A day’s petrol left, power cuts may last 15 hours: Lanka PM Wickremesinghe

Sri Lanka’s newly-appointed Prime Minister Ranil Wickremesinghe on Monday warned that next two months would be the toughest and said his aim is to save the country from the ongoing economic crisis, and not a person, family or group, in an apparent reference to the Rajapaksa family and its former strongman Mahinda Rajapaksa.

In his first televised address to the nation after becoming the prime minister last week, the 73-year-old United National Party (UNP) leader also said that US dollars will be sourced from open markets to pay for petrol, crude, furnace oil shipments currently in Sri Lankan waters.

Wickremesinghe was appointed as Sri Lanka’s 26th prime minister on Thursday.

“I am accepting this challenge for our nation. My goal and dedication is not to save an individual, a family, or a party. My objective is to save all the people of this country and the future of our younger generation,” Wickremesinghe said.

Wickremesinghe said that at present the Sri Lankan economy is extremely precarious and Colombo must obtain $75 million within the next couple of days to ease the current queues for essentials.

“At the moment, we only have petrol stocks for a single day,” he said, adding that diesel shortages would be eased thanks to the Indian credit line.

“Due to the diesel shipment that arrived yesterday, the lack of diesel will be resolved to some extent. Under the Indian credit line, two more diesel shipments are due to arrive on the 18th May and 1st June. In addition, two petrol shipments are expected on 18th and 29th May,” he said.

The Prime Minister said the entire local banking system is suffering from dollar shortages.

He said another grave concern is the lack of medicine and that they will continue to print money to pay local salaries.

“There is a severe shortage of a number of medicines including medicine required for heart disease as well as surgical equipment. Payments have not been made for four months to suppliers of medicine, medical equipment, and food for patients. The payment owed to them amounts to SLR 34 billion,” he said.

He said he would propose to privatise state carrier Sri Lankan Airlines, which is making massive losses.

Sri Lankan Airlines suffered a loss of Rs 45 billion in 2021 alone. By March 31, 2022, the total loss was Rs 372 billion.

He thanked the opposition leader and the leaders of the political parties who replied to the letters that he sent them informing them of the current situation.

“We must immediately establish a national assembly or political body with the participation of all political parties to find solutions for the present crisis. This will enable us to discuss with all parties and to arrive at decisions for short-, medium-, and long-term action plans that will enable us to rebuild our nation within a specified time frame,” he added.

“We have planned to present a new alternative budget to the development budget proposed for 2022. Intend to present it as a concessionary budget”, he added.

He also said that he proposes setting up national council of all political parties to find solutions to combat the crises.

Workers groups across the country will on Wednesday begin a three-day nationwide strike against the arrest of protesters involved in last week’s clashes, an umbrella organisation of the country’s trade unions said in a statement. The demonstrators were instigated by the actions of the pro-government groups, they said.

Trade unions have decided to hole a three-day protest. “It has been decided that the trade unions will hold nationwide protests on the 18th, 19th and 20th demanding an immediate halt to the arrest and interrogation of the public who have responded to the thugs’ actions in defence of the thugs,” the statement added.

The country reimposed an islandwide curfew from 11: 00 pm Monday until 5:00 am Tuesday, the president’s media unit said in a statement. The curfew, first imposed after violence erupted May 9, had been lifted since early Sunday.

Sri Lanka is sliding inexorably into default as the grace period on two unpaid foreign bonds nears an end, the latest blow to a country rattled by economic pain and social unrest.

The island nation could be formally declared in default if it fails to make an interest payment to bondholders before Wednesday, when the 30-day grace period for missed coupons on dollar bonds ends. That would mark its first default.

Sri Lanka’s government announced in mid-April it would stop paying back its foreign debt to preserve cash for food and fuel imports as it struggled with a dollar crunch that’s led officials to implement capital controls and import curbs. A few days later, it failed to service a $78 million coupon on its dollar bonds due in 2023 and 2028, leading S&P Global Ratings to declare a selective default.

“Without an agreement, there will be a formal default,” said Carlos de Sousa, a money manager at Vontobel Asset Management in Zurich. “Legally that matters. But for markets, Sri Lanka is already de facto in default, so the price effect of such an event is probably not going to be significant.”

Sri Lankan dollar notes due in 2029 were down 1.2 per cent to 38.7 cents on the dollar Monday, after touching an all-time low of 37 cents on the dollar last week, indicative pricing data compiled by Bloomberg showed.

The extra yield investors demand to hold the notes over US Treasuries is at 37 percentage points, according to JPMorgan Chase & Co. That is far above the 1,000-basis point threshold to be considered distressed.

Sri Lanka is going through the worst economic crisis since independence in 1948. A crippling shortage of foreign reserves has led to long queues for fuel, cooking gas and other essentials while power cuts and soaring food prices heaped misery on the people.