India extends its credit line to SL by $200mn to procure fuel

India has extended its current credit line by a further $200 million to replenish Sri Lanka’s rapidly depleting fuel stocks, power and energy minister Kanchana Wijesekera said on Monday.

“India has already given an additional $200 million which will be used for another 4 shipments (in May). Apart from this we are also in discussion with India for another $500 million credit line, but this is not finalised yet,” Wijesekara said.

Sri Lanka has utilised $400 million from the $500 million credit line extended by India in March and April, and the two fuel shipments will be paid for from the remaining funds this month, the minister said. India has already agreed to defer $1.5 billion in import payments that Sri Lanka needs to make to the Asian Clearing Union. Last month, New Delhi also extended the tenure of a $400 million swap given in January this year, the Indian High Commission said. The Sri Lankan government said it would temporarily default on $35.5 billion in foreign debt as the pandemic and the war in Ukraine made it impossible to make payments to overseas creditors.

The Gotabaya Rajapaksa regime has also asked for an International Monetary Fund bailout, which could take up to three months to arrive.

Wijesekara said the monthly fuel import cost in May is estimated to be around $580 million, compared to $200 million three months ago, due to the spike in the global oil prices.

The fuel imports from India notwithstanding, Sri Lanka will also need to address the shortfall of dollars to pay for its crude oil shipments.

Parl session tomorrow

Meanwhile, the parliament is set to convene on Wednesday in a session that may see a no-confidence motion being brought against Prime Minister Mahinda Rajapaksa.

Sri Lanka’s leader of Opposition and Samagi Jana Balawegaya (SJB) leader Sajith Premadasa on Saturday had said that the no-confidence motion will be brought against Prime Minister Mahinda Rajapaksa during the next session of the country’s parliament.

The president reportedly told dissidents within his coalition government on Friday he was willing to consider forming a unity government, but that neither he nor his brother Mahinda, the country’s prime minister, would step down.