Credit line

Sri Lanka seeks second $500m line of credit from India to buy oil

Sri Lanka is seeking a second US$500 million line of credit from India as an existing line of credit is nearing completion.

Sri Lanka quickly exhausted an existing US$500 million line of credit signed by India in february and is now seeking to sign a second US$500 million line of credit with the New Delhi government. With rising oil prices, US$375-400 million of the initial line of credit will be drawn by the end of April.

Ceylon Petroleum Corporation Chairman Sumith Wijesinghe told reporters: “We are in talks with India for an additional US$500 million oil credit,”.

As the country suffers from power outages, Sri Lanka’s worst economic crisis since independence took a new turn when the finance ministry and central bank governor announced that the government would not be able to repay its international debt.

Sri Lanka’s Ministry of Finance has announced that the government “suspend normal debt service”, adding that “the government is only taking the emergency measure as a last resort in order to prevent a further deterioration in the financial situation of the republic”.

According to the statement, the non-payment will concern all “affected debts”, citing bonds issued in international capital markets, bilateral credits and foreign loans. The total amount is estimated at around US$51 billion. Falling foreign exchange reserves have impacted imports of vital items like fuel, medicine and food.

Read more on EconomicNext