COLOMBO: Rating agencies are poised to declare Sri Lanka in default on Wednesday due to the non-payment of coupons on two of its sovereign bonds, while the energy minister stated the nation had run out of money to pay for gasoline.
An unprecedented economic crisis in the country’s history since its independence in 1948 has resulted in a serious lack of foreign money, causing it to miss two coupon payments on sovereign bonds on April 18.
Sri Lanka has previously said that it would be unable to pay the coupons, and a 30-day grace period expires on Wednesday.
According to S&P, the ratings on the bonds, which mature in 2023 and 2028, have already been reduced to ‘default,’ and the country’s overall rating may be reduced to ‘D’ if the non-payment is confirmed after the grace period expires.
Sri Lanka presently has no dollars to pay for fuel supplies, according to Power and Energy Minister Kanchana Wijesekera, who has asked citizens to refrain from queuing for the next two days.
He stated that a petrol cargo has remained at the Colombo port since March 28 but that the government has been unable to pay.
“There aren’t enough funds to open letters of credit,” he explained.
“We are striving to raise finances, but gasoline will not be accessible until at least the weekend.”
“The very limited reserve stock of gasoline is being issued for necessary services such as ambulances,” he explained.
Prime Minister Ranil Wickremesinghe said on Wednesday that the country had acquired $160 million in World Bank bridging funding, although it remained unclear if the cash could be used for gasoline payments.
“The numbers have gone crazy,” he explained. “But the fact is that we don’t even have a million dollars.”
Sri Lanka’s severe economic condition, exacerbated by the epidemic, rising oil costs, and populist tax cuts, has resulted in spiralling inflation and shortages of vital commodities, prompting thousands to take to the streets in protest.
Last week’s violence between pro-and anti-government factions and police left nine people dead and over 300 wounded, prompting former Prime Minister Mahinda Rajapaksa to quit.
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