People stand in a queue to buy kerosene oil used in cooking stoves in Colombo on August 19, 2021. - With the country of 21 million already facing shortages of imported cooking gas and sugar because of the lack of dollars, the Central Bank of Sri Lanka increased its deposit and lending rates by 50 basis points to 5.0 percent and 6.0 percent respectively. (Photo by ISHARA S. KODIKARA / AFP) (Photo by ISHARA S. KODIKARA/AFP via Getty Images)

Sri Lanka Economic Crisis: Sri Lanka is out of Deisel, No commercial vehicles, No electricity in Hospitals

By Ranbir Hanse On Mar 31, 2022

Colombo, March 31: Diesel is no longer on sale across Sri Lanka on Thursday, crippling transport as the crisis-hit country’s 22 million people endure record-long power blackouts.
The South Asian nation is amid its worst economic downturn since independence, sparked by an acute lack of foreign currency to pay for even the most essential imports.

Diesel — the main fuel for buses and commercial vehicles — was unavailable at stations across the island, according to officials and media reports.

Petrol was on sale but in short supply, forcing motorists to abandon their cars in long queues.

We are siphoning off fuel from buses that are in the garage for repairs and using that diesel to operate serviceable vehicles,” Transport Minister Dilum Amunugama said.

Owners of private buses — which account for two-thirds of the country’s fleet — said they were already out of oil and that even skeleton services may not be possible after Friday.

We are still using old stocks of diesel, but if we don’t get supplies by this evening, we will not be able to operate,” chairman of the private bus operators association Gemunu Wijeratne told AFP.

The state electricity monopoly said they would be forced to enforce a 13-hour power cut from Thursday — the longest ever — because they did not have diesel for generators.

We are promised new supplies in two days and if that happens, we can reduce the length of power cuts,” Ceylon Electricity Board chairman M. M. C. Ferdinando told reporters

The electricity rationing also hit mobile phone base stations and affected the quality of calls, operators said, adding that their stand-by generators were also without diesel.

The shortages have sparked outrage across Sri Lanka, with local television reporting protests across the country as hundreds of motorists block main roads in several towns.

The country’s foreign exchange reserves have fallen 70 per cent in the past two years to about $2.31 billion, leaving it struggling to pay for essential imports, including food and fuel.

The country is left with foreign reserves of only around $2.31 billion as of February, even as it faces debt payments of about $4 billion through the rest of the year.

“The reason for the shortages is not a shortage of any commodity but the shortage of dollars,” said Dhananath Fernando, chief operating officer of Colombo think-tank Advocate Institute told news agency Reuters.

Check the Reasons of Country Crisis here :

The $4 billion debt includes a $1 billion international sovereign bond that matures in July.

The COVID-19 pandemic in 2020 made the bad situation worse. Exports of tea, rubber, spices and garments suffered. Tourism arrivals and revenues fell further. The pandemic also necessitated a rise in government expenditures: the fiscal deficit exceeded 10% in 2020 and 2021, and the ratio of public debt to GDP rose from 94% in 2019 to 119% in 2021.

Sri Lanka annually spent about $260 million (or about 0.3% of its GDP) on fertiliser subsidies. Most of the fertilisers are imported. To prevent the drain of foreign exchange reserves, the Gotabaya government came up with a novel, but thoroughly bizarre, solution in 2021. All fertiliser imports were completely banned from May 2021, and it was declared that Sri Lanka would overnight become a 100% organic farming nation. This policy, which was withdrawn in November 2021 after protests by farmers, literally pushed Sri Lanka to the brink of a disaster. Agricultural scientists were unanimous in warning the Gotabaya government of the potential losses from the organic farming policy. They wrote to the government that yields may drop by 25% in paddy, 35% in tea and 30% in coconut if chemical fertilisers were banned.

Tourism, one of the key source of foreign exchange for the country, was badly hit due to the Covid pandemic. Besides, remittances from Sri Lankans working overseas also declined sharply

Sri Lanka Economic Crisis: Sri Lanka is out of Deisel, No commercial vehicles, No electricity in Hospitals

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