Sri Lanka seeks US$200mn credit lines from Australia, Pakistan: report

Source:Economynext

ECONOMYNEXT – Sri Lanka is seeking a 200 million US dollar credit line from Australia for lentils and other foods a media report said, soon after reports of 200 million dollars being sought from Pakistan amid forex shortages.

Sri Lanka’s The Sunday Times newspaper quoted Trade Minister Bandula Gunewardene as saying that 200 million dollar credit line sought from Australia as well a billion US dollar credit line from India in the works could be used to bring goods for the upcoming New Year season.

“The two credit lines will be sufficient for the imports of essentials for about six months,” the newspaper quoted Minister Gunewardene as saying.

Sri Lanka’s Foreign Minister G L Pieiris expected to visit India shortly and there are expectations of progress over the billion dollar credit.

India had already given a 500 million dollar credit line for fuel and a 400 million dollar swap to the central bank. India had also deferred a payment under the Asian Clearing Union from the central bank.

Sri Lanka is facing severe forex shortages amid liquidity injected to maintain excessive low rates.

Two years of money printing has sent inflation soaring to 14.2 percent a year by January 2022. Money in recent months has been printed to sterilize interventions for imports and maintain policy rates at 6.5 percent.

There a complaints that 1,500 containers are stuck at the port awaiting foreign currency. In December imports are estimated to have soared to 2.2 billion US dollars. (Colombo/Jan08/2022)