Sri Lanka Seeks $1 Billion Loan From India For Food Imports Amid Shortage Of Essential Commodities

Sri Lanka is also negotiating another loan from China, even as it has ruled out assistance from the International Monetary Fund (IMF).

A representative image of Sri Lanka's central bank signage | Photo: Getty

New Delhi: The Sri Lankan government is looking for a US$1 billion loan from India, the country's central bank governor Ajith Nivard Cabraal said on Wednesday, according to a PTI report.

The demand comes amidst a shortage of almost all essential commodities in Sri Lanka that is reeling under an economic crisis. 

It was reported earlier that Sri Lanka is negotiating another loan from China, even as it has  ruled out assistance from the International Monetary Fund (IMF).

The loan amount is yet to be decided, the PTI report said.

China is Sri Lanka's fourth biggest lender after financial markets, the Asian Development Bank and Japan. 

Quoting Cabraal, the report said Sri Lanka is negotiating a US$1 billion loan with India for import of goods from the country.

He said this will help Sri Lanka in its debt repayment, and promote more bilateral trade.

'Confident We Can Pay Despite Current Difficulties'

During Chinese Foreign Minister Wang Yi's visit to Sri Lanka over the past weekend, President Gotabaya Rajapaksa had requested him to restructure the debt.

“We have an understanding that they would assist us in making the repayments in that form. So maybe there is a possibility that we would have a new loan coming in order to cushion our debt repayments to China,” Cabraal was quoted as saying in the report.

Sri Lanka’s total debt repayments would amount to about US$6 billion this year, starting with a US$500 million international sovereign bond (ISB) repayment that is due on January 18.

“We are confident we can pay all of them despite current difficulties we are facing," Cabraal said.

Quoting gvernment officials, the PTI report said the US$1 billion loan from India would be restricted to food imports.