Colombo, Sri Lanka –
Sri Lanka may be forced to buy more oil from Russia as the island nation is desperately hunting for fuel amid an unprecedented economic crisis, the newly appointed prime minister has said.
Prime Minister Ranil Wickremesinghe said he would first look at other sources, but would be open to buying more crude from Moscow. Western nations have largely cut energy imports from Russia under sanctions over the war with Ukraine.
In an extensive interview with The Associated Press on Saturday, Wickremesinghe also said he would be willing to accept more financial help from China, despite his country’s mounting debt. And while acknowledging that Sri Lanka’s current predicament is “self-produced”, he says the war in Ukraine is making it even worse – and food shortages are severe. The importance could continue until 2024. He said Russia has also supplied 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 after a month after he took office as prime minister for the sixth time. Appointed by President Gotabaya Rajapaksa to tackle an economic crisis that has nearly depleted the country’s foreign exchange reserves, Wickremesinghe was sworn in after days of violent protests last month that forced his predecessor, Mr. Rajapaksa’s son, Mahinda Rajapaksa, had to resign and seek safety from an angry mob at a naval base.
Sri Lanka has accumulated $51 billion in external debt, but has suspended payments of nearly $7 billion due this year. The country’s mounting debt has left the country with no money for basic imports, which means people are having a hard time accessing basic necessities like food, fuel, medicine – even paper. toilet and matches. Power shortages have led to prolonged power outages, and people have been forced to wait days to cook gas and gasoline in lines stretching for kilometers (miles).
Two weeks ago, the country bought a shipment of 90,000 tonnes (99,000 tonnes) of Russian crude to restart its only refinery, the energy minister told reporters.
Wickremesinghe did not comment directly on those reports and said he did not know if there were more orders in the pipeline. However, he said Sri Lanka desperately needs fuel and is currently trying to get oil and coal from the country’s traditional suppliers in the Middle East.
“If we can get it from any other source, we’ll get it from there. If not (we) might have to go to Russia again,” he said.
Officials are in talks with private suppliers, but Wickremesinghe said one problem they face is “there’s a lot of oil that can be unofficially returned to Iran or to Russia.”
“Sometimes we might not know what oil we are buying,” he said. “We’re certainly looking at the Gulf as our main source of supply.”
Since Russia invaded Ukraine in late February, global oil prices have skyrocketed. While Washington and its allies are trying to cut financial flows supporting Moscow’s war effort, Russia is offering its crude oil at a steep discount, making it extremely attractive to some. nation.
Like some other South Asian countries, Sri Lanka remained neutral about the war in Europe.
Sri Lanka has received and continues to contact many countries for help – including China, the country’s third largest creditor, which is currently the most controversial. Opposition figures have accused the president and former prime minister of taking on a series of Chinese loans for fragile infrastructure projects that did not generate profits, instead adding to their debt. country.
Critics also point to a besieged port in then-President Mahinda Rajapaksa’s hometown, Hambantota, which was built alongside a nearby airport as part of Belt and Road Initiative projects. and China’s Road, saying they cost too much and bring too little to the economy.
“We need to identify what projects we need for economic recovery and get loans for those projects, whether they are from China or from other countries,” Wickremesinghe said. “It’s a question where are we going to deploy the resources?”
The prime minister said his government has been talking to China about restructuring its debts. Beijing had previously offered to lend the country more money but was reluctant to cut the debt, possibly due to concerns that other borrowers would ask for the same relief.
“China has agreed to join with other countries to provide relief to Sri Lanka, which is the first step,” Wickremesinghe said. “This means that they all have to agree (on) how the cuts will happen and how they should work out.”
Sri Lanka is also seeking financial support from the World Food Program, which may soon send a team to the country, and Wickremesinghe is banking on a bailout from the International Monetary Fund. But even if approved, he doesn’t expect to see money from the package until October or later.
Wickremesinghe admits that the crisis in Sri Lanka was “self-made.” Many have blamed government mismanagement, deep tax cuts in 2019, policy blunders that devastated crops and a sharp drop in tourism due to the coronavirus pandemic. However, he also stressed that the war in Ukraine, which has pushed global supply chains into a tailspin and pushed fuel and food prices to unsustainable levels, has made things much worse. .
“The Ukraine crisis has impacted our… economic contraction,” he said, adding that the economy will shrink even more before the country can begin to recover and rebuild next year. next.
“I think by the end of the year you could also see the impact in other countries,” he said. “Global food shortages are happening. Countries don’t export food.”
In Sri Lanka, vegetable prices have tripled while the country’s rice cultivation has fallen by about a third, the prime minister said.
Shortages have affected both the poor and the middle class, sparking months of protests. Mothers are struggling to get milk to feed their babies as fear of a hunger crisis grows.
Wickremesinghe said he felt terrible watching his nation suffer, “as a citizen and as a prime minister.”
He says he’s never seen anything like this in Sri Lanka – and doesn’t think he ever will. “I’m often in governments where I make sure people get three meals and their income goes up,” he said. “We’ve had some hard times. …But not like this. I’ve never seen… people with no fuel, no food.”
Associated Press writers Bharatha Mallawarachi and Krishan Francis contributed to this report.