Sri Lanka’s economic activity has come to a near standstill as the island nation, facing its worst financial crisis, runs out of fuel for transport and there are few signs of fresh supplies.
The government declared a public holiday for public offices and schools on Friday to limit vehicle traffic, leaving many roads in and around the capital Colombo deserted. Meanwhile, thousands of vehicles are lined up in queues stretching for miles as drivers wait for gas stations to be restocked.
Power and Energy Minister Kanchana Wijesekera said on Thursday that state-owned Ceylon Petroleum Corp had not received tenders for new fuel stocks because suppliers were being deterred by the unpaid ones.
The South Asian nation has approached several companies and countries, including Russia, for supplies and was hoping for India’s approval for a new $500 million line of credit for fuel imports, Wijesekera said.
Sri Lanka’s economic collapse, the worst in its independent history, has seen protests erupt across the island in recent months demanding the ousting of President Gotabaya Rajapaksa and members of his family from government. The clan have been accused of making decisions that have led to severe shortages of everything from fuel to medicine, nearly 40% inflation, daily power outages lasting up to 1 p.m. and default on payment historical.
According to Prime Minister Ranil Wickremesinghe, the nation will need about $6 billion in aid from the International Monetary Fund and countries like India and China to get by over the next six months. Local authorities are seeking to speed up bailout talks with the IMF to secure other new sources of funding.
Sri Lanka’s economy likely contracted in the first quarter, hit by public protests, political instability, high commodity prices and supply chain issues. According to Bloomberg Economics, a recession this year will be inevitable.
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