Sri Lanka has sought an additional line of credit of $1.5 billion, or over Rs 11,396 crore, from India to import essential supplies, the country’s central bank said on Monday, reported Reuters.
“There is a very close discussion continuing for an additional support of $1.5 billion [with India] by way of oil support as well as other essential goods support of credit terms,” Central Bank of Sri Lanka Governor Ajith Nivard Cabraal said at an online event, according to the news agency.
Sri Lanka is facing its worst economic crisis since independence in 1948 as the island’s foreign reserves have hit rock bottom. The country had declared an emergency in August last year. Sri Lankans are now facing shortages of milk powder, cooking gas, kerosene and other essential items.
On March 18, New Delhi had extended a line of credit worth $1 billion, or over Rs 7,600 crore, to support Colombo to manage the economic meltdown. In January too, India had offered an assistance of $1.4 billion, over Rs 10,661 crore, to Sri Lanka.
Sri Lanka has to repay about $4 billion, or over Rs 30,391 crore, in debt this year. Its foreign reserves had fallen to $2.31 billion, or more than Rs 17,550 core, by February end, down by about 70% from two years ago.
An unidentified official told Reuters that New Delhi has indicated it would meet the request for the new line of credit.
On March 21, Chinese Ambassador to Sri Lanka Qi Zhenhong had told reporters that Beijing was also considering extending a credit line worth $2.5 billion, or more than Rs 18,994 crore, to Colombo.
Sri Lanka’s Finance Minister Basil Rajapaksa will also meet the officials of the International Monetary Fund in April to start talks for a rescue plan and seek support from the World Bank.
Meanwhile, India’s External Affairs Minister S Jaishankar met Sri Lankan President Gotabaya Rajapaksa and the country’s finance minister on Monday.
“Discussed the economic situation and India’s supportive response,” Jaishankar said in a tweet after his meeting with Gotabaya Rajapaksa. “We will continue to be guided by Neighbourhood First.”
Jaishankar said that he and Rajapaksa “reviewed various dimensions of the close neighbourly relationship” between India and Sri Lanka.
Jaishankar had reached Sri Lanka on Sunday to attend the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation summit.
Shortage of supplies in Sri Lanka has led to sporadic incidents of violence with residents jostling to buy fuel and other essentials. A man was stabbed to death on March 21 in an argument with a driver, while three elderly citizens died the week before while waiting to buy fuel in the sweltering heat, the police said.
Last week, school tests for nearly 30 lakh students were postponed because of shortage of paper and ink. Two major Sri Lanka newspapers have also suspended their print editions, citing lack of paper.
On March 22, the Sri Lankan government had deployed soldiers at petrol pumps across the country as protests erupted with people standing in queues to buy fuel.