Sri Lanka’s central bank has secured foreign currency to pay for fuel and cooking gas shipments that will ease the crippling shortage, its governor said on Thursday, as the prime minister said the supply would last at least a month. was closed for.
Sri Lanka’s central bank has secured foreign currency to pay for fuel and cooking gas shipments that will ease the crippling shortage, its governor said on Thursday, as the prime minister said the supply would last at least a month. was closed for.
Most of Sri Lanka’s petrol stations have dried up as the island nation grapples with its most devastating economic crisis since independence in 1948. At a few pumps in the commercial capital Colombo, dozens of people stood in lines holding plastic jerry cans as soldiers in combat gear. and patrolled the streets armed with assault rifles. Traffic was very light.
Residents said most people were staying at home due to lack of transport.
Central bank governor P. Nandalal Veerasinghe told a press conference that enough dollars had been released to pay for fuel and cooking gas shipments, which were used to pay for $130 million received from the World Bank and from Sri Lankans working abroad. was done in money.
He was speaking after the central bank kept interest rates stable at a policy meeting, citing a massive 7 per cent hike in April that it was working its way through the system.
Veerasinghe said the country was more stable politically and economically and he would continue in his post. He told reporters on May 11 that he would resign in two weeks in the absence of political stability as any steps taken by the bank to deal with the economic crisis would not be successful amid the turmoil.
Opposition MP Ranil Wickremesinghe was made prime minister last week and has made four cabinet appointments. However, he has not yet named any finance minister.
The central bank governor said inflation could rise to as high as 40% in the next few months, but this was mainly driven by supply-side pressures and measures by the bank and the government, which were already curbing demand-side inflation. Were putting
Inflation hit 29.8% in April and food prices expanded by 46.6% year-on-year.
Sri Lanka’s economic crisis comes from the confluence of the COVID-19 pandemic with a tourism-dependent economy, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa and his brother Mahinda, who resigned as prime minister last week. Had given.
Other factors include heavily subsidized domestic prices of the fuel and the decision to ban imports of chemical fertilisers, which devastated the agriculture sector.
test support
The central bank said energy and utility prices needed to be revised urgently, and analysts said Wickremesinghe’s ability to push reforms through parliament and quell public anger would be critical.
“They need to bring significant reforms and other measures to Parliament to test their support and see if they really have consensus and consistency,” said Sheehan Coure, head of research at AQT stockbrokers in Colombo.
However, he added that the situation has taken a turn for the better. “Given that there was a point where the governor was even more difficult to find, the fact that he has decided to stay is a good thing,” Coure said.
Speaking in Parliament, Wickremesinghe said the government was working to release six fuel shipments that had arrived at the port of Colombo.
“There are two petrol shipments between them, but that won’t end the shortfall,” he said, adding that the supply had only been stopped by mid-June.
“Our aim now is to find a way to reduce lines and start a fuel reserve so that even if some shipments are missed, there is fuel available.”
However, there is a lot of opposition to them. The protesters agitating for the removal of the Rajapakse brothers say that they are their puppets.
Hundreds of students took out a march from Colombo on Thursday carrying black flags and raising anti-government slogans.
A banner at the rally said: “Gota-Ranil Conspiracy Sarkar Out! System Change.”
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