New Delhi: The Island nation Sri Lanka sought a $500 million credit line from India to pay for its crude oil purchases. “Lanka is facing a severe foreign exchange crisis after the pandemic hit the nation’s earnings from tourism and remittances.” Sri Lankan Finance Minister Basil Rajapaksa said.
Sri Lanka’s GDP contracted by a record 3.6 percent in 2020 and its foreign exchange reserves plunged by over a half in one year through July to just $2.8 billion.
The state oil distributors import crude from the Middle East and refined products from other areas, including Singapore. The state-run Ceylon Petroleum Corporation (CPC) owes nearly $3.3 billion to the two main government banks — Bank of Ceylon and People’s Bank.
Sumith Wijesinghe CPC (Ceylon Petroleum Corporation) Chairman told the media “We are currently engaged with the Indian High Commission here to obtain the facility (USD 500 credit line) under the India-Sri Lanka economic partnership arrangement,”
The move came few days after energy minister Udaya Gammanpila warned that the current availability of fuel in the island nation can be guaranteed only till next January.
According to a media report, the energy secretaries of both India and Lanka are expected to sign an agreement for the loan soon.
The price hike in the global oil prices has forced Lanka to spend more on oil imports this year. The country’s oil bill has jumped 41.5 percent to $2 billion in the first seven months of this year, compared to last year.
(_Vinayak Barot)
