World News

India Extends $1 Billion Credit Line To Sri Lanka For Another Year Amid Economic Crisis

May 31, 2023
Bharat Times

In a move to assist Sri Lanka in overcoming its severe economic crisis, India has extended its under-utilized USD 1 billion credit line for an additional year. The credit facility will enable the island nation to procure essential items such as food, medicine, and other necessities. The agreement between the State Bank of India (SBI) and the Sri Lankan government was initially signed in March of last year, during the height of the country’s economic turmoil.

The Indian High Commission in Sri Lanka expressed its “commitment to the people” of Sri Lanka through a tweet, stating Sri Lanka will use the $1 billion Indian credit facility for the procurement of medicine, food, and other essentials.

The credit facility extension, which will last until March 2024, was granted by India in response to a specific request from the Government of Sri Lanka. It forms part of India’s comprehensive assistance package of $4 billion provided to Sri Lanka last year.

State Minister of Finance Shehan Semasinghe tweeted about the agreement, stating, “The signing of the agreement to extend the US$ 1,000 million assistance scheme for the import of essential materials for a further period of one year was done today. The officials of the State Bank of India participated in the event virtually. The initial agreement was signed in March 2022, and out of the allocated $1,000 million, materials worth $576.75 million were imported. The agreement is extended for the remaining $423.25 million. We will prioritize the import of essential medicines until March 2024.”

Extended support to Sri Lanka aligns with India’s ‘Neighbourhood First’ policy and demonstrates its unwavering commitment to stand with the government and people of Sri Lanka during this period of economic recovery.

Sri Lanka faced an unprecedented financial crisis in 2022, marking the worst economic downturn since its independence from Britain in 1948. The severe scarcity of foreign exchange reserves led to political turmoil in the country, resulting in the removal of the influential Rajapaksa family from power.