Sri Lanka Can’t Find Cash to Pay Even One Ship for Petrol

Sri Lanka asked citizens not to queue for gasoline as the nation on the verge of default has no dollars to pay for a fuel shipment.

“There is a petrol ship in our waters,” Energy Minister Kanchana Wijesekera told parliament Wednesday. “We do not have the forex.”

Sri Lanka “hopes” to release the ship “today or tomorrow,” the minister said. The nation also owes the same supplier US$53 million for an earlier shipment of gasoline, he added, without elaborating.

The island nation is in the worst economic tailspin of its independent history. Shortages of everything from food to cooking gas have resulted in Asia’s fastest inflation — with prices surging almost 30% — and spilling over into social unrest and political turmoil.

Prime Minister Ranil Wickremesinghe — less than a week into the job — said on Monday the nation has only one day’s stock of gasoline and the government is working to obtain dollars in the open market to also pay for three ships with crude oil and furnace oil that have been anchored in Sri Lankan waters.

He said in parliament Wednesday that the government was in discussions with the World Bank to channel part of the US$160 million aid provided for social welfare, for purchasing fuel imports.

Wijesekera said Sri Lanka’s fuel requirement for June is estimated at US$530 million, and current supplies of petrol are being prioritized for essential services such as ambulances.

The nation currently has sufficient stocks of diesel, he added.

Sri Lanka is set to default on US$12.6 billion of overseas bonds as its new prime minister struggles to stabilize an economy spiraling into chaos fueled by a lack of dollars and surging inflation.

The South Asian nation is set to blow through the grace period on US$78 million of payments Wednesday, marking its first sovereign debt default since it gained independence from Britain in 1948. Its bonds already trade deep in distressed territory, with holders bracing for losses approaching 60 cents on the dollar. The government said last month it would halt payments on foreign debt.

Prime Minister Ranil Wickremesinghe, appointed last week, is yet to choose a finance minister, who will help lead talks with the International Monetary Fund over badly needed aid. He warned on Monday that the country was down to its last day of gasoline supplies, as it didn’t have the dollars to pay for shipments aboard tankers anchored just offshore. He also said it would need to print money to pay government salaries, a move that will worsen inflation already running near 30%. –Bloomberg