Sri Lanka seeks another $1bn from India: Report | Business and Economy News

New credit score line will likely be used to pay for imports of important objects similar to rice, wheat flour, pulses, sugar & drugs.

Sri Lanka has sought a further credit score line of $1bn from India to import necessities amid its worst financial disaster in a long time, Reuters has reported, citing two sources, because the Indian international minister started talks with the federal government of its neighbour.

The island nation is struggling to pay for important imports of meals and gas after a 70 % drop in international change reserves since January 2020 led to a forex devaluation and efforts to hunt assist from world lenders.

New Delhi has indicated it could meet the request for the brand new line, for use for importing important objects similar to rice, wheat flour, pulses, sugar and drugs, stated one of many sources briefed on the matter.

“Sri Lanka has requested a further $1 billion credit score line from India for imports of necessities,” the second supply stated. “This will likely be on prime of the $1-billion credit score line already pledged by India.”

Each sources declined to be recognized because the discussions had been confidential.

The finance and international ministries of Sri Lanka, in addition to India’s international ministry, didn’t instantly reply to requests for remark.

Sri Lankan finance minister Basil Rajapaksa signed the sooner credit score line of $1bn this month within the Indian capital of New Delhi to assist pay for essential imports.

Indian international minister Subrahmanyam Jaishankar met Rajapaksa on Monday after arriving within the Sri Lankan capital of Colombo late yesterday.

“Mentioned the financial scenario and India’s supportive response,” Jaishankar stated on Twitter, with {a photograph} of the 2 officers collectively.

Along with the credit score traces, India prolonged a $400m forex swap and a $500m credit score line for gas purchases to Sri Lanka earlier this yr.

Sri Lanka’s imports stalled, inflicting shortages of many important objects, after international forex reserves fell to $2.31bn by February.

The nation, simply off India’s southern tip, has to repay debt of about $4bn in the remainder of this yr, together with a $1bn worldwide sovereign bond that matures in July.

Rajapaksa is about to fly to Washington, DC subsequent month to start out talks with the Worldwide Financial Fund (IMF) for a rescue plan.

“India can be very supportive of Sri Lanka’s resolution to hunt an IMF programme and has given their fullest help,” one of many sources added.

Leave a Reply