Shortages of letters of credit (L/Cs) are threatening supplies of essential drugs and fuel to Sri Lanka as the island state grapples with severe foreign exchange and debt crises.

Indian banks have already reported they are making L/Cs harder to come by for Indian exporters selling goods to Sri Lanka (DC World News, 12 January 2022).

Drug supplies

Sri Lanka may face a shortage of about 80 essential drugs as health officials were finding it difficult to purchase them due to the current foreign exchange shortage the president of the College of Medical Laboratory Science, Ravi Kumudesh told The Island daily English language newspaper.

He said last week that L/Cs had not been opened for medicine supplies for 2022. "L/Cs have to be opened fast, for it takes a few months for the shipments to arrive here...the L/Cs to purchase medicines have not yet been opened. Thus, the medicine purchasing process has been delayed by four months," Kumudesh concluded.

Power cuts looming

An official at the Ceylon Electricity Board (CEB), which has been forced to make daily hour-long power cuts in Sri Lanka, said the power utility had run out of dollars to buy much needed feedstock for its power stations.

The official said that CEB has to import oil and gas and that with L/Cs so difficult to obtain due to Sri Lanka's crippling foreign exchange crisis, the power company could run out of fuel this month.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.