Colombo: India has agreed to extend an additional $500 million credit line to help Sri Lanka import fuel, Finance Minister Ali Sabry said, amid delays in chalking out a bailout package with the IMF to mitigate the dire financial crisis facing the island nation.
Sri Lanka has been struggling to pay for imports after its foreign exchange reserves plummeted sharply in recent times, causing a devaluation of its currency and spiralling inflation. “India has agreed to provide an additional $500 million for our fuel imports,” Sabry said on Friday, while adding that he was hopeful that New Delhi would consider handing out another $1 billion dollars as a credit line. India has already agreed to defer $1.5 billion in import payments that Sri Lanka needs to make to the Asian Clearing Union.
Sabry is currently in Washington to negotiate a programme with the International Monetary Fund (IMF). The Finance Minister said that talks have begun on an Extended Fund Facility, but the finer details of the programme are yet to be finalised.
Sri Lanka needs at least $ 4 billion to tide over its mounting economic woes, and Sabry has been holding talks with international institutions such as the World Bank as well as countries like China and Japan for financial assistance.
“We are talking with several countries. If these efforts are successful, and if investment of about USD 2 billion comes to the central bank, it will help stop the depreciation and stabilise the rupee,” Sabry said.