Sri Lanka’s worst financial crisis since independence in 1948 is seeing the authorities do everything possible to get US dollars into the island.
From so called golden visas to port dues, officials in Colombo are scrambling to source cash. The nation has been hit by a drastic drop in its reserves that dropped 70% over the past two years, hitting $1.93bn at the end of March, hurt by no tourism during the pandemic, spiralling inflation as well as some dire agricultural decisions by the government. The country, failing to meet some of its debt obligations, now needs up to $4bn in bridge financing to help meet its essential expenses.
The World Bank agreed this week to provide Sri Lanka with $600m in financial assistance to help meet payment requirements for essential imports. Talks are ongoing with the International Monetary Fund, while major creditor and port investor, China, is also saying it is willing to help.
The newly appointed cabinet minister of ports and shipping, Premitha Bandara Tennakoon, has got the Sri Lanka Ports Authority (SLPA) to ensure that shipping lines calling the country from June 1 pay their dues in US dollars not the decimated local currency, something he said this week ought to bring in more than $100m a year.
However, the crisis on the island could see vessel traffic subside. A new report from Indian market researcher CRISIL, a subsidiary of S&P Global, suggests shipping lines might look elsewhere for calls in south Asia other than Sri Lanka due to the ongoing fuel shortages. For most of this century Sri Lanka has acted as the region’s transhipment hub.
Desperate Sri Lanka declared a plan this week to sell long-term visas to bring in more foreign currency. The Sri Lanka government’s ‘Golden Paradise Visa Program’ states that non-Sri Lankans who deposit a minimum of $100,000 will be allowed to live and work in the country for 10 years.
The Ceylon Electricity Board (CEB), the largest electricity company in Sri Lanka, on Sunday announced that there will be rolling power cuts this week due to the lack of sufficient fuel and water to generate electricity.
