International Business: Sri Lanka suffers long power cuts, lacks foreign currency to import fuel – Gulf Digital News

International Business: Sri Lanka suffers long power cuts, lacks foreign currency to import fuel – Gulf Digital News

COLOMBO: Swathes of Sri Lanka faced prolonged power cuts on Wednesday as a deepening economic crisis roiled markets and buffeted businesses, with the government unable to pay for fuel shipments because of a foreign exchange shortage, an official said.

The country of 22 million people is seeking assistance from the International Monetary Funds (IMF), having slid into its worst economic crisis in decades as a result of badly-timed tax cuts, the impact of the COVID-19 pandemic and historically weak government finances.

Sri Lankan shares fell more than 7%, prompting the Colombo Stock Exchange to halt trading twice.

Foreign exchange reserves have fallen by 70% in the past two years and were down to a paltry $2.31 billion as of February, leaving Sri lanka struggling to import essentials, including food and fuel.

Janaka Ratnayake, Chairman of the Public Utilities Commission of Sri Lanka, said the drawn-out power cuts were partly a result of the government's inability to pay $52 million for a 37,000 tonne diesel shipment that is awaiting offloading.

"We have no forex to pay," Ratnayake told Reuters. "That is the reality."

Power cuts could increase further over the next two days, he said.

Electricity generation has also been hit by low water levels at hydropower facilities