Sri Lanka’s fuel shortage will be alleviated.Police clash with protesters

ryanniesMay 19, 2022

Reuters

Uditha Jayasinghe and Devjyot Ghoshal

Colombo-The central bank of Sri Lanka has secured foreign exchange to pay for the transportation of fuel and cooking gas. This alleviates the serious shortage.

Most of Sri Lanka’s gas stations have been depleted as the island nation fights the most devastating economic crisis since its independence in 1948. At some pumps in the commercial capital of Colombo, dozens of people lined up with plastic jerry cans as an army of combat equipment. He then patrolled the streets, armed with assault rifles. The traffic was very light.

Residents said most people are at home due to lack of transportation.

Hundreds of students with black flags marched in Colombo’s central Fort area, sloganing the government. According to Reuters witnesses, police repeatedly fired tear gas and water canons, pushing them back.

Central Bank Governor P. Nandalal Weerasinge said at a press conference that the $ 130 million received from the World Bank and remittances from Sri Lankans working abroad are sufficient to transport fuel and cooking gas. He said the amount was paid.

After the central bank stabilized interest rates at a policy meeting, he quoted a significant 7 percentage point rise in April, which said the system was on track in April.

Weerasinge said the country was more politically and economically stable, adding that he would stay in his post. He told reporters on May 11 that any measures taken by banks to deal with the financial crisis would be unsuccessful in the turmoil and would resign in two weeks without political stability.

Opposition lawmaker Ranil Wickremesinghe was appointed prime minister last week and has made four ministerial appointments. However, he has not yet appointed a finance minister.

Inflation could rise to another 40% in the coming months, driven primarily by supply pressure, with banking and government measures already curbing demand inflation. The bank governor added.

Inflation reached 29.8% in April and food prices rose 46.6% year-on-year.

The economic crisis in Sri Lanka stems from the confluence of the COVID-19 pandemic due to a tourism-dependent economic blow, soaring oil prices, and mass tax cuts by President Gotabaya Rajapaksa, who resigned last week, and his brother Mahinda’s government. came.

Other factors include large subsidies for domestic fuel prices and a decision to ban the import of chemical fertilizers that have hit the agricultural sector.

“This is an economy that hasn’t really fully recovered from the pandemic yet,” said Christian de Guzman, senior vice president of sovereign risk at Moody’s. “Tourism, one of the driving forces behind their growth, has not returned.”

Test support

Sri Lanka is also in default on its sovereign debt as a so-called grace period for paying interest on bonds that have expired and are already overdue on Wednesday.

Mr. Weerasinge said the debt restructuring plan was almost complete and would soon submit a proposal to the Cabinet.

“We are in a preemptive default,” he said. “Our position is very clear. We cannot repay until the debt is restructured.”

The central bank said energy and utility prices needed to be urgently revised, and analysts said the prime minister’s ability to drive reforms through parliament and overcome public anger was important.

Shehan Cooray, Head of Research for Acuity Stockbrokers in Colombo, said:

But he added that things had improved. “Given that there were times when it was even more difficult to find a governor, the fact that he decided to stay is good,” said Cooley.

A spokesperson for the International Monetary Fund said Thursday that the fund is monitoring development very carefully and that a virtual mission to Sri Lanka is expected to end technical talks on a potential lending program to the country on May 24. Said that it has been.

Wickremesinghe spoke in parliament, saying the government is working to free six fuel transports arriving at the port of Colombo.

“There are two of those petrol shipments, which do not end the shortage,” he said, adding that supplies were only locked up until mid-June.

“Our current goal is to find a way to reduce lines and start stockpiling fuel, which allows us to use fuel even if we miss a few shipments.”

But he has a lot of opposition. Protesters inciting the dismissal of Brother Rajapaksa say he is their minion.

(Additional reports by Swati Bhat, David Lawder, Jorgelina do Rosario, written by Raju Gopalakrishnan, edited by Robert Birsel and Chizu Nomiyama)