International Monetary Fund (IMF)

Crisis-hit Sri Lanka shuts schools, urges work from home to save fuel

Summary
Companies

Fuel stocks set to run out in days without curbs
Supplies only to essentials from Tuesday untl July 10
Regulator hopes to keep power cuts at 3-4 hrs/daily for 2 months

COLOMBO, June 27 (Reuters) – Sri Lanka will shut schools and only allow fuel supplies to services deemed essential like health, trains and buses for two weeks starting Tuesday, a minister said, in a desperate attempt to deal with a severe shortage.

Sri Lanka is suffering its worst economic crisis, with foreign exchange reserves at a record low and the island of 22 million struggling to pay for essential imports of food, medicine and, most critically, fuel.

Industries like garments, a big dollar earner in the Indian Ocean nation, are left with fuel for only about a week to 10 days. Current stocks of the country will exhaust in just under a week based on regular demand, Reuters calculations show.

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Sri Lanka will issue fuel only to trains and buses, medical services and vehicles that transport food starting Tuesday until July 10, Bandula Gunewardena, the spokesman for the government cabinet, told reporters.

Schools in urban areas will be shut and everyone is urged to work from home, he said. Inter-provincial bus service will be limited.

“Sri Lanka has never faced such a severe economic crisis in its history,” Gunewardena said.

Autorickshaw driver W.D. Shelton, 67, said he had waited in line for four days for fuel.

“I haven’t slept or eaten properly during this time,” he said. “We can’t earn, we can’t feed our families.”

PEOPLE TRY TO FLEE

The government is talks with the International Monetary Fund (IMF) on a possible bailout, but many people can’t wait that long and demand for passports has surged. read more

The navy in the early hours of Monday arrested 54 people off the eastern coast as they tried to leave by boat, a spokesman said, on top of 35 “boat people” held last week.

Embattled President Gotabaya Rajapaksa’s elder brother resigned as prime minister last month after clashes between pro- and anti-government protesters spiralled into countrywide violence that left nine dead and about 300 people injured.

An escalation of the fuel shortage could lead to a fresh wave of demonstrations.

People wait in a queue after receiving tokens to buy petrol due to fuel shortage, amid the country’s economic crisis, in Colombo, Sri Lanka, June 27, 2022. REUTERS/Dinuka Liyanawatte

Opposition leader Sajith Premadasa called for the government to step down.

“The country has collapsed completely due to the fuel shortage,” he said in a video statement. “The government has lied to the people repeatedly and has no plan on how to move forward.”

POWER CUTS

The government fuel stockpile stands at about 9,000 tonnes of diesel and 6,000 tonnes of petrol, the power minister said on Sunday, but no fresh shipments are due.

Lanka IOC (LIOC.CM), the local unit of Indian Oil Corporation (IOC.NS), told Reuters it had 22,000 tonnes of diesel and 7,500 tonnes of petrol, and was expecting another 30,000 tonnes shipment of petrol and diesel combined around July 13.

Sri Lanka consumes about 5,000 tonnes of diesel and 3,000 tonnes of petrol a day just to meet its transport requirements, Lanka IOC chief Manoj Gupta told Reuters.

Other big consumers are industries like apparel and textiles companies, whose exports jumped 30% to $482.7 million in May, according to data released on Monday.

“We have enough fuel for the next seven to ten days, so we are managing,” said Yohan Lawrence, secretary general of the Sri Lanka Joint Apparel Associations Forum.

“We are watching and waiting to see if fresh fuel stocks arrive and what will happen in the coming days.”

Sri Lanka’s power regulator said the country was using its last stocks of furnace oil to run multiple thermal power plants and keep power cuts to a minimum. Scheduled power cuts will rise to three hours from Monday from two and a half hours earlier.

“We are hoping to keep power cuts at three to four hours for the next two months,” said Janaka Ratnayake, chairman of the Public Utilities Commission of Sri Lanka. “But given the situation of the country this could change.”

An IMF team is visiting Sri Lanka for talks on a $3 billion bailout package. The country is hoping to reach a staff-level agreement before the visit ends on Thursday, that is unlikely to unlock any immediate funds. read more

It has received about $4 billion in financial assistance from India and the Sri Lankan government said on Monday the United States had agreed to provide technical assistance for its fiscal management.

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Reporting by Uditha Jayasinghe; Additional reporting by Waruna Karunatilake; Writing by Uditha Jayasinghe and Krishna N. Das; Editing by Clarence Fernandez, Nick Macfie and Deepa Babington

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Argentina’s Senate gives thumbs up to $45 bln IMF debt deal, article with image

Police officers stand in front of the National Congress as the senate debates the government’s agreement with the International Monetary Fund (IMF), in Buenos Aires, Argentina March 17, 2022. REUTERS/Agustin Marcarian

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BUENOS AIRES, March 17 (Reuters) – Argentina’s Senate voted late on Thursday to approve a $45 billion debt deal with the International Monetary Fund (IMF), converting the agreement into law and ensuring that the economically battered country can avoid another messy default.

