India on Tuesday extended its underutilized $1 billion credit line to Sri Lanka for another year
Post Date – Tuesday, 5/30/23 at 10:00pm
India on Tuesday extended its underutilized $1 billion credit line to Sri Lanka for another year
Colombo: India on Tuesday extended its underutilized $1 billion credit line to Sri Lanka for a year to help the island nation hit hard by an unprecedented economic crisis to procure much-needed food, medicine and other essentials.
In March last year, the State Bank of India (SBI) signed an agreement with the Sri Lankan government for a US$1 billion credit line. India extended credit lines to Sri Lanka at the height of the country’s economic crisis.
“India reaffirms its commitment to the people of Sri Lanka. Amended agreement signed today in the presence of Hon.Minister @ShehanSema will enable Sri Lanka to use $1 billion Indian line of credit to procure medicines, food and other essentials within a year,” India’s ambassador Sri Lanka High Commission tweet.
“Beyond the original deadline, which is until March 2024. India has extended the facility through @TheOfficialSBI at the specific request of GOSL and formed part of the $4 billion multi-pronged assistance India provided last year,” it said.
Since last year, the line of credit has been used for emergency purchases of fuel, medicines, food and industrial raw materials in line with Sri Lanka’s requirements and priorities.
“An agreement to extend the $1 billion basic materials import aid scheme for another year was signed today. Officials from State Bank of India attended the event virtually,” tweeted Shehan Semasinghe, state secretary for finance.
“The initial agreement was signed in March 2022, and out of the $1 billion allocated, $576.75 million was imported. The agreement was extended to cover the remaining $423.25 million. We will prioritize the import of essential medicines until March 2024,” he said. explain.
Last year, India provided about $4 billion in multi-pronged assistance to Sri Lanka through multiple lines of credit and monetary support under India’s “Neighborhood First” policy.
The Indian High Commission said India’s continued support for Sri Lanka was a testament to “our continued commitment to stand with the Sri Lankan government and people for early economic stabilization and recovery”.
Sri Lanka will encounter an unprecedented financial crisis in 2022, the worst since independence from the United Kingdom in 1948. Due to the serious shortage of foreign exchange reserves, it has triggered domestic political turmoil and led to the resignation of the full-power Rajapaksa family.
Meanwhile, Sri Lanka announced on Tuesday that it has started preliminary work to revive the abandoned Japan-funded light rail transit (LRT) project.
The Cabinet approved President Ranil Wickremesinghe’s proposal to revive the project.
Wickremesinghe visited Japan last week.
“President Wickremesinghe’s trip to Japan after creating background allayed some of our concerns as several agreements and proposals came to an abrupt halt,” Cabinet spokesman and minister Bandura Gunawadna told reporters.
Former president Rajapaksa unilaterally canceled the $1.5 billion light rail project and Colombo Port East Container Terminal (ECT) project in 2021. Japan has agreed to finance the light rail project and has also shown interest in the ECT project, along with India and Sri Lanka.
