The island nation has been unable to pay for fuel shipments due to a lack of foreign exchange and is ready to seek help from the International Monetary Fund (IMF). “We have made a request to the government to allow the public sector, which is about 1.3 million employees, to work from home for the next two days so that we can better manage fuel and electricity shortages,” said Janaka Ratnayake, President of Of public services. The Sri Lankan Commission told Reuters. Sign up now for FREE unlimited access to Reuters.com Register Power outages will be extended to 13 hours on Thursday, the Sri Lankan electricity regulator said in a statement. Amid the country’s worst economic crisis in decades, foreign exchange reserves fell 70 percent in the past two years to a whopping $ 2.31 billion in February, leaving Sri Lanka struggling to import basic necessities, including food and fuel. The delayed power outages on Wednesday were caused in part by the government’s inability to pay $ 52 million for a 37,000-tonne diesel cargo waiting to be unloaded, Ratnayake said. “We do not have forex to pay,” he said, warning of more power outages over the next two days. “This is the reality”. “I DO NOT SEE THE END OF THE TUNNEL” Shares of Sri Lanka closed 3.6% lower on Wednesday, after falling more than 7% during the day, as a result of which the Colombo Stock Exchange stopped trading twice. Udeeshan Jonas, Chief Strategist at equities research firm CAL Research, said the market was responding to a deepening crisis caused by misplaced tax cuts, the coronavirus pandemic and historically weak state finances. read more “Investors can not see the end of the tunnel,” he said. To find a way out of the crisis, Finance Minister Basil Rajapaksa is due to visit Washington in April for talks with the IMF. The Fund’s assessment released on Friday said Sri Lanka was experiencing a combined balance of payments and public debt crisis and that it would need a “comprehensive strategy” to make its debt sustainable. If Sri Lanka secures an IMF program, it will be the 17th global bailout package from the global lender. Harpo Gooneratne, a restaurant in Sri Lanka’s main city, Colombo, said that although some of its 10 restaurants had their own generators, the lack of diesel made it difficult to run his business during power outages. “It’s crazy,” he said. Worsening power cuts will hit already troubled businesses, especially exporters who have locked orders and have limited ability to absorb cost increases, said Dhananath Fernando, a think tank analyst at the Advocata Institute in Colombo. “This will further hurt Sri Lanka’s growth and threaten foreign exchange gains that are vital to improving stocks, repaying debt and paying basic imports,” Fernando said. Gooneratne said there were 30% fewer customers at his restaurants and they were spending less. “Even when people go out they are careful with their spending,” he said. “The person who used to drink two beers will now have only one.” Sign up now for FREE unlimited access to Reuters.com Register Writes Devjyot Ghoshal. Editing by Simon Cameron-Moore, Tomasz Janowski and Alex Richardson Our role models: The Thomson Reuters Trust Principles.
