Sri Lanka’s deteriorating foreign-exchange shortage has seriously impacted the energy and education sector, which largely depends on imports.
Sri Lankan government admitted on Monday that it has run out of cash to buy paper and fuel. Gas stations across the country have out of fuel and examination in the schools has been postponed while, worsening the foreign reserves crisis has crippled the island nation’s economy.
Sri Lanka’s current economic situation does not even have sufficient US dollars to pay for two shipments of fuel. The fuel shipments have arrived today, but we are unable to pay for it, Sri Lanka’s Energy Minister Udaya Gammanpila said.
Last week, state-owned refinery Ceylon Petroleum Corporation (CPC) said that CPC out of money to procure supplies from abroad. The CPC suffered USD 415 million losses in 2021 due to the sale of diesel at prices fixed by the government. Energy minister warned about the approaching fuel shortages due to the dollar crisis twice in January and once earlier this month.
The fuel shortage has led to long queues at understocked pumps across the country. Gammanpila estimated that the only way out of this mess is by increasing the retail prices of fuel. The minister also urged the government to reduce the customs duty on fuel imports in order to pass the benefits to the public.
Earlier this month, Sri Lanka bought 40,000 metric tons of diesel and petrol from major Indian Oil Corporation to meet the urgent energy requirements in the economic crisis. India a committed partner and a true friend of Sri Lanka. The High Commissioner Gopal Baglay handed over 40,000 MT fuel consignments by Indian Oil Company, a statement issued by the Indian High Commission.
The delivery of the fuel by India came amidst the announcement of Sri Lankan Finance Minister Basil Rajapaksa’s visit to India in a fortnight to formalize India’s economic relief package for the country facing a serious forex crisis. Last month, India announced a USD 900 million bail out to Sri Lanka to build up its tired foreign reserves and for food imports, amid a shortage of almost all essential commodities in the country.