India Poised To Extend $1.5 Billion Credit To Sri Lanka To Tide Over Forex Crunch

New Delhi, Jan 15: India is poised to extend US$1.5 billion credit to forex-starved Sri Lanka to import food, essential items, medicine and fuel, days after extending a $900 million assistance.
This was conveyed by Indian External Affairs Minister S Jaishankar to Sri Lankan Finance Minister Basil Rajapaksa during a virtual meeting on Saturday.
In tweets, the EAM said: “We positively noted the extension of the USD 400 million swap facility and the deferred ACU settlement of USD 515.2 million.”
“Discussed the early realisation of USD 1 billion term loan facility for .
essential commodities and of USD 500 million LoC for fuel purchase.”
He also reaffirmed that India will be a steadfast and reliable partner of Sri Lanka.
The EAM tweeted: “Assured that India will take up with other international partners initiatives to support Sri Lanka at this important juncture.
“Welcomed the progress on Trincomalee Tank Farm which will contribute to energy security.
“Considered projects and investment plans by India that would strengthen Sri Lankan economy.
“Urged early release of Indian fishermen in Sri Lankan custody as a humanitarian gesture.”
The meeting comes a week after India and Sri Lanka inked an agreement for joint development of the Trincomalee Oil Tank Farms.
A readout of the meeting said that Jaishankar conveyed that “India has always stood with Sri Lanka, and will continue to support Sri Lanka in all possible ways for overcoming the economic and other challenges posed by COVID-19 pandemic. As close friends and maritime neighbours, both India and Sri Lanka stand to gain from closer economic interlinkages.
“Both Ministers positively noted that extension of US$ 400 million to Sri Lanka under the SAARC currency swap arrangement and deferral of A.C.U. settlement of USD 515.2 million by two months, which would assist Sri Lanka.
“The two Ministers reviewed the progress in extending Indian credit facility of USD 1 billion for importing food, essential items and medicine and USD 500 mn for importing fuel from India.
“Rajapaksa recalled India’s longstanding cooperation with Sri Lanka and deeply appreciated the gestures of support.
“He welcomed Indian investments in Sri Lanka in a number of important spheres including ports, infrastructure, energy, renewable energy, power and manufacturing and assured that conducive environment will be provided to encourage such investments.
“Both Ministers noted that the recent steps taken by the Government of Sri Lanka for jointly modernizing Trincomalee Oil Tank Farms will boost confidence of investors, apart from enhancing Sri Lanka’s energy security.”
“Jaishankar brought up the issue of Indian fishermen detained in Sri Lanka. He urged the Government of Sri Lanka to ensure early release of the detained fishermen on humanitarian considerations.
“The two Ministers agreed to remain in close touch for guiding mutually beneficial bilateral economic cooperation towards long-term economic partnership for shared progress and prosperity.
“The EAM conveyed greetings to the Sri Lankan Finance Minister and the Government and the people of Sri Lanka on his own behalf and on behalf of the Government and the people of India for the year 2022 and on the occasion of the festival of Pongal celebrated both in India and Sri Lanka,” the readout said.
The virtual meeting and the extension of Indian assistance comes days after the visit of Chinese Foreign Minister Wang Yi to Colombo. Beijing is looking to strengthen its clout in Sri Lanka, through major infra projects in the island nation and is also working out a financial package for Colombo.