Ajit Karn
Colombo: Sri Lanka will seek a new temporary credit facility of USD 1 billion from India in order to purchase essential commodities such as food and medication, according to the official media on Monday.
Last week, Sri Lanka received 333 million dollars, the first installment of a 3 billion dollar International Monetary Fund (IMF) assistance programme, in order to surmount its economic crisis and stimulate financial support from other development partners.
The state-run Daily News newspaper reported that Sri Lankan finance ministry officials met with their Indian counterparts to obtain a new temporary USD 1 billion facility for the purchase of essential foodstuffs, medications, and other products for the country.
Former Central Bank Governor Dr. Indrajith Coomaraswamy, speaking at a discussion hosted by the Central Bank’s Centre for Banking Studies, stated, “The negotiations to secure an Indian rupee swap from RBI are also underway. The quantity is still unknown; it could be as much as one billion dollars. That is still under consideration.”
The senior economist was quoted by the Daily Mirror newspaper on Saturday as saying, “This is expected to facilitate Sri Lanka-India trade.”
Indrajith Coomaraswamy added that the Sri Lankan government began discussions with Indian authorities to extend by five years the repayment of the USD 1 billion credit line received last year and debt owed to the Asian Clearing Union, according to the report.
“We are attempting to resolve this money over a period of five years. It is still in the early stages of negotiations,” he said, adding that it was unlikely that the island nation would be granted such a long extension for the USD 400 million multi-currency exchange facility, which has already been extended.
Ranjith Siyambalapitiya, state minister of finance, announced last week that Sri Lanka repaid a loan instalment of USD 121 million from India using the first tranche of the IMF bailout package.
Sri Lanka has been hit by a calamitous economic and humanitarian crisis brought on by years of mismanagement and a rampaging pandemic.
According to the Indian High Commission in Colombo, India has extended credit lines totaling over USD 4 billion to Sri Lanka in diverse sectors, including the provision of essential commodities, petroleum, fertilisers, development of railways, infrastructure, the defense sector, and renewable energy.
As the state ran out of foreign currency to import petroleum, The Indian Oil Company’s local operation kept fuel supplies flowing despite miles-long lines forming at retail gas stations during the middle of last year.
Last week, the IMF’s Executive Board authorized a 48-month extension to its Extended Fund Facility (EFF) in the amount of 2,286 billion SDR. (about USD 3 billion).
The seventeenth IMF rescue in Sri Lanka’s history was approved after protracted discussions regarding Colombo’s unsustainable debt.
In the debt restructuring negotiations, India was the first bilateral lender to provide financing guarantees.
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President Ranil Wickremesinghe, who led the negotiations with the International Monetary Fund, highlighted Nirmala Sitharaman’s contributions to his government.
In accordance with its “Neighborhood First” policy and as an ardent ally and partner of Colombo, India has provided Sri Lanka with multifaceted aid during the height of its economic and humanitarian crisis.
