Credit Slip

The Indian Export Import (EXIM) Bank has called for a corporate guarantee for the US$ 150 million fuel credit line to Sri Lanka. The Indian Export Import (EXIM) Bank has called for a corporate guarantee for the US$ 150 million fuel credit line to Sri Lanka. The new hurdle was introduced to cover a possible default by the Sri Lankan Government, which already owes Lanka IOC US$ 30 million.

The credit line is technically not tied to the dues owned to the IOC’s Lankan subsidiary.

The Government was banking heavily on the six month credit line to shore up its foreign reserve at US$ 1.9 million (gross officials foreign reserves) by end October, down 17 percent for levels in 2003.

The island nation’s trade deficit, ballooned US$ 564 million to US$ 1,704 million, for the ten months ended Oct., after high global oil prices added a further US$ 274 mn to its oil import bill.

Petroleum accounts for some 14 percent of the total import bill.

The credit line was open for Sri Lanka to import refined fuel products from any Indian supplier over six month, at an interest rate of London Inter-bank Offered Rate (LIBRO) plus