COLOMBO: Sri Lanka was handed momentary aid from power shortages and rolling blackouts on Wednesday (Feb 2) with a US$500 million loan from India to finance urgent oil purchases for the cash-strapped nation.
The island’s financial woes have left thermal energy mills unable to maintain the lights on and disrupted transport networks, as merchants run desperately low on international forex to fund imports.
Frequent breakdowns at an enormous coal energy plant have compounded unannounced electrical energy cuts and households are additionally struggling to supply cooking fuel and kerosene.
Officials stated a proper settlement was being signed on Wednesday after two weeks of talks, as well as to a latest US$915 million in international alternate assist.
An Indian diplomat stated talks have been underway on one other US$1 billion credit score line to fund urgently wanted meals and medication imports from India.
“The US$500 million is for Sri Lanka to purchase petroleum products from Indian suppliers,” the official stated.
Sri Lanka’s economic system can be seeing a shortage of rice, automotive elements and cement, with supermarkets pressured to ration some staple meals.
The shortages pushed meals inflation to a report 25 per cent final month.
Tourism is a key international alternate earner for Sri Lanka however the sector has collapsed within the wake of the COVID-19 pandemic.
The authorities has shut abroad diplomatic missions to get monetary savings and a broad ban on imports has been in impact for almost two years to preserve international forex.
Three worldwide score businesses have downgraded the island since late final 12 months on fears it might not be in a position to service its US$35 billion sovereign debt.
Sri Lanka has sought extra loans from Beijing to assist repay its present Chinese debt, which accounts for about 10 per cent of the nation’s exterior borrowings.
Authorities have borrowed closely from China for infrastructure tasks up to now, a few of which ended up as expensive white elephants.