Sri Lanka seeks more Chinese cash as crisis claims fourth life

Beijing is considering a request for another $2.5 billion loan package from crisis-hit Sri Lanka, China's ambassador said Monday, as a man was stabbed to death while queuing at a fuel station.

The island nation of 22 million people is in the throes of its worst economic meltdown since independence in 1948, with widespread shortages of essential goods and worries that it may default on its $51 billion in foreign debt.

Qi Zhenhong announced that loan discussions were at an advanced stage, but stopped short of saying whether Beijing would agree to a separate request from Colombo to restructure its debt.

Also Read | In Sri Lanka, as economic crisis worsens, two men die waiting in queue for fuel

"China understands the urgent need of Sri Lanka and its people," Qi told reporters in Colombo. "Relevant authorities in China are promptly studying the request."

He said Colombo had asked for a $1 billion loan and another $1.5 billion credit line to import goods from China because the country has virtually run out of dollars to import goods.

Officials said a motorcyclist was stabbed to death by another driver following a dispute over his place in a long queue for fuel at Nittambuwa, just outside Colombo, on Sunday night.

A 70-year-old man collapsed from exhaustion and died in the nearby town of Mirigama the same evening after spending hours waiting for petrol. Two more elderly people have died under similar circumstances since Saturday.

Motorists are forced to wait hours outside gas stations to fill up and the government has imposed rolling blackouts as power utilities are unable to pay for foreign oil.

Also Read | Sri Lanka cancels school exams over paper shortage

Oil and liquified petroleum gas shipments have been idling outside Colombo's main port, with importers unable to scrape together enough foreign currency to pay for them.

The Covid-19 pandemic throttled Sri Lanka's tourism sector -- a key foreign exchange earner -- and foreign worker remittances have also declined.

The Chinese ambassador said Beijing had already extended $2.8 billion in long-term loans and currency swaps since the pandemic.

Sri Lanka's Central Bank Governor Ajith Cabraal tod reporters recently that Colombo was seeking more loans from China to repay its loans to the country -- estimated at over 10 per cent of Sri Lanka's external debt.

India last week said it had agreed to give a $1 billion credit line to buy food and medicines on top of a $500 million facility granted earlier.

Sri Lankan authorities announced last week that the country will seek an IMF bailout.

Shortages have wrought havoc on almost every aspect of daily life, with authorities even postponing term tests for nearly three million students because of a lack of paper and ink.

Check out the latest videos from DH: