Arabic version: سريلانكا تواجه ضغوطًا اقتصادية بسبب الصراع المستمر في إيران

Sri Lanka is bracing for a new economic crisis as the war on Iran escalates, impacting the nation’s fuel supplies and food prices. According to Al Jazeera, the conflict has led to significant disruptions in the Strait of Hormuz, through which 20 percent of the world’s oil and gas is transported.

In Kandy, Sri Lankans like tuk-tuk driver Keerthi Rathna now face fuel rations of 20 litres per week, a stark contrast to previous times when they could purchase fuel freely. The government has implemented a QR-based fuel rationing system reminiscent of the 2022 economic crisis, exacerbated by a 33 percent increase in fuel prices since the war began.

The impact of the conflict extends beyond fuel, with experts predicting a 15 percent rise in food prices due to disruptions in fertilizer supplies, as nearly half of the world’s urea comes through the affected strait. This situation has rekindled memories of Sri Lanka’s previous economic struggles under former President Gotabaya Rajapaksa, who faced backlash for policies leading to the country’s first-ever default on foreign debt.

The current government, led by President Anura Dissanayake, is under pressure as it navigates these challenges. While officials have indicated a willingness to adjust bus fares in response to fuel price fluctuations, many citizens remain skeptical, facing stagnant incomes amid rising living costs.

To mitigate the crisis, the government is exploring various options, including negotiations for fuel purchases from Russia and offers from Iran, which have been declined due to logistical issues. Political economists suggest that building fuel storage capacities should be a priority for the nation, which currently has only a month’s worth of reserves. Without immediate action, the economic outlook for Sri Lanka remains precarious as the war continues.