Sri Lanka has sought an additional credit line of $1.5 billion from India to import essentials, the island nation’s central bank governor said on Monday, amid its worst economic crisis in decades.
The country of 22 million people is struggling to pay for essential imports after a 70 percent drop in foreign exchange reserves in two years led to a currency devaluation and efforts to seek help from global lenders. Fuel is in short supply, food prices are rocketing and protests have broken out as Sri Lanka’s government prepares for talks with the International Monetary Fund amid concerns over the country’s ability to pay back foreign debt.
The new line is on top of the $1 billion support extended by India to help pay for critical imports when Sri Lankan Finance Minister Basil Rajapaksa travelled to New Delhi earlier this month. “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,” Ajith Nivard Cabraal told an online event.
Cabraal’s comments followed a report that said the crisis-hit country was in talks with India for an additional credit line of $1 billion.
Delhi has indicated it would meet the request for the new line, to be used for importing items such as rice, wheat flour, pulses, sugar and medicines, one source briefed on the matter said.