Sri Lanka is turning off street lights to save electricity, according to a minister, as the country’s worst economic crisis in decades has resulted in additional power outages and the suspension of trade on its main stock exchange.
Because the government does not have enough foreign cash to buy fuel, the island’s 22 million people are subjected to rolling blackouts lasting up to 13 hours every day.
Power Minister Pavithra Wanniarachchi told reporters, “We have already asked authorities to turn off street lights around the country to assist conserve power.”
The power outages exacerbate the suffering of Sri Lankans who are already suffering from food shortages and skyrocketing prices.
According to the statistics department, retail inflation was 18.7% in March compared to the same month a year ago. In March, food inflation hit 30.2 percent, owing in part to a currency depreciation and a restriction on artificial fertilisers that was eventually lifted last year.
“This is the highest amount of inflation Sri Lanka has seen in over a decade,” said Dimantha Mathew, First Capital Research’s head of research.
Wanniarachchi said a diesel cargo from India under a $500 million credit line was scheduled on Saturday, but she cautioned that this would not solve the problem.
“Once it occurs, we’ll be able to reduce load shedding hours,” the minister stated, “but power outages will have to continue until we have rains, which should be sometime in May.”
“We don’t have any other options.”
During the hot, dry season, water levels at reservoirs feeding hydro-electric installations had dropped to record lows, while demand had reached record highs, she said.
Because of the power outages for the rest of this week, the Colombo Stock Exchange (CSE) reduced daily trading to two hours from four and a half hours at the request of brokers, the bourse stated in a statement.
However, after an index tracking top firms fell by more than 5% after the market began on Thursday, the CSE suspended trading for 30 minutes for the third time in two days.
“Negative mood is being driven by economic concerns, as well as reports of reduced trading hours and increased power cuts,” said Roshini Gamage, an analyst at brokerage firm Lanka Securities.
The problem is the result of poorly timed tax cuts, the impact of the coronavirus pandemic, and historically weak government finances, which has resulted in a 70 percent decline in foreign exchange reserves in the last two years.
As of February, Sri Lanka had $2.31 billion in reserves, leading the government to seek assistance from the International Monetary Fund and other countries such as India and China.