COLOMBO: Sri Lanka’s power and energy minister announced on Monday that the country has increased its credit line with India by $200 million in order to purchase emergency petroleum stockpiles, with four shipments expected to arrive in May.

Minister Kanchana Wijesekera told a news conference that Colombo was in talks with New Delhi about extending the credit line by another $500 million.

The island nation is now severely short of foreign exchange and has contacted the International Monetary Fund for an emergency bailout, having been hit hard by the virus and short of money after Gotabaya Rajapaksa’s government enforced harsh tax cuts.

Inflationary pressures and shortages of imported food, gasoline, and medications have sparked weeks of occasional violence.

Sri Lanka spent $400 million of the $500 million credit line given by India earlier this year on numerous shipments in April, according to Wijesekera. In May, the remaining cash will be used to pay for two gasoline shipments.

Also Read

Sri Lanka offers ‘golden visa’ to foreigners for USD $100,000

Sri Lanka gripped in the middle of its worst economic crisis has...

“The Indian credit line was recently increased by $200 million, which will be used to fund four shipments in May. India is still negotiating for another $500 million, bringing the total credit line to $1.2 billion “According to Wijesekera.

However, Sri Lanka is still having trouble paying for petroleum imports, with the state-owned Ceylon Petroleum Corporation (CPC) owing $235 million for shipments already received and another $500 million needed to pay for letters of credit due to mature in the next six weeks.

Sri Lanka will also require dollars in order to pay for crude oil shipments in order to supplement its imports from India.

“We’ve made procurement plans through June,” Wijesekera said, “but we still need to figure out how to get enough foreign exchange to make payments.”