India extends billion-dollar credit line to Sri Lanka

India extends billion-dollar credit line to Sri Lanka

Sri Lanka received a $1 billion credit facility from India on Thursday to help it get through its worst foreign exchange crisis and purchase food, medicines, and other necessities. The State Bank of India and the Government of Sri Lanka signed an agreement to this effect on Thursday, during the country's Finance Minister Basil Rajapaksa's visit to New Delhi. Mr. Rajapaksa met with Finance Minister Nirmala Sitharaman and External Affairs Minister S Jaishankar after meeting with Prime Minister Narendra Modi on Wednesday morning to discuss Indian assistance in the face of Sri Lanka's unprecedented economic crisis. The Ministers discussed issues of mutual interest and economic cooperation. according to an official statement from the Finance Ministry.

Sri Lanka has received $1.4 billion in aid from India, including a $400 million RBI currency swap, the deferral of a $0.5 billion loan, and a half-billion in a line of credit to help the country meet its essential fuel import needs. Sri Lanka is in the midst of its worst financial crisis, having declared a state of emergency in August of last year in response to a crippling foreign exchange crisis. The country is still dealing with significant fuel and gas shortages, as well as high inflation in essential goods and food. The political opposition and citizens' groups have staged a series of protests, blaming the Rajapaksa government for the crisis. President Gotabaya Rajapaksa promised to work with the International Monetary Fund to resolve the fiscal crisis in a televised address to the nation on Wednesday. He attributed the problem to a foreign exchange shortage caused by a $10 billion trade deficit.

CONCLUSION

The State Bank of India and the Government of Sri Lanka signed an agreement to this effect on Thursday. during the country's Finance Minister Basil Rajapaksa's visit to New Delhi. The Ministers discussed issues of mutual interest and economic cooperation, according to an official statement from the Finance Ministry. Sri Lanka is in the midst of its worst financial crisis, having declared a state of emergency in August of last year in response to a crippling foreign exchange crisis.