International

Sri Lanka seeks USD 500 million loan from India for fuel purchase amid forex crisis

By PTI

Colombo: The Sri Lankan government on Saturday said it was continuing efforts to secure a $500 million loan from India to ensure fuel supplies amid the island nation’s foreign exchange crisis.

“The proposal has been sent to the treasury for approval and will then be presented to the cabinet,” Energy Minister Uday Gammanapila said.

He said the cabinet has already approved a loan of $3.6 billion for the purchase of fuel from Oman.

Gammonpila indicated that a continuous fuel supply could only be guaranteed until January next year as the island was facing a foreign exchange crisis and high global prices.

Long queues were witnessed at fuel pumps since Thursday due to speculation of a hike in retail prices by the State Fuel Corporation.

Lanka IOC (LIOC), a subsidiary of Indian Oil Corporation in Sri Lanka, had increased the retail prices of both petrol and diesel by Rs 5 per litre.

The new prices came into effect from Thursday midnight in view of rising global oil prices.

State-run Ceylon Petroleum Corporation has asked the government to allow a hike in prices given its losses.

Gammanpila has refused to revise the price for the time being.

He also blamed the opposition for spreading rumors of imminent fuel shortage in the country.

Rising global oil prices have forced Sri Lanka to spend more on oil imports this year.

The country’s oil bill has increased by 41.5 percent to $2 billion in the first seven months of this year compared to last year.

Sri Lanka is facing a serious foreign exchange crisis after Finance Minister Basil Rajapaksa said last month that tourism and remittances affected the country’s earnings.

The country’s GDP fell by a record 3.6 per cent in 2020 and its foreign exchange reserves fell in half in a year to just US$2.8 billion in July.

This has resulted in the Sri Lankan rupee depreciating by 9 per cent against the dollar over the previous year, making imports more expensive.

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