Lankan Prime Minister is ready to buy Russian oil in the face of the devastating economic crisis – Natural Self Esteem

Sri Lanka may be forced to buy more oil from Russia as the island nation desperate for fuel amid an unprecedented economic crisis, the newly appointed prime minister has said.

Prime Minister Ranil Wickremesinghe said he would look to other sources first but was open to buying more crude from Moscow.

Western nations have largely halted energy imports from Russia in line with sanctions over its war in Ukraine.

In a lengthy interview with The Associated Press on Saturday, Wickremesinghe also hinted that he was willing to accept more financial aid from China, despite his country’s mounting debt.

And while acknowledging that Sri Lanka’s current predicament is homegrown, he said the war in Ukraine is making it worse and that dire food shortages could linger into 2024. He said Russia also offered wheat to Sri Lanka.

Wickremesinghe, who is also Sri Lanka’s finance minister, spoke to the AP at his office in the capital Colombo a day ago, almost a month after becoming prime minister for the sixth time.

Wickremesinghe was appointed by President Gotabaya Rajapaksa to resolve an economic crisis that has nearly drained the country’s foreign exchange reserves. Wickremesinghe was sworn in after days of violent protests last month forced his predecessor, Rajapaksa’s brother Mahinda Rajapaksa, to resign and seek shelter from angry crowds at a naval base.

Sri Lanka has accumulated US$51 billion in external debt but has suspended repayments of nearly US$7 billion that are due this year.

The crushing debt has left the country without money for basic imports, meaning citizens are struggling to access basic necessities like food, fuel, medicines, even toilet paper and matches.

The shortages have led to constant power outages, and people have had to wait in miles-long lines for cooking gas and petrol for days.

Two weeks ago, the country bought a 90,000-ton shipment of Russian crude to restart its only refinery, the energy minister told reporters.

Wickremesinghe didn’t comment directly on those reports and said he didn’t know if any more orders were in the pipeline. But he said Sri Lanka is in dire need of fuel and is currently trying to get oil and coal from the country’s traditional suppliers in the Middle East.

If we can get from any other sources, we will get from there. Otherwise we might have to go back to Russia, he said.

Officials are negotiating with private suppliers, but Wickremesinghe said one problem they face is that there is a lot of oil in circulation that can be informally shipped back to Iran or Russia.

Sometimes we may not know what oil we are buying, he said. Certainly we consider the Gulf as our main supply area.

Since the Russian invasion of Ukraine in late February, global oil prices have skyrocketed.

As Washington and its allies seek to cut financial flows in support of Moscow’s war effort, Russia is offering its crude oil at a deep discount, making it extremely tempting for a number of countries.

Like some other South Asian nations, Sri Lanka has remained neutral on the war in Europe.

Sri Lanka has turned to numerous countries for help, and will continue to do so, including the most contentious China, currently the country’s third largest creditor.

Opposition figures have accused the president and former prime minister of taking out a slew of Chinese loans for bubbly infrastructure projects, which have since failed to generate profits and have increased the country’s debt.

Critics have also pointed to a beleaguered port in then-President Mahinda Rajapaksa’s hometown of Hambantota, which was being built along with a nearby airport as part of China’s Belt and Road Initiative projects, saying they cost too much and too much do little for the economy.

We need to figure out what projects we need for economic recovery and borrow for those projects, whether from China or others, Wickremesinghe said.

The question is, where do we use the resources?

The prime minister said his government has been in talks with China about a debt restructuring.

Beijing had previously offered to lend the country more money but declined to cut the debt, possibly out of concern other borrowers would demand the same relief.

China has agreed to join forces with other countries to provide assistance to Sri Lanka, which is a first step, Wickremesinghe said. That means they all have to agree on how and in what way the cuts should be made.

Sri Lanka is also seeking financial support from the World Food Programme, which may soon be sending a team to the country, and Wickremesinghe is banking on an International Monetary Fund bailout. But even if it’s approved, he doesn’t expect to see any money from the package until October.

Wickremesinghe acknowledged that the crisis was of Sri Lankan origin.

Many have blamed government mismanagement, deep tax cuts in 2019, policy mistakes that ravaged crops and a sharp slump in tourism due to the coronavirus pandemic. But he also stressed that the war in Ukraine, which has stalled global supply chains and pushed fuel and food prices to prohibitive levels, has made things much worse.

The Ukraine crisis has had an impact on our… economic contraction, he said, adding that he believes the economy will contract further before the country can start to recover and rebuild next year.

I think by the end of the year you could see the effects in other countries as well, he said. There is a global food shortage. Countries do not export food.

In Sri Lanka, the price of vegetables has tripled while the country’s rice production has fallen by about a third, the prime minister said.

The shortages have hit both the poor and the middle class, sparking months of protests. Mothers are struggling to get milk to feed their babies as fears of a looming hunger crisis mount.

Wickremesinghe said he felt terrible at seeing his nation suffer, both as a citizen and as prime minister.

He said he had never seen anything like it in Sri Lanka and didn’t think he ever would.

I’ve generally been in governments where I’ve made sure people had three meals and increased their incomes, he said. We’ve had difficult times. … But not like this. I haven’t seen… people with no fuel, no food.

(Only the headline and image of this report may have been edited by the staff at Business Standard; the rest of the content is auto-generated from a syndicated feed.)

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