Sri Lanka’s cabinet has approved a 500 500 million loan from India’s Exim Bank to buy petroleum products amid a severe foreign exchange crisis in the island nation.
Sri Lanka is considering various options to facilitate measures to prevent fuel pumps from drying up, as the country faces a serious foreign exchange crisis to pay for its imports.
The country is plunged into an unprecedented economic turmoil, the worst since independence from Britain in 1948. Due to the lack of dollars to pay for imports, it is struggling with a shortage of almost all essentials.
At a cabinet meeting on Monday, Energy Minister Kanchna Wijesekera said on Tuesday that the proposal to seek a loan from Exim Bank of India to buy fuel had been approved.
“In the current economic scenario, the proposal of the Minister of Power and Energy to seek a loan of 500 500 million from the Exim Bank of India for the purchase of petroleum products was approved,” a cabinet note said.
Sri Lanka has already received 500 500 million from Exim Bank of India and another 200 200 million to buy oil from the State Bank of India, Mr Wisekesara said.
As of June, Sri Lanka’s current foreign exchange crisis is estimated to require 30 530 million for fuel imports.
Crisis-hit Sri Lanka and petrol prices rose 24.3 per cent and diesel 38.4 per cent on Tuesday, pushing fuel prices to a record high amid the country’s worst economic crisis due to a shortage of foreign exchange reserves.
On Monday, India said it had supplied about 40,000 metric tonnes of petrol to Sri Lanka, just days after the supply of 40,000 metric tonnes of diesel under the Indian credit line to help reduce the acute energy deficit.
India last month extended an additional USD 500 million credit line to Sri Lanka to help neighboring energy imports as it struggles to pay for imports after its foreign exchange reserves have plummeted in recent months, leading to currency devaluation and rising inflation. .
The economic crisis has also triggered a political crisis in Sri Lanka and demands for the resignation of President Gotabhaya Rajapaksa. The crisis forced Prime Minister Mahinda Rajapaksa, the president’s elder brother, to resign on May 9.
With inflation rising to 40 percent, food, fuel and medicine shortages and rolling power blackouts leading to nationwide protests and a sinking currency, the government lacks the foreign exchange reserves it needs to import.
(Except for the title, this story was not edited by NDTV staff and was published from a syndicated feed.)