India extended a USD 500 million credit line to Sri Lanka to fund the country’s fuel purchases the Indian High Commission said, as the island nation struggles to overcome its worst financial and energy crisis in decades.
Last month, the Indian High Commission said that External Affairs Minister S Jaishankar agreed to offer critical support and a USD 500 million credit line.
The agreement was signed in the presence of Sri Lankan Finance Minister Basil Rajapaksa and
Indian High Commissioner to Sri Lanka Gopal Baglay.
The credit line, which was under negotiations since August 2021, would ease pressure on the country’s dwindling reserves that had dipped to USD3.
The move came weeks after Power Minister Gamini Lokuge said that Sri Lanka would hold talks with the Indian Oil Corporation’s local entity amid a severe foreign exchange crisis.
Sri Lanka in the recent weeks has been consider different options to facilitate measures to prevent fuel pumps from going dry as the island nation faced an acute foreign exchange crisis.
Also, Energy Minister Udaya Gammanpila had predicted fuel shortages in the country due to the inability to pay for imports.
When the crisis loomed, the government approached the IOC’s local operation LIOC to import fuel for the government as the country is also grappling with a shortage of almost all essentials due to the lack of dollars to pay for the imports.
Additionally, power cuts are imposed at peak hours as the state power entity is unable to obtain fuel to run turbines.
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