Colombo, March 31 (BNA): Sri Lankans faced 10-hour power outages on Wednesday and warnings of longer blackouts on Thursday, as the deepening economic crisis roiled markets and the Electricity Regulatory Authority urged more than a million government employees to work from home to save fuel.
Unable to pay for fuel shipments due to a shortage of foreign exchange, the island nation is preparing to request assistance from the International Monetary Fund (IMF).
“We have made a request to the government to allow the public sector, which has around 1.3 million employees, to work from home for the next two days so that we can better manage the fuel and electricity shortages,” Janaka Ratnayake, chairperson of the Public Utilities Commission of Sri Lanka told Reuters.
Reuters reported that the power outage will be extended to 13 hours on Thursday.
Amid the country’s worst economic crisis in decades, foreign exchange reserves have fallen 70% in the past two years and dropped to $2.31 billion in February, leaving Sri Lanka struggling to import essentials, including food and fuel.
Ratnayake said Wednesday’s prolonged blackout was caused in part by the government’s inability to pay $52 million for a 37,000-tonne diesel cargo waiting to be unloaded.
“We don’t have forex to pay,” he said, warning of more power outages over the next two days. “This is the reality”.
Sri Lankan shares closed 3.6% lower on Wednesday, after dropping more than 7% on the day, prompting the Colombo Stock Exchange to halt trading twice.
Odeshan Jonas, chief strategist at equity research firm CAL Research, said the market was responding to a deepening crisis caused by poorly timed tax cuts, the coronavirus pandemic and historically weak government funding.
“Investors cannot see the end of the tunnel,” he said.
To search for a way out of the crisis, Finance Minister Basil Rajapaksa is scheduled to visit Washington in April for talks with the International Monetary Fund. The fund’s assessment published on Friday said Sri Lanka was going through a balance of payments and sovereign debt crisis, and would need a “comprehensive strategy” to make its debt sustainable.
If Sri Lanka gets an IMF program, it will be the 17th financial rescue package from the global lender.
Harpo Gooneratne, a restaurant owner in Sri Lanka’s main city Colombo, said that although some of his 10 restaurants had their own generators, the lack of diesel made it difficult for him to run his business during the power outages.
“It’s crazy,” he said.
Danath Fernando, an analyst at the Advocata Institute Research Center in Colombo, said:
“This will further hurt Sri Lanka’s growth and threaten the foreign exchange earnings necessary to improve reserves, repay debts and pay for essential imports,” Fernando said.
Gooneratne said his restaurants had 30% fewer customers and were spending less.
“Even when people go out, they are very careful about their spending,” he said. “A person who has had two beers will now only have one.”
FA