Lanka to turn off street lights in deepening economic crisis; shares dive

Sri Lanka is turning off street lights to save electricity, a minister said on Thursday, as its worst economic crisis in decades brought more power cuts and halted trading on its main stock market.

The island of 22 million people is struggling with rolling blackouts for up to 13 hours a day because the government does not have enough foreign exchange for fuel imports.

“We have already instructed officials to shut off street lights around the country to help conserve power,” Power Minister Pavithra Wanniarachchi told reporters.

The power cuts add to the pain of Sri Lankans already dealing with shortages of essentials and rocketing prices.

Retail inflation hit 18.7 per cent in March over the same period a year ago, the statistics department said on Thursday. Food inflation reached 30.2 per cent in March, partly driven by a currency devaluation and last year's ban on chemical fertilisers that was later reversed.

Stocks slide as trade halts

The Colombo Stock Exchange (CSE) cut daily trading to two hours from the usual four-and-a-half because of the power cuts for the rest of this week at the request of brokers, the bourse said in a statement.

But shares slid after the market opened on Thursday and the CSE halted trading for 30 minutes - the third time in two days - after an index tracking leading companies dropped by more than 5 per cent.

“Concerns on the macro side, together with news of shorter trading hours plus increased power cuts, is driving negative sentiment,” said Roshini Gamage, an analyst at brokerage firm Lanka Securities.

Buys coal from Russia's SUEK at a discount

The country has bought coal from the Singapore unit of Russian coal trader SUEK AG and will pay in US dollars, two senior officials said, as it looks to address a fuel shortage that has lead to hours-long power outages.

Sri Lanka has been struggling to pay for critical imports including fuel and food due to paltry forex reserves, while many Russian firms are struggling to complete transactions because foreign banks are wary of doing business with them after Western sanctions that followed Russia's invasion of Ukraine.

Some international traders have been avoiding Russian oil to avoid becoming entangled in sanctions, but Russia has been pushing its commodities to countries including Sri Lanka's northern neighbour India at steep discounts.

IMF to start talks on loan request

The International Monetary Fund will initiate discussions with Sri Lankan authorities on a possible loan program in coming days, IMF spokesperson Gerry Rice said. 

Rice said the discussions would continue during the visit of Sri Lankan Finance Minister Basil Rajapaksa in Washington for the spring meetings of the IMF and World Bank next month.