Sri Lanka raises 100 million dollars to meet oil import bill

Sri Lanka has raised a 100-million-dollar loan from foreign banks to help pay hefty oil import bills that threaten to blow a hole in the country’s balance of payments, the Central Bank said Wednesday. Sri Lanka has raised a 100-million-dollar loan from foreign banks to help pay hefty oil import bills that threaten to blow a hole in the country’s balance of payments, the Central Bank said Wednesday. Petroleum imports have risen 45 percent to almost 1.4 billion dollars for the 10 months to October due to high oil prices, according to the central bank.

“The loan proceeds will also help to further stabilise domestic interest rates since these funds are raised from the international market,” the central bank said in a statement on the three-year syndicated loan arranged by Citigroup.

It comes after Sri Lanka got its maiden sovereign rating this month, a first step in tapping the international bond market for loans.

Two international rating agencies — Fitch Ratings and Standard and Poor’s — assigned speculative ratings to the country. Fitch gave the nation a BB- rating while Standard and Poor’s awarded an even lower B+ sovereign rating.

Despite the “junk bond” status, President Mahinda Rajapakse, elected last month, said the ratings marked a “respectable beginning (in) the universe of rated sovereigns.”

The island nation is anxious for cash to meet its rising oil import bill and tsunami-related reconstruction costs that have strained finances.

Both rating agencies said the country’s credit worthiness was affected by the absence of a permanent peace accord with Tamil rebels, who control much of the island’s north and east.

An upsurge of violence this month threatens to push the country back to war and has severely strained a ceasefire in place since February 2002.

The truce had helped the economy expand every subsequent quarter, but analysts say an outbreak of fresh hostilities could reverse the trend. – AFP