Home youth program budget Sri Lanka to seek additional $500m Indian loan for fuel

Sri Lanka to seek additional $500m Indian loan for fuel

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Govt. telling non-essential staff to work from home to save fuel; social media saw many stories of families unable to access emergency medical care due to lack of fuel

Govt. telling non-essential staff to work from home to save fuel; social media saw many stories of families unable to access emergency medical care due to lack of fuel

Sri Lanka has decided to seek $500 million in new aid from India to boost its fuel imports, as the island grapples with a crippling economic crisis manifested by continuing shortages of essentials.

Citizens have been spending long hours queuing outside gas stations for weeks – sometimes all day or all night – to pump gasoline or diesel, currently in short supply, as Sri Lanka, hit by the crisis, lack of dollars to pay for its imports.

Public transport has been blocked due to unavailability of fuel, businesses have been affected and schools have been forced to remain closed as students cannot move around. Over the past few days, Sri Lankan social media has seen many stories of families unable to access emergency medical care due to lack of fuel. The government has asked “non-essential” staff to work from home, to save on fuel consumption.

“The Cabinet of Ministers has approved the proposal submitted by the Minister of Electricity and Energy to obtain a series of short-term loan facilities worth an additional $500 million with the assistance of the import-export bank of the Indian government in order to buy oil. commodities required by the country addressing the current shortage of foreign exchange, the government said in a statement after Monday’s Cabinet meeting.

Fuel prices saw a record rise on Tuesday as diesel, previously sold at LKR 289 ($0.80) per litre, now costs LKR 400, a 38% rise. Petrol prices have risen from 338 to 420 Sri Lankan rupees, threatening to further increase the costs of all essentials whose prices are already skyrocketing.

For several months now, Sri Lanka has been in the midst of an unprecedented economic downturn, sparking street protests by citizens across the country. A group of protesters have camped outside the presidential secretariat in Colombo for 46 consecutive days, demanding that President Gotabaya Rajapaksa, whom they hold as the main culprit, leave office. 

Amid a deepening crisis, the government announced last month that it would preemptively default on the country’s external debt totaling $51 billion as a “last resort”, and is currently negotiating a package with the International Monetary Fund. However, Central Bank Governor Nandalal Weerasinghe noted on Monday that it was difficult to give a timetable for Sri Lanka’s economic recovery which he said depended on the success of the measures taken by the government.

So far, most Colombo initiatives have involved seeking external assistance from bilateral partners and multilateral donors. India has already extended lines of credit worth $700m so far for fuel imports – part of the total $3.5bn aid extended so far since January – and delivered over 5 lakh MT of fuel, including the latest shipment of 40,000 tons of gasoline which reached Colombo on Monday. Meanwhile, the government is also considering various options to develop Sri Lanka’s domestic energy sector, including with foreign investment. Power and Energy Minister Kanchana Wijesekera on Tuesday announced plans to advertise land for oil exploration studies in the Mannar Basin, where Cairn India was previously involved in exploration.