Sri Lanka to default on debt, no cash for gas, minister says

Sri Lanka is predicted to be positioned into default by ranking companies on Wednesday after the non-payment of coupons on two of its sovereign bonds, whereas the power minister stated the nation had run out of cash to pay for fuel.

An financial disaster unprecedented within the nation’s historical past since independence in 1948 has led to a vital scarcity of overseas trade, that noticed it miss two coupon funds on sovereign bonds on April 18.

Sri Lanka has already stated it’s unable to make the coupon funds, and a 30-day grace interval ends on Wednesday.

S&P has stated the rankings on the bonds, maturing in 2023 and 2028, have already been minimize to ‘default’ and the nation’s general ranking may very well be additional minimize to ‘D’ on affirmation of the non-payment after the grace interval ends.

Sri Lanka presently has no {dollars} to pay for petrol shipments, Energy and Power Minister Kanchana Wijesekera instructed parliament, interesting to individuals to cease queuing for the following two days.

A petroleum cargo has been at Colombo port since 28 March however the authorities has been unable pay, he added.

“There aren’t sufficient {dollars} obtainable to open letters of credit score,” he stated.

“We’re working to seek out funds however petrol is not going to be obtainable a minimum of till the weekend. The very small reserve inventory of petrol is being launched for important providers like ambulances,” he stated.

Prime Minister Ranil Wickremesinghe stated on Wednesday the nation had secured $160 million in bridge financing from the World Financial institution, but it surely was not clear if the funds may very well be used for gas funds.

“The statistics have gone haywire,” he stated. “However the actuality is we do not even have $1 million.”

Hit exhausting by the pandemic, rising oil costs and populist tax cuts, Sri Lanka’s dire financial state of affairs has led to spiralling inflation and shortages of important provides, bringing hundreds of onto the streets in protest.

Violence between pro- and anti-government factions and police left 9 useless and greater than 300 injured final week, and was adopted by the resignation of former prime minister Mahinda Rajapaksa.

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