Sri Lankan PM Commences Bailout Talks With IMF as Fuel Shortage Triggers Violence, Food Crisis

India has delivered several shipments of petrol and diesel to Sri Lanka as part of a $500Mln credit line, with the last unit having been delivered this week. Colombo is awaiting official confirmation from New Delhi that its credit line has been extended by another $500Mln for fuel imports.

Sri Lankan Prime Minister Ranil Wickremesinghe began talks on Monday with a 10-member delegation from the International Monetary Fund (IMF), which kickstarted a mission to the south Asian nation set to continue until 30 June.

A statement from the IMF on Sunday pledged the global lender’s “commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies”.

This is the third round of talks between Colombo and the US-based creditor; previous rounds took place in April when a delegation from Sri Lanka - led by finance minister Ali Sabry - visited Washington, and last month when a virtual meeting took place between the IMF and the island nation.

The virtual IMF mission between 9 and 24 May acknowledged that the continuing fuel, food and other shortages have been caused by a “severe balance of payments” crisis, after the nation’s foreign exchange reserves hit a record low because of the COVID pandemic.

The Sri Lankan government, facing its worst economic crisis since independence in 1948, announced in April that it would suspend all external debt payments.

The Sri Lankan government said last week that its present fuel stocks would last only till 21 June.

Sri Lankan Troops Fire at Protesters - Reports

The Sri Lankan military opened fire on protesters who pelted stones at an army convoy after being angered long queues at the petrol pumps, according to local media reports citing police officials.

The incident, which took place in Visuvamadu (365km north of Colombo) on Saturday, marked the first time in the ongoing economic crisis that the military had to resort to gunfire to control protesters.

At least four protesters and three army personnel were reportedly injured in the incident.

The United Nations (UN) reportedly called on the authorities to “understand the frustration of citizens spending hours in long queues, and to exercise restraint in the use of force,” after Saturday’s incident.

The call to “exercise restraint” was also echoed by US Ambassador to Sri Lanka Julie Chung.

The present fuel crisis has prompted the government to order its employees to “work from home” for two weeks, according to an official order on Friday.

Other fuel-rationing measures such as the closure of schools and the limiting of working hours in the private sector have also been implemented.

The authorities also fear food shortages that could be caused by the inability of trucks to get the food to the cities and other areas of dense population because of fuel shortages.

Prime Minister Wickremesinghe said on Friday that as many as five million Sri Lankans could be affected by food shortages in the coming months, according to a statement.

The UN-backed World Food Programme (WFP) has also sprung into action in the country, kickstarting a scheme last week to distribute food packets to vulnerable populations in Colombo.

“Food inflation in Colombo set a record high of 57.4 percent in May, and widespread shortages of fuel for cooking and transport means poor families are struggling to afford food,” the WFP said in a statement on 16 June.

“WFP’s recent surveys indicated that 86 percent of families are resorting to at least one coping mechanism, including eating less, eating less nutritious food and even skipping meals altogether,” it added.