Sri Lanka Power Cuts
Sri Lanka, reeling under its worst economic crisis, has announced a nationwide daily power cut of seven-and-a-half hours each. This is Sri Lanka’s longest power cut announced in 26 years.
- The Sri Lankan government has been imposing sporadic power cuts due to its dwindling fuel supplies.
- The power cuts will be imposed from 8 a.m. to 1 p.m., then 6 p.m. to 8 p.m., then 8.30 p.m. to 11 p.m., or 1 p.m. to 6 p.m., then 8.30 p.m. to 11 p.m.
- This is the longest power cut, since 1996 when the country used to rely on hydropower for most of its electricity needs and the reservoirs ran dry.
- President Gotabaya Rajapaksa has asked the Central Bank and the Treasury to ensure fuel import while the government is taking steps to deal with the shortage. Public offices have been urged to turn off air conditioners and conserve energy.
- Buses running on the road have also been reduced due to the shortage in fuel. Due to the ongoing drought, Hydroelectric dams also have failed to meet the country’s energy requirements
Economic Crisis of Sri Lanka
For a few years, the island nation has been reeling under economic turmoil. To promote spending, the Rajapaksa government slashed the value-added tax when they came to power in 2019. However, this move, along with the pandemic affecting the tourist sector, on which the country’s economy is strongly reliant, has left the country in a vulnerable position.
Sri Lanka’s foreign reserves fell by 24.8 per cent to USD 2.36 billion in January 2022, according to data provided by the country’s Central Bank. This puts Sri Lanka in a difficult position, as it owes over USD 7 billion in debt that must be paid by 2022.
Help Received from India
Sri Lanka is relying on currency swaps and credit lines with its neighbouring countries such as India, Bangladesh, and China for medicines and food and foreign reserves.
In February, 40,000 tonnes of fuel had been sent to the country by India. In January, a USD 400-million credit swap facility was also signed off by India and a USD 515.2 million Asian Clearing House settlement was also deferred. A USD 500 million line of credit has also been extended by India to Sri Lanka to buy petroleum products.
Category: International / World Current Affairs