Bank loan

Sri Lanka seeks $ 1 billion loan from India

ColomboSri Lanka is negotiating a billion dollar loan from India to import goods from the country, Central Bank Governor Ajith Nivard Cabraal said on Wednesday, amid a shortage of nearly all essentials.

Cabraal also said Sri Lanka is negotiating another loan from China as part of an attempt to restructure its debt repayment. The loan amount has not been decided.

He said Sri Lanka is negotiating a billion dollar facility with India to import goods from the country.

Cabraal said it would also help Sri Lanka to repay its debt and further promote trade with the respective countries.

Last week the president Gotabaya Rajapaksa told visiting Chinese Foreign Minister Wang Yi that Sri Lanka would be helped if the debt could be restructured.

We understand that they would help us make refunds in this form. So maybe there is a possibility that we have a new loan coming in order to amortize our debt repayments to China, Cabraal said.

Cabraal said Sri Lanka’s debt repayments this year will amount to around $ 6 billion.

We are convinced that we can pay them all despite the current difficulties we face, ”he said, adding that the next repayment of the International Sovereign Bonds (ISBs) of $ 500 million will be duly paid.

Last week, the government was faced with lobbying from chambers of commerce who advocated default of the ISB in order to pay for imports.

Sri Lanka is currently experiencing a shortage of almost all basic necessities due to a lack of dollars to pay for imports.

Cabraal defended the central bank’s decision to sell more than half of its gold reserves last month in order to supplement foreign exchange reserves. The Central Bank’s economic indicators as of January 7 showed that gold reserves had fallen to US $ 175 million in December from US $ 382 million.

Cabraal said the sale of gold is part of the reserve management adopted by the central bank and may be brought to the bank in the future.

Government officials have said India’s billion dollar loans will be limited to food imports.

Farmers have warned of food shortages in the country over the next two months.

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