India has been a key supporter during the financial crisis as it has provided around US$3 billion in aid, including a US$1 billion credit line for essential imports and a US$400 million swap.

Sri Lanka has approached several countries, including Russia, to discuss fuel import options that would allow for several months’ worth of supplies, Wijesekera said.

The country is also in talks with the International Monetary Fund over a bailout package and a delegation from the lender is expected to arrive in Sri Lanka on June 20.

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