Senior US officials visit Sri Lanka to help resolve crisis

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A daily wage laborer waits for work at a wholesale market in Colombo, Sri Lanka, Sunday, June 26, 2022. Sri Lankans have endured months of shortages of food, fuel and other necessities due to the country's dwindling foreign exchange reserves and mounting debt, worsened by the pandemic and other longer term troubles. (AP Photo/Eranga Jayawardena)

COLOMBO – Senior U.S. officials were in Sri Lanka seeking ways to help the island nation cope with an unprecedented economic crisis and severe shortages of essential supplies, as the energy minister warned that new fuel shipments would be delayed.

The U.S. over the past two weeks has announced millions of dollars in assistance to the South Asian island nation, which has been surviving on $4 billion in credit lines from neighboring India. It also has received pledges of $300 million to $600 million from the World Bank to buy medicine and other items.

Prime Minister Ranil Wickremesinghe last week announced the economy had “collapsed” due to dwindling foreign exchange reserves and a mounting debt, worsened by the pandemic and other longer term troubles.

The U.S. delegation was led by Robert Kaproth, deputy assistant secretary of Treasury for Asia, and Kelly Keiderling, deputy assistant secretary of state for South and Central Asia.

During their four-day stay, they are meeting with a wide range of political representatives, economists, and international organizations to “explore the most effective ways for the U.S. to support Sri Lankans in need, Sri Lankans working to resolve the current economic crisis, and Sri Lankans planning for a sustainable and inclusive economy for the future,” the U.S. Embassy said in a statement.

“This visit underscores our ongoing commitment to the security and prosperity of the Sri Lankan people,” said Julie Chung, U.S. ambassador to Sri Lanka.

As Sri Lankans endure some of the “greatest economic challenges in their history, our efforts to support economic growth and strengthen democratic institutions have never been more critical,” she said.

The U.S. has announced $120 million in new financing for small and medium-sized businesses, a $27 million contribution to Sri Lanka’s dairy industry and $5.75 million in humanitarian assistance to help those hit hardest by the economic crisis. Another $6 million was committed in new grants for livelihoods and technical assistance on financial reform.

Sri Lanka says it's unable to repay $7 billion in foreign debt due this year, pending the outcome of negotiations with the International Monetary Fund on a rescue package. It must pay $5 billion on average annually until 2026. Authorities have asked the IMF to lead a conference to unite Sri Lanka’s lenders.

Power and Energy Minister Kanchana Wijesekera in a tweet on Saturday evening urged people not to line up for fuel, saying new shipments would be delayed due to “banking and logistics reasons.”

He said limited stocks of fuel will be distributed to limited stations throughout next week. He said until the next shipments arrive, “public transport, power generations and industries will be given a priority.”

Residents have had to queue for hours and sometimes days to get fuel, sometimes resorting to burning charcoal or palm fronds for cooking.

Wickremesinghe said last week that the state-run Ceylon Petroleum Corporation was $700 million in debt and as a result, no country or organization was willing to provide fuel.

Protesters have occupied the entrance to President Gotabaya Rajapaksa’s office for more than two months demanding his resignation, saying the primary responsibility for the crisis rests with him and his family, whom they accuse of corruption and mismanagement.