Home Market Lanka asks for enhancement on $500m Indian credit line in view of increased oil prices

Lanka asks for enhancement on $500m Indian credit line in view of increased oil prices

  • 20 Mar 2022
  • 0

Sri Lanka has asked for an enhancement of $250m on the existing Indian credit line of $ 500m in view of the increase in international crude oil prices treasury sources said.

This follows a $1bn credit line secured from India to buy urgently needed food and medicine, for which the agreement was signed during Finance Minister Basil Rajapaksa’s recent visit to India.

 “India stands with Sri Lanka,” Indian foreign minister S Jaishankar said on Twitter. “US$1 billion credit line signed for supply of essential commodities.”

Meanwhile, the International Monetary Fund (IMF) on Friday confirmed it was considering President Gotabaya Rajapaksa’s request made on Wednesday to discuss a bailout.

“We will discuss with the authorities how best we can assist Sri Lanka going forward,” IMF spokesman Gerry Rice said in a statement to reporters.

Rajapaksa’s announcement that he would go to the IMF which is a deviation from his previous position shows that Sri Lanka will seek to renegotiate some of its estimated $51bn in foreign debts.

Rice said the IMF had already highlighted the urgent need for Sri Lanka to implement a “credible and coherent strategy to restore macroeconomic stability and debt sustainability”.

Around $6.9bn of Colombo’s debt needs to be serviced this year. Its foreign currency reserves stood at about $2.3bn at the end of February.

Sri Lanka earlier this year had asked one of its main creditors, China, to help put off debt payments, but there has not been any favourable official response from Beijing

  • Share