Crisis-Hit Sri Lanka Defaults On Debt As It Runs Out Of Fuel

The Sri Lankan government has announced that citizens should not wait in line for petrol as the crisis-hit Sri Lanka defaults on debt and runs out of fuel. 

Crisis-Hit Sri Lanka Defaults On Debt As It Runs Out Of Fuel 1

The crisis-stricken country has no money to buy fuel. Following violent public protests that began in early April in Colombo and swiftly spread across the country due to skyrocketing costs amid food and other basic resource shortages such as medicine, the Sri Lankan government announced Wednesday that citizens should “not wait in line” for petrol.

In a television address on Tuesday, Sri Lanka’s new prime minister, Ranil Wickremesinghe, claimed that the country was on its “last day of petrol” amid the worst crisis in over seven decades. He estimated that the country would require an immediate bailout of at least $75 million in foreign currency only to fund necessary imports for the next few days.

Crisis-Hit Sri Lanka Defaults On Debt As It Runs Out Of Fuel 2
Hundreds of petrol stations have seen miles of vehicles backed up, desperate for gas.

He also hinted that the central bank will have to print money in order to pay government salaries. According to Bloomberg, the government has also failed to meet its April 18 deadline to pay $78 million in global bond payments, as well as another $105 million owed to Chinese banks. The 30-day grace period ended on Wednesday.

“Sri Lanka is expected to be placed in default by rating agencies on Wednesday after the non-payment of coupons on two of its sovereign bonds,” Reuters said.

It’s expected to be the start of a historic default on a total of $12.6 billion in offshore bonds, the first since the small country gained independence from Britain in 1948, amid a continuing spiral of out-of-control inflation and a foreign exchange crisis caused by a lack of dollars.

“There aren’t enough dollars available to open letters of credit,” Power and Energy Minister Kanchana Wijesekera told parliament on Wednesday. He said, “We are working to find funds but petrol will not be available at least until the weekend. The very small reserve stock of petrol is being released for essential services like ambulances “he stated.

PM Wickremesinghe then announced that the World Bank had approved a $160 million emergency bridge loan, albeit it remained unclear whether the funds would be utilized for fuel imports.

He went on to say, in an ambiguous statement, that the government had little chance of getting the country out of its debt and energy crises in the near future: “The statistics have gone haywire ,” he said, “but the reality is we don’t even have $1 million.”

In recent weeks, political and financial elites have been the target of increasingly brazen mob attacks…

To make matters worse, central authorities indicated early this week that the public may expect 15 hours of power outages each day due to the energy crisis, raising the probability of rioting and violent street protests.

Last week’s protests turned fatal, with at least nine people killed, including a member of the ruling party’s parliament, forcing Prime Minister Mahinda Rajapaksa to resign. Thousands of demonstrators marched into his home and office.

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