Sri Lanka Seeks $1 Billion in Credit from India For Essential Items

Sri Lanka Seeks $1 Billion in Credit from India For Essential Items

Sri Lanka plans to seek a fresh $1 billion temporary credit facility from India to buy essential items such as food and medicine, said official media on March 27. Its ministry officials met with Indian counterparts to secure the facility, said the state-run Daily News newspaper in a report.

The island country had in March received the first tranche of the $3 billion International Monetary Fund (IMF) bailout plan to help it overcome its economic crisis and catalyse financial assistance from other development partners.

Speaking at a discussion hosted by the Central Bank’s Centre for Banking Studies, Sri Lanka’s Former Central Bank Governor Indrajith Coomaraswamy said, “Negotiations are also underway to secure an Indian rupee swap from the RBI. The sum is still unknown; it could be as much as USD 1 billion. That is still under consideration.” The senior economist added, “This is expected to facilitate trade between Sri Lanka and India.”

According to Indrajith Coomaraswamy, the Sri Lankan government has also begun discussions with Indian authorities to extend the repayment of the USD 1 billion credit line obtained last year and debt under the Asian Clearing Union by five years.

Ranjith Siyambalapitiya, state minister of finance, also announced last week that Sri Lanka had settled a loan instalment of USD 121 million from prior facilities provided by India, using the first tranche of the IMF bailout package.