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Shock Waves From War in Ukraine Threaten to Swamp Sri Lanka

  • Soaring oil, dipping foreign reserves jolt $81 billion economy
  • Facing default, island-nation in talks with IMF for bailout
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Oil Climbs Back Above $100 on Russia-Ukraine Uncertainty
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Russia’s war in Ukraine, which has caused a humanitarian crisis and convulsed global financial markets, is now threatening to crush an $81 billion economy more than 4,000 miles away in the Indian Ocean. 

Hit by soaring oil import costs and a dip in tourism revenue, Sri Lanka is racing to avert a default amid dwindling foreign-exchange holdings. With inflation already at 15% -- the worst in Asia -- the conflict is only making it harder for the tropical island located off the southern tip of India. Fuel shortages and blackouts lasting as long as seven hours have become daily routine, while the wait gets longer at gas stations where prices surged almost 50% this month.