Media reports stated that on Monday that Sri Lanka would ask India for a fresh temporary credit facility of USD 1 billion so that it could buy necessities like food and medicine.
Last week, Sri Lanka got the first installment of the USD 333 million International Monetary Fund (IMF) bailout program, which aims to help the country get out of its economic crisis and spur financial assistance from other development partners.
The Sri Lankan finance ministry officials channelised official talks with the Indian counterparts to fetch the fresh temporary USD 1 billion aid for the “purchase of essential foodstuff, medicines and other goods for the country,” the state-run Daily News newspaper mentioned in a report.
Henceforth, the erstwhile Central Bank Governor Dr Indrajith Coomaraswamy, in conversation at the Centre for Banking Studies of the Central Bank, averred, “… the negotiations are also underway to secure an Indian rupee swap from RBI. The amount is still uncertain; it could be up to the equivalent of USD 1 billion. That is still being worked out.”
“This is expected to facilitate Sri Lanka-India trade,” the senior economist averred in conversation with Daily Mirror newspaper on Saturday.
Coomaraswamy noted that Sri Lanka’s government had started discussions with Indian authorities to extend the payback period for debt incurred through the Asian Clearing Union and a USD 1 billion credit line by five years.
“… we are trying to settle that money over a five-year period. It is still at early levels of negotiations,” he said, mentioning that the island nation is not likely to get a lengthy extension for the USD 400 million multi-currency exchange aid which was earlier already extended.
Ranjith Siyambalapitiya, the state minister of finance, announced last week that Sri Lanka had used the first tranche of the IMF bailout package to pay off a loan installment of USD 121 million from earlier facilities provided by India.
According to the Indian High Commission in this country, India has provided Sri Lanka with lines of credit totaling more than USD 4 billion for a variety of projects, including the delivery of necessities, the production of fertiliser and petroleum, the construction of railways and other infrastructure, the defence industry, and the use of renewable energy.
Mid-last year, as the state ran out of foreign currency to buy fuel, the local operation of the Indian Oil Company kept fuel supplies continuing despite miles-long lines building at retail fuel stations.
A 48-month extension of the IMF’s Extended Fund Facility (EFF) with an SDR 2.286 billion infusion was authorised by the IMF Executive Board last week. (about USD 3 billion).
The seventeenth IMF bailout in Sri Lanka’s history was granted after protracted negotiations that were stalled by Colombo’s unmanageable debt.
In the negotiations for the debt restructuring, India was the first bilateral lender to provide finance guarantees.
In keeping with its “Neighborhood First” policy and in the spirit of friendship and cooperation with Colombo, India provided multifaceted aid to Sri Lanka at the height of its economic and humanitarian crises.
