Sri Lankan finance minister to Indian counterpart to discuss $1 billion loan

India has already given the island nation a loan of $500 million for fuel purchase

By ANI

Published: Thu 17 Mar 2022, 10:09 AM

Sri Lanka’s Finance Minister Basil Rajapaksha is expected to meet his Indian counterpart Nirmala Sitharaman this week to discuss $1 billion loan that the Indian government agreed to provide and will also share the road map on the utilisation of funds.

India has already given a loan of $500 million for fuel purchase and $400 million currency swap under the South Asian Association for Regional Cooperation (SAARC) facility, Policy Research Group reported.

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Earlier, the Sri Lankan Finance Minister met Prime Minister Narendra Modi and Foreign Minister S Jaishankar on Wednesday and thanked PM Modi for the support extended by India to the Sri Lankan economy.

India has stepped up and pledged a whopping $2.415 billion to the island nation to help overcome dire financial constraints caused by external debt payments and a lack of US dollars in the country for business.

Sri Lanka is moving away from China while getting close to India over the failure of Colombo to pay back Chinese loans worth $4.5 billion, amidst fears of a “debt trap”.

Sri Lankan foreign minister has been asking from China and different countries to help them in their financial crisis.

Sri Lanka also offered that whosoever country will help, Sri Lanka will collaborate on supplying essential commodities and avail the economic opportunities to them on their island, think tank reported.

Sri Lanka’s credit rating has been downgraded by Fitch Ratings and Moody’s Investors Service due to delays in obtaining new funds, which are necessary to satisfy loan commitments. The country is on the verge of defaulting.

Saudi Arabian foreign minister, who recently visited Colombo, was requested to invest in the Port City project and the Hambantota Port project. Likewise, Oman was asked to assist in their fuel prices.

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Sri Lanka’s financial crisis began with the Easter Sunday attacks in 2019 and the situation deteriorated when the tourism rate fell and the government granted 25 per cent tax breaks to investors.

In January this year, Jaishankar held a virtual meeting with the Finance Minister of Sri Lanka Basil Rajapaksa and conveyed that India has always stood with Sri Lanka, and will continue to support Sri Lanka in all possible ways for overcoming the economic and other challenges posed by the Covid-19 pandemic.