India extends billion dollar credit line to Sri Lanka

Assistance comes after $ 1.4 billion support since January last 

 NEW DELHI/COLOMBO

India on Thursday extended a $1 billion credit facility to Sri Lanka to assist the island nation through its worst foreign exchange crisis and enable it to procure food, medicines and other essential items. 

An agreement to this effect was signed between the State Bank of India and the Government of Sri Lanka on Thursday, during a visit of the country’s Finance Minister Basil Rajapaksa to New Delhi. 

Mr. Rajapaksa, who met Prime Minister Narendra Modi on Wednesday morning to discuss Indian assistance amid Sri Lanka’s extraordinary economic crisis, also interacted with Finance Minister Nirmala Sitharaman and External Affairs Minister S Jaishankar on Thursday. An official statement from the Finance Ministry said issues of mutual interest and economic cooperation were discussed by the Ministers.  

“Neighborhood first. India stands with Sri Lanka. US$ 1 billion credit line signed for supply of essential commodities. Key element of the package of support extended by India,” Mr. Jaishankar tweeted. 

In 2022, so far India has extended $1.4 billion support to Sri Lanka, through a $400 million RBI currency swap, deferral of a $0.5 billion loan and another half a billion as a line of credit for the country to sustain its essential fuel imports. 

Sri Lanka is facing its worst financial crisis, and had declared an emergency in August last in the face of a crippling foreign exchange crunch. The nation is still facing significant fuel and gas shortages, and high inflation in essential goods as well as food items. The situation has triggered a series of protests by the political Opposition and citizens’ groups, who blame the Rajapaksa government for the crisis.