Lanka set to finalize another line of credit for essential items with India

Sri Lanka is set to finalize another credit facility with India for food, medicine and other essentials that would help the island nation cope with the worst economic crisis in decades, it was reported on Wednesday. official sources.

Sri Lanka is currently reeling from a severe currency crisis with declining reserves. The country is also struggling with a shortage of almost all basic necessities due to lack of dollars to pay for imports.

According to the official sources here, another credit facility from India for food, medicine and other essential items is being finalized between the two governments.

On February 2, Sri Lanka officially signed an agreement with India for a $500 million line of credit, which would help finance fuel purchases at a time when the country is facing its worst financial and energy crisis. for decades.

Necessary steps to operationalize the Indian government’s $500 million line of credit for the purchase of petroleum products are underway as per the agreement between the Indian government and the Sri Lankan government, the sources said on Wednesday.

Power generation in Sri Lanka has been hit by the currency crisis, as fuel to run thermal power plants is scarce. Electricity regulators have warned of five to six hours a day of rolling blackouts over the next few days.

In January, the Indian High Commission said External Affairs Minister S Jaishankar had agreed to offer critical support and a $500 million line of credit in a letter to his Sri Lankan counterpart GL Peiris.

The line of credit, which had been under negotiation since August 2021, would ease pressure on the country’s declining reserves which had fallen to $3.1 billion in December 2021, according to central bank estimates.

In January, India announced a $900 million loan to Sri Lanka to replenish its depleted foreign exchange reserves and to import food, amid shortages of almost all essential commodities in the country.

In January, India also granted Sri Lanka a $400 million swap deal to boost its reserves.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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