Sri Lanka has sought a USD 500 million credit line from India to spend for its crude oil purchases amid a serious foreign exchange crisis in the island nation.
The move came couple of days soon after power minister Udaya Gammanpila warned that the existing availability of fuel in the nation can be assured only till next January.
The state-run Ceylon Petroleum Corporation (CPC) owes almost USD 3.3 billion to the two principal government banks — Bank of Ceylon and People’s Bank. The state oil distributors imports crude from the Middle East and refined items from other regions, which includes Singapore.
“We are currently engaged with the Indian High Commission here to obtain the facility (USD 500 million credit line) under the India-Sri Lanka economic partnership arrangement,” CPC Chairman Sumith Wijesinghe was quoted as saying by regional news web site newsfirst.lk.
He stated the facility would be utilised for buying petrol and diesel specifications.
The power secretaries of each India and Lanka are anticipated to sign an agreement for the loan quickly, the report quoted Finance Secretary SR Attygalle as saying.
The government has place on hold the anticipated retail value hike of fuel in spite of the last week’s enhance in cooking gas and other essentials.
The value hike in the international oil costs has forced Lanka to commit more on oil imports this year. The country’s oil bill has jumped 41.5 per cent to USD 2 billion in the 1st seven months of this year, compared to last year.
Lanka is facing a serious foreign exchange crisis soon after the pandemic hit the nation’s earnings from tourism and remittances, Finance Minister Basil Rajapaksa had stated last month.
The country’s GDP contracted by a record 3.6 per cent in 2020 and its foreign exchange reserves plunged by more than a half in one year by way of July to just USD 2.8 billion. This has led to a 9 per cent depreciation of the Sri Lankan rupee against the dollar more than the previous one year, producing imports more high-priced.