Economic crisis in Sri Lanka: just enough fuel for around five more days, minister says

The country of 22 million is caught in its worst financial crisis in seven decades after its foreign exchange reserves hit record highs as dollars run out to pay for essential imports including food, medicine and fuel .

Chronic fuel shortages have worsened this week with mile-long queues at some gas stations across the country, leading to sporadic protests as vehicle owners wait, sometimes overnight, for petrol and diesel.

Inventories cover fuel for vehicles, certain industries and essential services. A month ago, the prime minister said there was only enough petrol for one day.

Sri Lanka is unable to pay $725 million in late payments to suppliers and is also struggling to open letters of credit for future shipments, Energy and Energy Minister Kanchana Wijesekera has said.

“We are struggling to stock up on fuel due to our currency issues and the government is trying to manage existing stocks of diesel and gasoline until June 21,” he told reporters. “We are struggling to keep up with demand and stocks could run out faster if we don’t reduce non-essential travel and stop hoarding fuel.”

“We are expecting a shipment of gasoline within the next three days and two more shipments within the next eight days,” he added.

Sri Lanka is facing an economic and political crisis.  Here's what you need to know

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

India has been a key support during the financial crisis, having provided around $3 billion in aid, including a $1 billion line of credit for essential imports and a $400 million exchange.

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

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

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