Crisis-hit Sri Lanka seeks further $1 bn credit line from India

Sri Lankan Finance Minister Basil Rajapaksa signed the earlier credit line of $1 billion this month in the Indian capital of New Delhi to help pay for critical imports

India has received a new request from Sri Lanka for another concessional loan even as it recently extended two different credit lines worth $1.5 billion to help the neighbouring island nation through its worst economic crisis in decades.

Colombo has requested New Delhi to provide another credit line of $1.5 billion to help it import basic necessities, as the tiny nation of 2.2 crore people has been facing a grave economic crisis, which has now taken it on the verge of bankruptcy.

Sri Lanka has already asked for a $1 billion loan and a $1.5 billion credit line from China, which has been trying to expand its geopolitical influence in the Indian Ocean and has been building strategic assets in the region to encircle India.

Read more | Jaishankar meets Sri Lankan Finance Minister; discusses economic situation, India’s support

External Affairs Minister S Jaishankar called on Sri Lankan President Gotabaya Rajapaksa in Colombo on Monday and assured him of New Delhi's “continued cooperation and understanding”.

Jaishankar visited a fuel refilling station run by the Lanka IOC – a subsidiary of the Indian Oil Corporation – in downtown Colombo. He enquired about implementation of the $500 million credit line New Delhi had extended to Sri Lanka a few weeks ago to help it import fuel from India, as depletion of foreign currency reserve led to an acute energy crisis in the island nation, resulting in long queues in front of all refilling stations. “Indian LoC (Line of Credit) of US $500 million is helping Sri Lankan people in their everyday life,” the External Affairs Minister posted on Twitter.

India also on March 17 extended another Line of Credit of $1 billion to Sri Lanka to help the cash-strapped island nation to buy food, medicines and other essentials.

After a two-day visit to Addu City in Maldives, Jaishankar arrived in Colombo on Monday – primarily to attend a BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) conclave and to lay the ground for the seven-nation bloc's summit, which Sri Lankan President will host on March 30 and Prime Minister Narendra Modi will virtually take part in.

Read | Sri Lanka economic crisis: The way out won't be painless

Jaishankar had meetings with Sri Lankan President's brothers – Prime Minister Mahinda Rajapaksa and Finance Minister Basil Rajapaksa. He was joined by Mahinda Rajapaksa's son and the island nation's Minister for Sports and Youth Affairs, Namal Rajapaksa, the GenNext of the ruling clan of the country, during a tour to a facility of the HCL Technologies in the capital of Sri Lanka. He also had a meeting with his Sri Lankan counterpart and Foreign Minister G L Peiris.

A source in New Delhi said that the Government of India would consider the new request received from Colombo.

India has over the past few months not only extended a $400 million currency swap to Sri Lanka under the SAARC Framework, but also deferred the island nation's Asian Clearing Union (A.C.U.) settlement of $515.2 million till May 6.

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