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Monday April 15th, 2024

Sri Lanka’s forex crisis to prolong fuel shortage at least for 12 months – minister

Measures will be imposed to curb fuel import bill

ECONOMYNEXT – Sri Lanka’s fuel import will have to be limited for the next 12 months due to a dollar shortage and a systematic fuel rationing system with a QR-code is being rolled out nationwide, the Power and Energy Minister Kanchana Wijesekera said.

The QR system is to be implemented island-wide on Tuesday 26 as a measure to supply fuel as the government cannot fulfil the daily demand, the minister said in his Twitter feed.

“Due to Forex issues, fuel imports have to be restricted in the next 12 months,” Wijesekera said on Monday (25).

Sri Lanka’s average fuel import bill is around 500-550 million US dollars per month at present while the country has only a few million usable reserves as of end-June.

The island nation has been managing the fuel from its export earnings and remittances which are much lower than the total import bill.

Sri Lanka’s foreign exchange reserves depleted to near zero after the government under Gotabaya Rajapaksa did not seriously address a looming economic crisis. That led to a shortage of many essentials including fuel, resulting in public anger and protests which eventually forced Rajapaksa to flee the country.

An Indian 500 million US dollar credit line held the country to manage the fuel imports from mid-March to June 16.

The Ceylon Petroleum Corporation (CPC) is forced to reduce its fuel purchase because it does not have dollars to import the country’s demand, while the only other player, listed Lanka IOC’s supply is also not enough to meet the demand amid hoarding and a booming black market for fuel.

“CPC has never distributed fuel daily to every single fuel station. Practically not possible even when stocks are unlimited,” the minister said.

said.

The QR code-based National Fuel Pass will be used without the last digit number plate restrictions from August 1st, he said.

“From the 1st of August only the QR system quota will be in place & the last digit of the number plate system & other allocations will be invalid,” Wijesekera said.

He says by the end of the week different entities in the government sector, divisional secretaries, police departments, and businesses will be given options to register their vehicles too. (Colombo/July 25/2022)

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  1. Tahir says:

    I believe Govt should allocate few petrol/Filling stations for general public to pumps their vehicles by paying in USD, This would definite help to counter FX crises and the ex-pat would also use the banking channel to send home/worker remittance to facilitate their families.

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  1. Tahir says:

    I believe Govt should allocate few petrol/Filling stations for general public to pumps their vehicles by paying in USD, This would definite help to counter FX crises and the ex-pat would also use the banking channel to send home/worker remittance to facilitate their families.

Sri Lanka to discuss two contentious points with bondholders: report

ECONOMYNEXT – Sri Lanka and sovereign bondholders are to discuss two matters in the near future which the two sides failed to reach agreement at March talks in London, a media report quoting a top aide to President Wickremesinghe as saying.

Sri Lanka and bondholders had discussed four matters on restructuring international sovereign bonds in late March and agreement had been reached on two, President’s Chief of Staff Sagala Ratnayake was quoted as saying on state-run ITN television.

A restructuring proposal by bondholders was not in line with IMF requirements, and Sri Lanka had sent a counter proposal, he said.

The matters will be discussed at round of talks in the near future.

Sri Lanka was optimistic of reaching an agreement with the bondholders before June, officials have said.

According to matters already in the public domain, sovereign bond holders are keen to get a bond tied to dollar gross domestic product, as they feel IMF growth projections are too low.

In past re-structuring so-called value recovery instruments, a type of warrant, gave their owners extra payments if a country did better than expected and were tied to items like oil prices.

Bondholders had initially proposed bond which would have a lower hair cut initially, and it will have additional hair cuts if growth is low (about 3.1 percent) as projected in an IMF debt sustainability analysis. (Colombo/Apr15/2024)

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BIMSTEC Secretary General visits Sri Lanka, discusses regional cooperation

ECONOMYNEXT – The Secretary General of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), discussed measures to enhance regional cooperation, during his visit to the island last week.

Ambassador Indra Mani Pandey, Secretary General of BIMSTEC visited Sri Lanka from 07 – 12 April 2024, following his assumption of office as Secretary General of BIMSTEC in January this year.

The Secretary General “met with senior officials of relevant Ministries/Agencies to discuss measures to enhance regional cooperation under various BIMSTEC initiatives,” the Foreign Ministry said in a statement.

Several BIMSTEC countries have bilateral trade agreements, such as Sri Lanka and India, Thailand and Myanmar, Sri Lanka and Thailand, but no collective regional agreement to enable intra-regional leverage.

During the visit, Secretary General Pandey held discussions with Ministry of Foreign Affairs officials and paid courtesy calls on the President and the Minister of Foreign Affairs.

Secretary General Pandey participated at an event on “Regional Cooperation through BIMSTEC” organized by the Lakshman Kadirgamar Institute (LKI) on 9 April. (Colombo/April15/2024)

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Sri Lanka rupee closes weaker at 299.00/10 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 299.00/10 to the US dollar in the spot forex market on Monday, from 298.50/55 on Wednesday, dealers said, while bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed stable at 11.90/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent up from 12.10/15 percent.

A bond maturing on 15.09.2029 closed stable at 12.20/40 percent. (Colombo/Apr15/2024)

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