India has emerged as the top lender to Sri Lanka, extending $376.9 million worth credit compared to $67.9 million by China in the first four months of this year to rescue the island nation from the unprecedented political crisis and economic turmoil.
Loans from India with $376.9 million were the highest foreign financing disbursements during the period of January 1 to April 30, 2022, according to Sri Lanka's Finance Ministry.
After India, Asian Development Bank (ADB) came in as the second largest lender with $359.6 million being disbursed in the first four months, followed by the World Bank with $67.3 million.
The total foreign financing disbursements made during the period amounted to $968.8 million, of which, $968.1 million was disbursed as loans while $0.7 million was disbursed by way of grants.
The majority of the disbursements were from the loan agreements signed with India, which is almost 39 per cent, followed by Asian Development Bank (37 per cent) and China (7 per cent), according to a report from the ministry.
The government had made arrangements to mobilise foreign financing of $1,550.5 million by entering into four agreements with foreign development partners and lending agencies from January 1 to April 30, 2022, to support the public investment programme.
“This consists of $1,500.0 million of Export credit Facilities extended by the EXIM bank and State bank of India for import of essential commodities.”
The performance of mobilising foreign financing during the first quarter was greatly affected by the economic crisis of Sri Lanka, the ministry report said.
India was the island nation's only source of assistance with the economic meltdown, the worst in the country’s history, which kicked in during the early part of this year.
Sri Lanka is expecting a bail out from the International Monetary Fund to secure the urgent need of $3-4 billion dollars for bridging finance.
The country needs about $5 billion in the next six months to cover basic necessities for its 22 million people, who have been struggling with long queues, worsening shortages and power cuts.
The economic crisis also sparked a political crisis in the country after a popular uprising against the government forced Rajapaksa to flee the country and resign as president. India has been the principal source of foreign assistance to Sri Lanka this year.
On Friday, the Indian High Commission here reiterated that India will continue to stand with the people of Sri Lanka as they seek to realise their aspirations for prosperity and progress through democratic means and values as well as established institutions and a constitutional framework.