An official said on Monday that Sri Lanka’s finance minister will travel to New Delhi on Tuesday to sign a $1 billion credit line to pay for crucial food and medication imports as the island nation grapples with its worst financial crisis in years. The island’s foreign reserves have plummeted by 70% in the last two years, falling to $2.31 billion in February, halting crucial imports such as petroleum.
Finance Minister Basil Rajapaksa, who first revealed the Indian credit line in February, will sign a deal on Wednesday to use it to pay for necessities like as medicine, wheat flour, sugar, and rice. “Sri Lanka imports roughly $2 billion worth of vital products from India every year,” Milinda Rajapaksha explained.
Sri Lanka’s government last year reached out to India, among other countries, to negotiate credit lines and currency swaps. In January, India announced a $400 million currency swap programme and a $500 million credit line for fuel.
The finance minister will also push to fast-track 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 meagre reserves after costs increased rapidly in February, and experiencing rolling power cuts and long lines at petrol pumps. The country is also talking to the International Monetary Fund for possible help.
