Sri Lanka state airline part repays fuel debts

July 23, 2012 (LBO) - Sri Lanka's state-run SriLankan Airlines had repaid a 100 million US dollars to settle dues to Ceylon Petroleum Corporation and is negotiating to settle an undisclosed balance amount, a media report said. "We're negotiating with the CPC on the repayment in terms of pricing and credit terms and will arrive at a settlement by mid next month, Nishantha Wickremasinghe, chairman SriLankan Airlines was quoted as saying by Sri Lanka's The Sunday Times newspaper.

SriLankan raised a 175 million dollar equivalent dual currency Islamic loan last month against some of its foreign exchange denominated receivables from a consortium of Dubai based banks.

A 40 million US dollar loan to state-run Bank of Ceylon was also settled with the loan proceeds, he was quoted as saying.

Sri Lanka ran into a balance of payments crisis in 2011 following a large spike in bank credit to manipulate energy prices.

Monetary authorities also printed money to keep rates down amid the credit spike instead of allowing rates to go up, which would have curbed demand and raised more deposits in the banking system to fund the expanded credit.

In February, fuel prices were raised, allowing non-oil imports to fall