Crisis-hit Sri Lanka seeks additional $1 billion credit line from India

India has received a new request from Sri Lanka for another concessional loan even as it recently extended two different lines of credit worth $1.5 billion to help the neighboring island nation weather its worst economic crisis for decades.

Colombo has asked New Delhi to provide another $1.5 billion line of credit to help it import basic necessities as the small nation of 2.2 million faces a severe crisis economy, which has now brought it to the brink of bankruptcy.

Sri Lanka has already requested a $1 billion loan and $1.5 billion line of credit from China, which is trying to expand its geopolitical influence in the Indian Ocean and building strategic assets in the region. to encircle India.

Learn more | Jaishankar meets Sri Lanka’s finance minister; discusses economic situation, support from India

External Affairs Minister S Jaishankar visited Sri Lankan President Gotabaya Rajapaksa in Colombo on Monday and assured him of New Delhi’s “continued cooperation and understanding”.

Jaishankar visited a refueling station run by Lanka IOC – a subsidiary of the Indian Oil Corporation – in downtown Colombo. He inquired about the implementation of the $500 million line of credit that New Delhi extended to Sri Lanka a few weeks ago to help it import fuel from India, as the depletion foreign exchange reserves has led to an acute energy crisis in the island nation, leading to long queues. in front of all petrol stations. “The US$500 million Indian LoC (Line of Credit) helps Sri Lankans in their daily lives,” the External Affairs Minister said on Twitter.

On March 17, India also extended another $1 billion line of credit to Sri Lanka to help the cash-strapped island nation purchase food, medicine and other essentials.

After a two-day visit to Addu City in the Maldives, Jaishankar arrived in Colombo on Monday – mainly to attend a BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) conclave and to lay the groundwork for the seven-nation bloc. . summit, which the Sri Lankan president will host on March 30 and in which Prime Minister Narendra Modi will participate virtually.

Read | Economic crisis in Sri Lanka: the exit will not be painless

Jaishankar had meetings with the Sri Lankan President’s brothers – Prime Minister Mahinda Rajapaksa and Finance Minister Basil Rajapaksa. He was joined by Mahinda Rajapaksa’s son and the island nation’s Minister of Sports and Youth, Namal Rajapaksa, the GenNext of the country’s ruling clan, on a visit to an HCL Technologies facility in the capital. from Sri Lanka. He also had a meeting with his Sri Lankan counterpart and Foreign Minister GL Peiris.

A source in New Delhi said the Indian government would consider the new request received from Colombo.

Over the past few months, India has not only extended a $400 million currency exchange in Sri Lanka under the SAARC, but also postponed the Asian Clearing Union (ACU) settlement of the island nation of $515.2 million through May 6.

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