Out of cash and out of fuel, Sri Lanka runs on patience

Queues are everywhere – and organised.

For 5 liters of gasoline, motorists quietly wait in line for up to five days. People were queuing for cooking gas, milk powder and meals in soup kitchens, without quarrels or friction. Every day, essential workers, in hospitals, sanitation, post offices and banks, tolerate congestion in buses, one of the only modes of transport with a proven supply of fuel.

“Without hanging out? “It’s 110 people,” bus driver MPLK Saman, 32, said of the number of passengers he takes on the 15-mile journey between Colombo and Dombe in the east. “With hanging? 150 people.”

The country is running patiently even as the political and economic crisis intensifies.

Former President Gotabaya Rajapaksa went into hiding after protesters stormed his residence and office last week, then fled the country on a military plane. Parliament will vote on a successor on Wednesday, and the country is watching closely whether politicians can put aside their bickering to find a path to economic relief.

Fuel shortages, rising global food prices and the shock of erratic weather patterns, exacerbated by crushing policy mistakes and the coronavirus pandemic, have created a crisis that has no easy solution.

“Look no further than Sri Lanka as a warning sign,” said Kristalina Georgieva, Managing Director of the International Monetary Fund. “Countries with high debt levels and limited policy space will face additional pressures.”

But Sri Lanka may be unique in one thing: anger at the failure and corruption of the ruling elite is matched by the generosity and ingenuity to prevent complete collapse and chaos.

Hospitals are still working. Sewer trucks still roam the chic city streets, even if fewer times. The three-hour power outage is announced in detailed schedules the next day.

In the height of the anger last week, thousands stormed the president’s palace and several other major government buildings. But soon after, Sri Lankans returned to queues, patiently waiting outside the palaces for their turn to peek.

The country is increasingly dependent on the good of others, donors, lenders – really any person or institution that has the funds to help.

Anti-government protesters march to demand the resignation of Acting President Ranil Wickremesinghe in Colombo, Sri Lanka, Tuesday, July 19, 2022. President Gotabaya Rajapaksa resigned last week and handed the reins to the highly unpopular Wickremesinghe, who has moved on as prime minister. He has previously said that he will resign. (Atul Lok/The New York Times)

To fill the gap in medical supplies, hospital administrators often make lists of needed supplies and mobilize donations. At Lady Ridgway Hospital, where the nation’s sickest children come for open-heart surgeries, kidney transplants and other complex procedures, 40% of essential medicines and surgical equipment are from overseas donors.

Every week, the hospital posts a list of things needed on its website and a link to its charitable account. Dr. J. said. Wijesuriga, the hospital director, said the hospital had not lost any patients in the 1,600-bed facility due to shortages in the country.

“But if the donors weren’t here, we would have to give up our services,” he said.

The government itself is looking for what it needs. Somila Wanajuro, an economist at Sri Lanka’s central bank, analyzes cash flow every day to determine what can be saved.

Tourism and remittances – Sri Lanka’s main sources of foreign currency – have largely evaporated. When the government ran out of money to import essentials last spring, it tapped into central bank reserves, which in recent months had been hovering around zero.

Wanajuro, director of international operations, and others at the central bank had to beg for lines of credit, debt deferrals and currency swaps to get the hundreds of millions of dollars needed each month to import the bare minimum to keep the country afloat.

Officials forced exporters to transfer part of their foreign currency earnings to the bank. When the World Bank gave the government $130 million for a cash transfer program for the country’s poorest, Wanajuro replaced the money with rupees, adding US dollars to the bank’s reserves.

“We run the country without the influx of foreign exchange,” she said.

After rating agencies downgraded Sri Lanka’s debt last spring, some suppliers of diesel and other commodities began demanding advance payments. The situation has worsened since Sri Lanka defaulted on its debt in May, losing access to capital markets.

Wanaguru has to regularly license and arrange huge cash transactions for trade. Import companies meet ships carrying much-needed fuel shipments at Colombo port with piles of cash.

Everyone looks at the central bank all the time, but it can’t do everything. And that’s why we have a government and ministries that have to sit together and put together a national plan. “Let’s hope they learn a good lesson.”

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