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Saturday January 11th, 2025

Cash-strapped Sri Lanka’s endless queues spur desperate but creative entrepreneurship

File photo – GAS LINE: People waiting in line to get gas in a suburb of Colombo, Sri Lanka.

ECONOMYNEXT – Sri Lanka’s shortage of essentials like fuel, cooking gas, medicines and food has opened up a new business venture of queuing up for others at a fee.

Sri Lanka’s fuel queues started in mid-February and are currently so long that people spend days waiting to fill their tanks; that, too, on a rationed basis. Waiting in line is too tiring for many, and others are unable to spend a significant portion of their day “hanging around” in queues which gets in the way of their livelihood.

This is where Bandula de Silva comes in. The 66-year-old resident of Katubedda recently started “Q-Smart,” where he offers up his weekends and holidays to stand in line for essentials for a small fee.

Speaking to EconomyNext, de Silva said: “I put out the poster a few days ago. So far, I have 81 callers. I’m up to my eyeballs this weekend.

“I am only queuing for fuel right now. There are no gas cans to be found anywhere. I travel by bus to the client’s house and take their vehicle to the shed.”

His services are available in Moratuwa and Mount Lavinia, Colombo, for a fee of 2,000 rupees “per task”.

Sri Lanka’s economic crisis has resulted in widespread protests, some of which de Silva has participated in. However, with the ever-rising cost of living, he says it is impractical for him to protest and not do anything to earn an extra income.

“I can’t stay in the Aragale (struggle) all the time. I need money to run my household. My children are a little ashamed of me, but I have travelled extensively in my time, and I have seen how people earn. You can’t get anything if you don’t work,” he says.

While his new business venture might be a source of shame to his children, to his clients de Silva is a godsend.

“They tell me I’m doing a bloody good job,” says de Silva. “I’m sure everyone will start doing this soon.”

Sri Lanka’s fuel and gas shortage is forcing people to queue up for hours on end, with small enterprises and entrepreneurs being hit hardest. Threewheeler and taxi drivers are declining hires, and many food outlets have had to close over the past few months.

Parents with young children wait in line till early morning hours. Senior citizens queue up in the sweltering heat with no refreshment and walk back home carrying heavy gas cylinders. They have no choice but to, as the younger members of the household have to go out and earn a living.

A more insidious side of the queues is the death toll, with at least eight reported deaths while lining up for fuel.

The ongoing food shortage is reflected in the empty shop shelves around the island and the rising prices of everything from rice to bread, which are staples on a Sri Lankan dining table. Reports indicate that many Sri Lankans are now going hungry.

There is also a massive shortage of essential medicines. Only the lucky few have time in the day to go from one pharmacy to the next to find drugs that are increasingly scarce.

Sri Lankans have gone into the habit of sharing locations where fuel and gas are available on social media. Despite the government’s insistence that people not queue up due to no new fuel being distributed until this weekend, the lack of an uninterrupted supply has shattered consumer confidence.

The battle cry at the protest grounds say, “Reta kanna-buth tika ne, gedara inna-lightuth ne, paare yanna- gasuth ne” (no rice to eat, no light to stay home, no gas to go out). Sri Lankans are now in a situation where they cannot even protest, because survival has become the first concern.

Sri Lanka’s new Prime Minister has urged the public to be “prepared to make sacrifices.” But as the queues snake through the country, and parents are unable to feed their children, the citizens are asking what more sacrifices there are to be made. (Colombo/21May/2022)

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Sri Lanka hikes alcohol taxes raised above inflation rate

ECONOMYNEXT – Sri Lanka has hiked alcohol taxes by around 6 percent from January 11, which is higher than the rate of inflation as advocated by some interventionists, but lower than hikes in previous years, according to data in a gazette notice.

Taxing legal alcohol has been controversial of late, after steep hikes reportedly expanded the illegal manufacture.

What used to be a cottage industry where 20 litre cans were discovered by authorities has turned into a big businesses where warehouses full of 4,000 litre plastic tanks are now being found, industry officials said.

The excise tax on a (proof) litre of special arrack has been raised to 7,244 rupees in a gazette signed by President Anura Dissanayake from 6,840 rupees.

Excise on coconut arrack has been raised to 7,752 rupees from 7,320 rupees.

Excise on foreign spirit types made locally has been raised to 7,960 from 7,525 rupees.

Malt liqour (beer) with 5% alcohol has been raised to 5,735 rupees a litre from 5,415 rupees.

Malt liqour above 5 percent has been raised to 6,015 rupees a litre from 5,680 rupees.

Sri Lanka has to raise more revenues from the public in in 2025 with salary hikes due for state workers and also more subsidies earmarked. (Colombo/Jan11/2025)

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Sri Lanka central bank to sell down its restructured bonds

ECONOMYNEXT- Sri Lanka’s central bank will gradually sell down its re-structured bond bonds, Central Bank Governor Nandala Weerasinghe has said.

The central bank converted a large part of its bill holding acquired to inject liquidity and trigger an economic crisis from 2020, into lower yielding longer term bonds during the domestic debt restructuring process, as part of efforts to reduce the gross financing needs of the state.

“Domestic money market liquidity is likely to increase gradually in 2025 with the expected buildup of foreign reserves, and the Central Bank will stand ready to manage liquidity, through appropriate monetary operations,” Governor Weerasinghe said delivering the annual policy speech.

“Meanwhile, the Central Bank will explore ways to gradually phase out its holding of restructured bonds, a legacy of the Central Bank’s financial support to the Government during the crisis.”

The central bank has a gross reserve target of about 7 billion US dollars in 2025 under the IMF program, Governor Weerasinghe said during a television interview earlier in the week.

A sell-down of the central bank’s domestic assets (at an appropriate interest rate) against liquidity from dollar purchases from the market, leads to a permanent balance of payment surplus.

The central bank sold its Treasury bill stock to mop up liquidity and lock in reserves over the past two years. It also gets coupons on the bond portfolio which is also deflationary.

The bonds were initially valued in the central bank’s balance sheet at an imputed cost which generated a loss as it is not a readily marketable instrument.

The central bank has over-performed IMF reserve targets generally with broadly deflationary policy, though concerns were raised about the build up of excess liquidity in the last quarter.

Analysts had warned that aggressive inflationary open market operations to target a single policy rate, as private credit recovers can de-stabilize the external sector as mid-corridor targeting did after 2015. (Colombo/Jan11/2025)

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Spot US dollar closes at 294.70/90 rupees, bonds flat

ECONOMYNEXT – Sri Lanka’s rupee closed at 294.70/90 to the US dollar in the spot market Friday, weaker from yesterday’s close of 294.95/295.10 dealer said, while bond yields were flat.

The rupee appreciated towards 294.30 to the US dollar in intra-day trading and some official buying was seen, dealers said.

A bond maturing on 15.12.2026 closed at 9.35/45 percent down from 9.40/50 percent.

A bond maturing on 15.10.2027 closed at 9.80/90 percent up from 9.75/85 percent.

A bond maturing on 15.02.2028 closed at 10.10/15 percent flat.

A bond maturing on 15.10.2028 closed at 10.35/40 percent, up from 10.33/37 percent.

A bond maturing on 01.05.2028 closed at 10.27/33 percent up from 10.25/30 percent.

A bond maturing on 15.09.2029 closed at 10.75/80 percent flat.

A bond maturing on 15.05.2030 closed at 11.00/05 percent down from 11.00/10 percent.

A new auction bond maturing on 15.10.2030 closed at 11.25/30 against an auction average of 11.23 percent. (Colombo/Jan11/2025)

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