By Uditha Jayasinghe

COLOMBO (Reuters – Sri Lanka’s minister announced that the country is shutting down its street lights in order to cut electricity. This was in response to its worst economic crisis for decades, which brought about more power outages and gloom in its main stock exchange. It also caused a halting of trade due to falling prices.

A 22-million population island, the country is currently experiencing rolling power cut for 13 hours each day. This is because the government lacks foreign currency and cannot make fuel import payments.

Reporters were told by Pavithra Wanniarachchi, Power Minister, that officials have been instructed to turn off street lighting in the country.

Wanniarachchi stated that a diesel shipment from India under $500 million is likely to arrive Saturday. However, she cautioned that things are not expected to get better anytime soon.

Wanniarachchi stated that “once it arrives, we will be in a position to reduce loadshedding hours. However, until we get rains (probably sometime in May), power cuts will need to continue.” Wanniarachchi was referring to the ongoing power cut.

“There are no other things we can do”

She said that water levels in reservoirs used to power hydro-electric plants had dropped to record lows and that demand was also at record highs during this hot, dry period.

« DRIVING the Drop »

According to a statement, the Colombo Stock Exchange (CSE), daily trading was reduced from four hours to two because of power outages for the remainder of the week. This decision was made at brokers’ request.

However, shares fell after Thursday’s market opening. The CSE suspended trading for thirty minutes. This was the third suspension in as many days. It came after an index that tracks the leading companies had dropped more than 5%.

Roshini Gambage, an analyst with brokerage Lanka Securities, stated that negative sentiment is being driven by concerns on the macro-side, as well news of reduced trading hours and increased power cuts.

Gamage declared that overall weak sentiment was driving the drop.

CSE stopped trading on Wednesday twice due to concerns about the economy, power shortages and other factors.

This crisis was caused by poorly timed tax cuts, the effects of the coronavirus epidemic and historically poor government finances. Foreign exchange reserves dropped 70% over the past two years.

Sri Lanka’s reserves were $2.31 Billion as of February. The government was forced to ask for help from other countries such as India and China.