SL extends credit line with India by $200mn for fuel

want to form a new government in the country.

COLOMBO: Sri Lanka has extended a credit line with India by $200 million in order to procure emergency fuel stocks, the country’s power and energy minister said on Monday, with four shipments due to arrive this month. Colombo was also in talks with New Delhi over extending the credit line by an additional $500 million, minister Kanchana Wijesekera said.

Hit hard by the pandemic and short of revenue after Gotabaya Rajapaksa’s government imposed steep tax cuts, the island nation is now also critically short of foreign exchange and has approached the International Monetary Fund for an emergency bailout.

Rampant inflation and shortages of imported food, fuel and medicines has led to weeks of sporadically violent protests.

Sri Lanka has used $400 million, on multiple shipments in April, of the $500 million credit line extended by India earlier this year, Wijesekera said. Two fuel shipments will be paid for from the remaining funds in May.

“The Indian credit line was extended by $ 200 million recently and this will be utilised for four shipments in May. Talks are continuing for a further $500 million with India so in total the credit line will be $1.2 billion,” Wijesekera said.

However, Sri Lanka is still facing payment challenges for fuel imports with the state-run Ceylon Petroleum Corporation (CPC) owing $235 million for shipments already received, while about $500 million more will be needed to pay for letters of credit maturing over the next six weeks, he added. Sri Lanka will also need dollars to pay for crude oil shipments to supplement imports from India.

“We have made procurement plans till June but we still need to resolve how to find sufficient amounts of foreign exchange to make payments,” Wijesekera said.

Parl session on Wed

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.