Sri Lanka will need $6 billion by the end of the year to buy fuel and other essential goods to stabilize its crumbling economy.
The question is where that money should come from.
One of its most steadfast clients, India, has already provided $4 billion in credit and loans, which Sri Lanka has burned in recent months. At rallies in Colombo, Indian officials expressed a willingness to continue supporting the country. But it’s unclear how much more India will do.
The situation has become so desperate that Sri Lanka has asked Russia’s President Vladimir V. Putin for a credit line to buy fuel. Government delegations were even sent abroad to meet anyone who could help, including charities in Qatar.
China, a longtime ally of the ruling Rajapaksa family, has largely kept its distance. In recent years, China has financed many of their major infrastructure projects with loans.
Sri Lanka’s monthly fuel bill alone is about $500 million. Officials have said many of its traditional fuel suppliers are reluctant to sell to the country because the state oil company is mired in debt that it finds difficult to pay. In recent months, some suppliers have refused to unload fuel tankers docked in Sri Lankan ports until payment was made.
Fuel deliveries from India occasionally ease the long lines at filling stations in Sri Lanka. But as supplies dwindle, the government has rationed fuel and tried to suppress demand, for example by requiring state employees to work from home. The shortage of cooking gas became so hopeless for a time that people stopped shopping for it, in some cases leaving their empty gas cylinders on the street and chaining them together to prevent theft.
Officials have urged foreign tourists to return to Sri Lanka’s pristine beaches and lush mountains in hopes that much-needed hard currency will trickle in. But the political turmoil and the logistical nightmare of transportation and power cuts make that call a tough sell.
The country is still negotiating with the International Monetary Fund to restructure billions of dollars in foreign debt on which it has defaulted. A new settlement with the IMF, which could open doors to outside funding and aid, is in a few months’ time, and talks have been further complicated by the latest government upheavals.