India has increased its current credit to Sri Lanka by a 200 million so that Srilanka could buy fuelÂ
Debt-ridden Srilanka received around 3 billion in loans from India, this year. This loan was given through credit seals and credit lines at the beginning of the year. Srilanka is trying to manage its worst economic crisis since its independence. On Monday, India increased its current loan amount to Sri Lanka by 200 million so that the island nation could restock the emergency fuel it needs.Â
The ongoing crisis has meant that Srilanka does not have enough forex reserves to import its basic needs like goods, fuel and medicines. The policy reforms brought about in the country meant the farmers had to resort to organic farming and didn’t have access to fertilizers. This sudden change has reduced the output of the agrarian sector creating food shortages. In addition, the covid 19 related lockdowns meant that Sri Lanka’s tourism industry, one of the biggest industries in the country, couldn’t function for two years. This too led to losses in revenue for Srilanka.Â
Indian high commission released a statement saying “The $1 billion credit facility for the purchase of food, medicines and other essential commodities is already operational. Additional consignments of rice, medicines and industrial raw materials and other essentials are envisaged under the credit line. A separate line of Credit of $500 million for the purchase of petroleum products, such as diesel, petrol and aviation fuel has paved the way for the delivery of nine consignments of different types of fuel.”Â
India has also supplied SriLanka with 16,000 metric Tonnes of rice. In April ahead of the Sinhala new year, India had sent an additional supply of rice as a sign of goodwill gesture. India had also granted around 500 million dollars to buy fuel in February.Â
The SriLankan government has announced that it will default payments on 35.5 billion dollars in foreign debt temporarily. The government has also asked for International Monetary Fund (IMF) for an emergency bailout.Â
Published By – Chirag Agrawal
Edited By – Architha Menon M
