Colombo: Sri Lanka is negotiating a USD one billion loan from India to import goods from the country, the governor of the Central Bank Ajith Nivard Cabraal said on Wednesday, amidst a shortage of almost all essential commodities.

Cabraal also said that 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 that Sri Lanka is negotiating a USD 1 billion facility with India to import goods from the country.

Cabraal said that this will also help Sri Lanka in its debt repayment and promote more trade with the respective countries.

Last week, President Gotabaya Rajapaksa told the visiting Chinese foreign minister Wang Yi that Sri Lanka would be helped if the debt could be restructured.

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 said.

Cabraal said Sri Lanka’s debt repayments this year would amount to about USD 6 billion.

We are confident we can pay all of them despite current difficulties we are facing,” he said, adding that the USD 500 million international sovereign bond (ISB) repayment due next will be duly paid.

The government in the past week faced lobbying by the trade chambers who advocated an ISB default in order to pay for imports.

Sri Lanka is currently experiencing a shortage of almost all essentials due to a shortage of dollars to pay for the imports.

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

Cabraal said the gold-selling was part of reserves management adopted by the Central Bank and could be brought to the bank in the future.

The government officials said the USD one billion loans from India would be restricted to food imports.

Agriculturists have warned of food shortages in the country during the next two months.

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