Colombo, May 3: Sri Lanka has stretched the $500 million credit line with India by $200 million further to acquire two emergency fuel stocks, the country’s Power and Energy Minister Kanchana Wijesekera has said.
Wijesekera told the media on Monday that the Gotabaya Rajapaksa’s government is in talks with New Delhi on extending this credit line by a further $500 million totalling $1.2 billion amid negotiations with donor agency, International Monetary Fund for a bailout on the back of a crippling forex crisis, shortages of essential items, high inflation and intense protests by residents asking the government to resign.
The country has only $100 million left from the $ 500 million credit line given in January this year, according to Wijesekera which is adequate for two fuel shipments this month-end. The $200 million credit from India will fetch two more.
The Indian credit line was extended by $ 200 million recently and (the entire Indian credit) will be utilised for four shipments in May.
Talks are continuing for a further $ 500 million with India. In total the credit line will be $1.2 billion,? Wijesekera said, adding that the country still needs forex to pay for crude oil shipments to supplement the Indian imports.
Fuel being the largest bill, $500 million more is needed for letters of credit maturing by mid-June.
Exceptionally low tax revenue, rigid recurrent expenditure, a large budget deficit, accumulated and now unsustainable debt are the key concerns in Sri Lanka’s fiscal sector.
Deficit financing poses a critical challenge owing to the shortfall of foreign financing following the loss of international capital market access.
(UNI)
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