COLOMBO (BLOOMBERG) - Sri Lanka abruptly restricted fuel supplies and told residents to stay home, raising the risk of more unrest as the government struggles to provide essential goods due to a crippling sovereign debt crisis that has rocked the country for months.
The island nation's Cabinet of ministers on Monday (June 27) decided to limit distribution of fuel to essential services until July 10, spokesman Bandula Gunawardena said in a televised statement, adding that inter-provincial public transport would likely come to a halt.
"Port, health services, food transport will be provided petrol and diesel while all other sectors are requested to stay at home and provide services online in this difficult time," Mr Gunawardena said. "Our country is facing an unprecedented state of finance and foreign exchange crisis."
Sri Lankan Prime Minister Ranil Wickremesinghe told lawmakers last week the economy had "completely collapsed", saying the island nation is unable to purchase fuel as shortages of essentials and electricity worsen.
His government is in talks with the International Monetary Fund as well as bilateral creditors such as India and China for fresh funds to pay for imports after it defaulted on its dollar bonds earlier this year and saw foreign reserves dwindle.
The government had already closed public schools and asked civil servants to work from home to curtail transport, leaving many roads in and around the capital, Colombo, deserted over the past days, even as thousands of vehicles lined up in queues stretching for kilometres waiting for filling stations to be replenished.
Violent protests erupted in May after President Gotabaya Rajapaksa's brother resigned as prime minister following clashes between government supporters and opponents. Although Mr Rajapaksa has since shored up support in Parliament and vowed to serve out the final two years in his term, tensions remain high.
Sri Lanka plans to allow foreign companies to distribute fuel in a bid to ease crippling shortages that have paralysed most economic activity, Energy Minister Kanchana Wijesekera said on Sunday.
The governor of the Central Bank of Sri Lanka has agreed to pay outstanding dues to companies for fuel supplies "with a plan", the president’s office said in a statement late on Monday.
President Rajapaksa also instructed officials to take "immediate action to import fuel using the existing funds available until then", it said without elaborating.
The government is sending its envoys to Qatar and Russia this week to secure fresh supplies and is hoping for the approval from India of a US$500 million (S$693 million) credit line for fuel imports.
The High Commissioner of Sri Lanka to New Delhi Milinda Moragoda met India’s Minister of Petroleum and Natural Gas and Housing and Urban Affairs Hardeep Singh Puri in New Delhi on Monday to discuss the possibility of securing petrol and diesel supplies that are required by the island nation on an urgent basis.
Mr Moragoda also briefed Mr Puri on the "acute challenges that Sri Lanka is currently facing with regard to the supply and distribution of petroleum products and the severe hardships that the people are undergoing", according to a Facebook post from the High Commission.