Amid an acute economic crisis, Sri Lankan finance minister Basil Rajapaksa will visit India. New Delhi is likely to announce another $1 billion line of credit to Colombo, which sought a $1.5 billion credit line from India.

Last month, New Delhi provided $500 to the cash strapped island nation. This will help Colombo in somewhat tiding over its immediate financial crunch.

The acute financial crisis has led to fears that the all-important tourism sector could get hit. Sri Lanka’s economy has taken a huge hit due to lockdowns and travel restrictions following the outbreak of the Covid 19 pandemic. In a bid to revive the sagging economy, Colombo opened up its tourism sector to foreign travellers. But with the deteriorating situation, there are apprehensions that tourist inflow could once again slow down.

The United Kingdom and Canada have already issued advisories to their citizens warning them of the current economic situation.

Also read: Import restrictions hit Sri Lanka's retail sector, fear of job losses arises

“There may be long queues at grocery stores, gas stations, and pharmacies. Local authorities may impose the rationing of electricity, resulting in power outages,” the advisory issued by the UK said.

The ongoing Russia-Ukraine crisis impacting fuel and commodity prices has further hit the island nation’s economy, prompting the Sri Lankan government to impose import restrictions on 367 items. Aimed at saving the dwindling foreign exchange reserves, even items such as milk products, fruits and fish have been categorised as “non-essential”.

Sri Lanka's total debt burden for this year is $6.9 billion. The dwindling economic situation in Sri Lanka is gradually pushing the island nation on the brink of bankruptcy.

“The government’s next big challenge is a $1bn bond repayment due in July. If it fails to pay, it would join countries including Suriname, Belize, Zambia, and Ecuador in defaulting on its debt following the pandemic,” Financial Times in a report said.

So far, Colombo has been reluctant in taking assistance from the International Monetary Fund, though it sought the advice of the multilateral agency on the current situation.