Colombo: Sri Lanka handed over temporary assistance from the lack of energy and rolled out blackouts on Wednesday with a loan of $ 500 million from India to finance urgent oil purchases for countries that lack money.
The island economic misery has left the thermal generator that cannot turn on the lights and disrupt the transportation network, because traders run very low in foreign currencies to fund imports.
Frequent damage to large coal power plants has aggravated with electricity and household cuts that are not announced also struggling for gas cooking sources and kerosene.
Officials said the formal agreement was signed on Wednesday after two weeks of conversation, besides $ 915 million in recent foreign exchange support.
An Indian diplomat said talks are taking place on other $ 1 billion credit lines to fund food imports and drugs that are needed from India.
“$ 500 million is for Sri Lanka to buy petroleum products from Indian suppliers,” the official said.
Sri Lankan economy also saw scarcity of rice, automotive and cement parts, with supermarkets forced to ration some staple food.
Lack of encouraging food inflation to a record 25 percent last month.
Tourism is the main foreign exchange producer for Sri Lanka but this sector has collapsed after the Covid-19 pandemic.
The government has closed diplomatic mission abroad to save money and extensive import prohibitions have been valid for almost two years to save foreign currency.
Three international rating agencies have reduced the island since the end of last year about concerns it might not be able to serve $ 35 billion in debt.
Sri Lankan has been looking for more loans from Beijing to help pay China’s existing debt, which accounts for about 10 percent of the country’s external loan.
The authorities have borrowed many of China for infrastructure projects in the past, some of them ended as expensive white elephants.