Sri Lanka Crisis: A minister said on Thursday that Sri Lanka is turning off its street lights to save electricity. Sri Lanka is facing its most severe economic crisis in decades, causing protracted power outages, as well as depression in the main stock market, leading to a collapse in prices and a halt in trading.
The island nation of 22 million people is battling power cuts for 13 hours a day as the government is unable to even pay for fuel imports due to lack of foreign exchange.
According to Reuters, Power Minister Pavitra Vaniyarachi told the media: “We have already instructed officials to turn off street lights across the country to help save electricity.”
Vaniyarachi said diesel shipments from neighboring India under a $500 million line of credit are expected on Saturday, but added that the situation is unlikely to improve anytime soon.
Referring to the rolling power cut, Vaniyarachi said, “Once it comes, we will be able to reduce the hours of load shedding, but unless it rains, we will probably have to continue the power cut for sometime in May.” We can’t do anything else.”
He said water levels in reservoirs feeding hydroelectric projects had fallen to record levels, while demand also reached record levels during the hot, dry season.
Trading has to be stopped due to power cut
Colombo Stock Exchange (CSE) on the request of brokers reduced daily trading to two hours from the normal four and a half hours due to power cuts for the rest of this week, the exchange said in a statement.
But shares tumbled after markets opened on Thursday and the CSE closed trading for 30 minutes, the third time in two days after an index tracking major companies fell more than 5%.
“On the broader side, there is increasing negative sentiment with reports of concerns, shorter trading hours and power cuts,” said Roshni Gamge, an analyst at brokerage firm Lanka Securities. “Overall, the downtrend is due to weak sentiment,” Gammage said.
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CSE halted trading twice on Wednesday due to deepening concerns over the economy and power cuts.
The crisis is a result of the impact of the coronavirus pandemic coupled with timely tax cuts and historically weak government finances, which have led to a 70% fall in forex reserves over the past two years.
Sri Lanka had $2.31 billion in reserves as of February, forcing the government to seek help from the International Monetary Fund and other countries including India and China.
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