After an extended debate, the IMF debt restructuring deal backed by President Alberto Fernandez was passed with 56 senators voting in favor, 13 against, along with three abstentions.

The South American country’s center-left Peronist government led by Fernandez struck a staff-level agreement with the international lender at the beginning of March, which was then approved last week by the Chamber of Deputies.

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It now needs to be signed off by the IMF board.

The deal lays out a fresh schedule of financing over a 30-month period to replace a failed $57 billion program from 2018 that the grains-producing country was unable to pay back after years of recession, spiraling inflation and capital flight.

It garnered broad support from the center-right opposition, though some ruling party lawmakers have opposed it citing the economic strings attached, which include reducing the fiscal deficit, raising interest rates and cutting energy subsidies.

“This agreement will allow us to accumulate reserves, which will favor Argentina’s exchanges with the world and will allow sustained growth,” Senator Sandra Mendoza, from the ruling Peronists, said during the debate.

Roberto Basualdo, a senator from the opposition alliance Together for Change, told Reuters earlier in the day that approving the deal was key to any future economic expansion.

“We need to grow and the only way to grow is to be in international markets,” he said.

Many lawmakers stressed that the vote removes the worst-case scenario for near-term economic prospects.

“By approving this agreement we are prioritizing the interests of the Argentine republic by preventing default,” said Senator Jose Torello, of the opposition alliance.

Fernandez wants a quick approval of the agreement ahead of a $2.8 billion payment due to the IMF at the beginning of next week and billions more later this year. The new program would see repayments made between 2026 and 2034.

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Reporting by Nicolás Misculin; Additional reporting by Lucila Sigal and Eliana Raszewski; Editing by Adam Jourdan, Hugh Lawson and David Alire Garcia

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U.S. should boost financing to Caribbean nations: Antigua PM

Antigua and Barbuda’s Prime Minister Gaston Browne poses for photo in this undated handout picture distributed to Reuters on January 25, 2022. Government of Antigua and Barbuda/Handout via REUTERS

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MIAMI, Jan 26 (Reuters) – The United States should increase financing and aid to the Caribbean to help the region recover from the pandemic and cope with the growing impact of climate change, Antigua and Barbuda Prime Minister Gaston Browne said in an interview.

Countries in the region are facing unsustainable debt loads often equivalent to 100% of gross domestic product (GDP), Browne said, adding that many have been relying on loans from China due to favorable terms offered by Chinese banks.

“I feel that the U.S. ought to pay more attention to the Caribbean region in helping us to maintain our standard of living to avoid any mass movement of people,” he said in a telephone interview on Tuesday.

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“If people are unable to live in (Caribbean) countries, then clearly they’ll end up on the shores of the United States as refugees.”

China has lent over $4 billion to Caribbean nations in the last 10 years, according to figures compiled by the Washington-based Inter-American Dialogue, much of which has gone to finance infrastructure development.

The conditions of those loans are more favorable than even those provided by multilateral agencies such as the International Monetary Fund (IMF), Browne said, adding that borrowing from Chinese banks should not be understood as a political statement.

The U.S. State Department did not immediately reply to a request for comment.

The Caribbean was disproportionately affected by the COVID-19 pandemic, according to the IMF, which last year said tourism-dependent countries in the region saw economies contract by 9.8% in 2020.

Many struggle to get aid because multilateral agencies tend to classify them as a middle- or high-income nations based on per-capita GDP measurements, which do not factor in the higher costs facing small island nations or their vulnerability to climate change.

Sustained U.S. support for changing those criteria would provide a significant boost for the Caribbean, Browne said.

“We expect the United States would use its influence in the multinational financial institutions to effect that change,” Browne said, adding he had not seen evidence that this was happening.

The vast majority of some $336 million in U.S. aid to members of the Caribbean Community, or Caricom, goes to Haiti, with only around $70 million being distributed among 13 other countries, he said. The population of those countries is around 7.5 million.

“It’s just miniscule,” Browne said.

Antigua and Barbuda, a nation of two main islands and several smaller ones in the northeastern Caribbean, has, like other countries in the region, faced growing expenses associated with extreme weather events.

Hurricane Irma in 2017 ravaged Barbuda, leaving all buildings uninhabitable and forcing the evacuation of all residents for nearly 18 months. Reconstruction costs were in excess of $200 million.

Antigua and Barbuda bore most of those costs, but got only $169,000 in aid from the United States in 2019, Browne said.

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Reporting by Brian Ellsworth in Miami; editing by Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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