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Sunday December 10th, 2023

Sri Lanka fuel crisis to ease with India shipments, Jet fuel already in: CPC chief

ECONOMYNEXT – Sri Lanka is expecting severe fuel shortages to ease with shipments from an Indian credit line beginning to come, Ceylon Petroleum Corporation Chairman Sumith Wijesinghe said, as the island nation reels from forex shortages triggered by money printing.

“From the Indian credit line, we get all the finished products, such as petrol, diesel and Jet fuel,” Wijesinghe said in a recorded statement.

“We have already received jet fuel on the last 13 and 14. We received another diesel ship which will start unloading tomorrow.”

Wijesinghe said the public seems to be stocking up on fuel, while there is also a demand for generators with daily power cuts of up to 5 hours.

“The daily demand for diesel was 5,500 metric tonnes and 3,300 metric tonnes for petrol (before the crisis),” Wijesinghe said in a video statement.

“Now due to the excess buying we see in the country we have been issuing 7000-8000 MT of diesel and 4200-4500 MT of Petrol from CPC storage to the market in the past few days.”

In recent weeks Sri Lanka has been unable to unload ships which had brought oil to the country due to forex shortages with the central bank printing money to keep interest rates down.

The newly printed money has set off cascading credit, with a high budget deficit, triggering domestic demand and non-oil imports.

“There is a 92-octane petrol ship is unloading in Muthurajawela which will be completed tonight,” Wijesinghe said.

Another Jet-A1 ship and a diesel ship in Colombo port has started unloading and also there are two other diesels and a Jet-A1 Ship to unload in ports.”

Petroleum Minister Gamini Lokuge told reporters separately that there were delays in issuing fuel to the provinces due to unloading to the Muturajawela complex, which was not connected to the rail network.

Fuel distribution last week was also hit by a industrial action by tanker owners, after fuel prices were raised after the currency collapsed from 203 to 275 to the US dollar so far.

India is giving a 500 million dollar credit line for oil as forex shortages intensify. Another billion dollar credit for food and medicine was also signed.

Classical economists and analysts have urged legislators to change the governing law of the central bank to reduce its discretionary independence to print money and operate an intermediate regime, putting an end forex shortages, currency high inflation and social unrest. (Colombo/Mar19/2022)

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ADB USD200mn loan for Sri Lanka economic stabilization efforts

ECONOMYNEXT – The Asian Development Bank (ADB) has approved a US 200 million dollar concessional loan to Sri Lanka to help stabilize the country’s finance sector.

The Financial Sector Stability and Reforms Program comprises two subprograms of IS 200 million dollars each, according to a statement by the ADB.

“The program’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery,” ADB Country Director for Sri Lanka Takafumi Kadono was quoted as saying in the statement.

“The expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy.”

The ADB statement continues:

“Subprogram 1 targets short-term stabilization and crisis management measures that were implemented in 2023, while subprogram 2 is planned to be implemented in 2024 and focuses on structural reforms and long-term actions to restore growth in the banking sector.

The program will help strengthen the stability and governance of the country’s banking sector; improve the banking sector’s asset quality; and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises.

According to the International Monetary Fund’s (IMF) latest review, Sri Lanka’s economy is showing tentative signs of stabilization, although a full economic recovery is not yet assured.

The program is a follow-on assistance from ADB’s crisis response under the special policy-based loan that was approved for Sri Lanka in May 2023.

It is aligned with the fourth pillar of the IMF’s Extended Fund Facility provided to Sri Lanka to help the country regain financial stability.

It is also in line with the government’s reform agenda, including strengthening the operational independence of the Central Bank of Sri Lanka (CBSL) and its designation as the country’s macroprudential authority.

In designing this subprogram 1 loan, ADB has maintained close coordination and collaboration with the IMF to design targeted regulatory reforms for the banking sector—including the asset quality review—and with the World Bank on strengthening the deposit insurance scheme.

“The loan is accompanied by a $1 million grant from ADB’s Technical Assistance Special Fund to provide advisory, knowledge, and institutional capacity building for Sri Lanka’s Ministry of Finance and CBSL.”

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Sri Lank in blackout as power grid hit by cascading failure

ECONOMYNEXT – Sri Lanka suffered a blackout as Saturday evening as the state-run Ceylon Electricity Board grid was hit by a cascading power failure.

The cascading failure is believed to have been triggered by the failure of the Kothmale-Biyagama transmission line.

“The Ceylon Electricity Board wishes to inform our customers that due to the failure of Kotmale – Biyagama main transmission line, an island wide power failure has occurred,” CEB Spokesman Noel Priyantha said.

“Step by step restorations are underway and it may take few hours to completely restore the power supply.”

With hydro plants running flat out, a outage of the line tends to create a big imbalance in the demand and supply, leading to tripping of more lines and generators.

Lines can trip due to lightening strikes, or equipment failures.

Sri Lanka last suffered a cascading failure in December 2021, due to the failure of the same transmission line.

RelatedSri Lanka power blackout as grid hit by cascading failure

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Sri Lanka to host regional Food and Agriculture Organization conference

ECONOMYNEXT – Sri Lanka will host the 37th session of the Asia Pacific Regional Conference (APRC) of the United Nations Food and Agriculture Organization (FAO), from February 19-22, 2024 in Colombo.

The Conference will bring together agriculture ministers and officials from 46 countries across the region to discuss challenges in food and agriculture.

“The 37th APRC will provide a vital platform for regional collaboration, benefitting the agricultural landscape, fisheries sector and environment of Sri Lanka,” Minister Mahinda Amaraweera said at a press briefing on Friday (8) to announce the conference.

FAO has had an active presence in Sri Lanka for over 40 years. “FAO has supported the country in the implementation of Good Agricultural Practices (GAP), and the development of the fisheries sector for growth and climate resilience,” Vimlendra Sharan, FAO Representative for Sri Lanka and the Maldives said.

“The APRC conference will be an opportunity to highlight the innovative approaches introduced in partnership with the government.”

By hosting APRC, Sri Lanka hopes to demonstrate the country’s dedication to the growth of sustainable agriculture, and showcase its commitment to sustainable agricultural development.

The APRC agenda will include a forum on agritourism, especially requested by the Sri Lankan government.

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