Sri Lanka to sign $1 billion line of credit with India to help pay for major imports

COLOMBO : Sri Lanka’s finance minister will travel to New Delhi on Tuesday to sign a $1 billion line of credit to pay for essential food and medicine imports, an official said on Monday, as the island nation struggles struggling with its worst financial crisis in years.

The island’s foreign exchange reserves have fallen 70% over the past two years to $2.31 billion in February, stalling critical imports, including fuel.

Finance Minister Basil Rajapaksa, who first announced India’s credit line in February, will sign an agreement on Wednesday to pay for essentials including medicine, wheat flour, sugar and rice.

“Sri Lanka imports about $2 billion worth of essential items from India every year, and this line of credit will focus on the same items,” Milinda Rajapaksha, another chief executive of the media ministry, told Reuters. .

Rajapaksa will also meet India’s finance and energy ministers.

Last year, the Sri Lankan government reached out to India, among other countries, to negotiate lines of credit and currency swaps. In January, India announced a $400 million currency swap program and a $500 million fuel line of credit.

The finance minister will also push to speed up fuel imports from India, a senior energy ministry official said, asking not to be named.

Soaring global crude prices have hit Sri Lanka hard, with the country struggling to pay for fuel from its meager reserves after costs rose rapidly in February, and suffering power cuts and long queues. waiting at gas pumps.

The country is also in talks with the International Monetary Fund for possible assistance.

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