Sri Lanka under virtual lockdown over fuel scarcity amid crisis
Citizens of Sri Lanka have been placed under a virtual lockdown as the worsening sovereign debt crisis has deprived the South Asian country of fuel. The cabinet of ministers of the island nation decided on Monday to restrict fuel supply only to essential services until July 10. Government spokesperson Bandula Gunawardena stated in a televised address that inter-provincial public transportation would likely be suspended.
Why does this story matter?
After taking over as Prime Minister, Ranil Wickremesinghe said in May that his government was focusing on steps for various sectors of the economy to bring the country out of the ongoing crisis. Sri Lanka has been reeling under its worst economic crisis since independence, stemming from a foreign exchange crisis that led to shortages of essential supplies for the last several months.
Official statement over the development
"Port, health services, food transport will be provided petrol and diesel while all other sectors are requested to stay at home and provide services online in this difficult time," Gunawardena stated. "Our country is facing an unprecedented state of finance and foreign exchange crisis," he added. According to reports, the Sri Lankan government has also implemented a token system for fuel distribution.
Government to ask foreign companies to distribute fuel
Last week, Wickremesinghe issued a dire warning about Sri Lanka's impending collapse and claimed they are unable to buy fuel, even with cash, even as the shortages of basic supplies and electricity worsened. Energy Minister Kanchana Wijesekera announced on Sunday that the country intends to enable foreign companies to distribute fuel in an effort to ease severe shortages that have halted most economic activities.
Sri Lanka is seeking bilateral aid from countries
After defaulting on its dollar bond securities earlier this year and witnessing a massive decline in foreign reserves, authorities in Sri Lanka are negotiating with the International Monetary Fund (IMF) and bilateral creditors like India and China for fresh funding to pay for imports. In order to secure new fuel supplies, the Lankan government is also sending envoys to Qatar and Russia this week.
Sri Lanka in talks with IMF for a bailout package
The island nation is also in talks with the IMF for a bailout package. The United Nations earlier also planned to raise $47 million over the next four months to assist Sri Lankans who are demanding petrol, diesel, and kerosene for cooking and fishing activities. Notably, the government recently closed public schools and instructed government servants to work from home to reduce transportation costs.
India's financial assistance to Sri Lanka
Sri Lanka is reportedly depending on India for fuel supply and the final shipment of 44,000 metric tons of diesel under the Indian line of credit reached Colombo on June 16. Since January, India has given Sri Lanka more than $3.5 billion in financial assistance.
