Sri Lanka rejects $ 3.6 b Omani credit line due to conditions

The Government yesterday (25) said that a $ 3.6 billion credit line, which Sri Lanka hoped to receive from the Oman Government last year, was not accepted due to problems which had arisen with regard to the conditions of the loan agreement. 

“When we were having lengthy discussions about the conditions of the loan agreement, we realised that there was a problem with the conditions and concluded that it should not be in force at the moment. Although we realised then that it could be a good project, it is now inactive,” Cabinet Spokesman Dullas Alahapperuma said, whilst addressing the cabinet decisions press briefing yesterday. 

The Government of Sri Lanka was expecting to secure a $ 3.6 billion credit line from the Government of Oman, with a five-year grace period and a 20-year repayment period, to finance Sri Lanka’s oil procurements within the month of November, last year. The proposal received Cabinet of Ministers’ approval in October 2021. 

The Morning reported at the time that if the Oman loan facility could be secured, discussions with the UAE and India on securing a credit line for oil would not be a necessity. 

Government officials told The Morning yesterday that the proposal was “unacceptable”, which had in turn led to the Government not taking the loan facility. 

Moreover, the Government also said last year that it has rejected a request by Oman for the latter to be granted an oil exploration block in the Mannar basin in exchange for the interest payments on the $ 3.6 billion loan agreement. Attempts by The Morning to contact Finance Ministry and Treasury Secretary S.R. Attygalle yesterday on specific reasons for the rejection of the loan facility proved futile.

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