Facing its worst economic crisis in years, Sri Lanka on Tuesday said it was open to discussions with the International Monetary Fund (IMF) and other multilateral lenders for assistance.
Adding to its woes, the South Asian island nation's inflation hit a record high for the fourth consecutive month, official data showed Tuesday, putting a further squeeze on households’ income.
"Sri Lanka has sought IMF assistance multiple times in the past and we are still open to that option," Cabinet spokesperson and Plantation Minister Ramesh Pathirana said.
Sri Lanka's foreign exchange reserves have plummeted to $2.36 billion, hitting imports of essential goods, including fuel, and inflation is quickening.
The island nation of 22 million people also faces debt repayment obligations of about $4 billion this year, and opposition leaders and economists are pushing the government to seek assistance from the likes of the IMF.
"We are keeping lines of communication open with the IMF and other multilateral lenders such as the Asian Development Bank," Pathirana told reporters.
Some opposition members have also urged the government to table in parliament an upcoming IMF assessment of the economic and financial situation, conducted as part of its regular Article IV consultations.
"It is essential that the government table this document before parliament and clearly state their plan for addressing this crisis in a sustainable manner," said opposition deputy Harsha de Silva.
With fuel stocks sufficient for supplies for only a few days, Pathirana said the central bank had been directed to release funds for fuel shipments.
Sri Lanka is trying to arrange a payment of $35 million for a shipment of 40,000 tons of diesel, which would still only meet demand for about six days.
The fuel shortage is also hitting power supply, with the power regulator warning of five to six hours a day of rolling power cuts known as load shedding over the next few days unless supplies to thermal power plants increase.
Pathirana said any further increase in global oil prices would make the situation even more difficult.
"We hope and pray no war in Ukraine as soaring oil prices will really hurt Sri Lanka," he said.
Sri Lanka’s National Consumer Price Index (NCPI) rose 16.8% in January from a year earlier, the fourth consecutive record rise and more than double October's figure of 8.3%.
The record highs came as the South Asian island struggles to find dollars to finance essential imports, including food, fuel and medicines.
The energy ministry announced Monday it was struggling to buy fuel on credit and reported shortages at many pumping stations, leading to queues and forcing some to shut.
The ministry said the main state-owned oil company, the Ceylon Petroleum Corporation (CPC), was straddled with outstanding debt of $3.5 billion and was no longer able to raise new commercial loans.
However, the CPC is banking on a proposed credit line of $500 million from the Indian government to procure oil in the coming months, officials said.
The worsening economic crisis has already led to food rationing with supermarkets restricting the quantity of rice, milk powder, sugar, lentils and tinned fish sold to consumers.
Many pumping stations have also rationed fuel issued to motorists in the provinces.
Sri Lanka's economy has collapsed since the onset of the pandemic, with a nosedive in tourism revenue as well as foreign worker remittances.
International rating agencies have downgraded Sri Lanka over expectations it may not be able to service its $35 billion foreign debt. However, the government insists it can meet its obligations.