Sri Lanka has only enough petrol for one day and urgently needs $75 million in foreign exchange to pay for essential imports within the next couple of days, the country’s new prime minister said on Monday.
“At the moment, we only have petrol stocks for a single day,” Prime Minister Ranil Wickremesinghe said in a televised address.
Wickremesinghe said that three shipments of crude oil and furnace oil “have been anchored within the maritime zone of Sri Lanka” because the government was unable to raise dollars to pay for them.
“At present, the central bank, local and private banks, and foreign banks functioning in Sri Lanka are all facing a dollar shortage. As [the public] is already aware, we possess a very low amount of U.S. dollars,” he said.
While shipments of diesel and petrol using the Indian credit line may provide relief in the coming days, Wickremesinghe warned that Sri Lanka could see power outages lasting up to 15 hours a day.
The country also faces a severe shortage of medicines and surgical equipment, particularly heart disease medication and the anti-rabies vaccine. Sri Lanka currently owes 34 billion Sri Lankan rupees ($94 million) to pharmaceutical suppliers.
Wickremesinghe said the central bank will have to print money to pay the wages of state-sector employees, though he cautioned that doing so would cause the currency to depreciate.
He also proposed privatizing the Sri Lankan Airlines.
“The next couple of months will be the most difficult ones of our lives. We must prepare ourselves to make some sacrifices and face the challenges of this period,” he remarked.
Men on a scooter ride past the burnt buses near Sri Lanka’s former prime minister Mahinda Rajapaksa’s official residence, a day after they were torched by protesters in Colombo on May 10, 2022. (Ishara S. Kodikara/AFP via Getty Images)
Wickremesinghe was appointed prime minister on May 12 after violent protests led to the resignation of Mahinda Rajapaksa, the brother of sitting President Gotabaya Rajapaksa.
At least nine people died and 219 others were injured after ruling-party supporters attacked anti-government protesters on May 9. Armed troops are now authorized to shoot anyone seen looting public property or causing damage.
200 DEAD IN SRI LANKA UNREST DUE TO FOOD AND FUEL SHORTAGES pic.twitter.com/EJqbdbCUYF
— The_Real_Fly (@The_Real_Fly) May 16, 2022
A police spokesperson said Sunday that 230 people were arrested for violating curfew, attacking the public, and causing damage. Of those, 68 people have been remanded in custody.
China’s Role in Sri Lanka’s Economic Crisis
Sri Lanka is on the verge of bankruptcy, with its foreign exchange reserves plummeting by 70 percent over the past two years. The government said on April 12 that it was suspending debt repayments.
Sri Lanka is a key part of the Chinese Belt and Road Initiative (BRI), which other countries have criticized as a “debt trap” for smaller nations. Several of its infrastructure projects funded by foreign investments have failed to bring revenue, plunging the country into debt.
In December 2017, the Sri Lankan government leased the entire Hambantota Port to China for 99 years to convert its owed loans of $1.4 billion into equity. The move has led to thousands of protesters rallying against the deal.
Sri Lankan MP Harsha de Silva said Sunday that the government had no choice but to “figure out a way to come out of the debt” accumulated from the infrastructural projects.
“We can’t undo the projects now. What we can do now is to figure out a way to come out of the debt. We have to restructure it, and we have to talk to the Chinese and come to a solution,” Silva was quoted as saying by India Today.
About 10 percent of Sri Lanka’s $51 billion external debt is owed to China. Sri Lanka had requested China to help restructure its debt obligations and $2.5 billion in financial support. In May, the Sri Lankan government said Beijing extended a total aid package of 500 million yuan ($76 million).