Sri Lanka Faces Fuel Crisis Amid Foreign Exchange Shortage Due To Pandemic

Sri Lanka is going through a major fuel crisis at present. The main reason for the crisis is the shortage of foreign exchange to buy fuel. If reports are to be believed, Sri Lanka is left with 5-6 days of fuel only. The nation’s economy hits the bottom due to the pandemic. Due to the pandemic, the travel and tourism industry was on halt. That brought a major shock to Lanka’s economy, which is highly dependent on tourism. The losses that the country is facing in the last two years due to the pandemic stands at 14 billion dollars. Between July-September 2021 the economy shrinks by 1.5% as per the Central Bank reports. Not only this the Inflation rate also rose to 12.1% in the month of December.

To cope with the losses, Sri Lanka has borrowed international sovereign bonds worth 12.5 billion dollars. In January the government cleared around 500 million dollars on international sovereign bonds.  According to the central bank at the end of the month of January, the gross official reserve is at 2.36 billion dollars. As far as the amount of debt is concerned Sri Lanka has to pay more than 7 billion dollars by 2022. In addition to this, an additional amount of 1 billion dollars is to be paid by July 2022.

Power Cuts In Whole Sri Lanka To Save Fuel

As the fuel crisis is peaking up, the Sri Lankan government has started to do major power cuts across the country. This step is taken to reduce the consumption of fuel. Not only this the Lankans are facing a major shortage of essential items like Milk powder and cooking gas along with a fuel and power crisis. People are standing in long lines to get fuel for their vehicles but many stations remained closed due to the shortage.

Though the Chairman of the Public Utilities Commission of Sri Lanka, said, “Shortage of fuel is causing this issue” and “We are having a fuel crisis not an electricity crisis.” A special cabinet meeting has been called for discussing the crisis and to increase the prices on Tuesday.