India is planning to provide further financial assistance to neighbouring country Sri Lanka after providing aid worth $3.8 billion since January this year, reported Indian Express on Tuesday.
The purpose of this is to grant Sri Lanka’s requests for assistance in resolving their foreign exchange issue. Gopal Baglay, India’s high commissioner in Sri Lanka, was quoted by Reuters as stating, “We would like to continue bringing more investment into Sri Lanka because it would assist establish medium- and long-term capacity to respond within the Sri Lankan economy.” India has been the island nation’s biggest lender during the past four months, the country’s finance ministry claimed, according to news agency ANI. Between January 1 and April 30, 2022, India disbursed 376.9 USD million in foreign loans and grants, compared to China’s 67.9 USD million.
India has arrived in Sri Lanka to help, as it is now experiencing a serious economic crisis. According to a report from the nation’s finance ministry, “In February 2022, India and Sri Lanka inked a deal for a USD 500 million supply of petroleum products from the Indian Oil Company through a credit line, which was enlarged by USD 200 million in April.”
“Despite the fact that these credit lines have opened up crucial supply routes, Ceylon Petroleum Corporation (CPC) still has a hard time getting enough fuel, in large part because of restrictions on the amount of foreign currency that can be obtained and issues with external financing”, according to a report cited by ANI.
By signing into 4 agreements with international development partners and lending agencies between January 1 and April 30, 2022, the Sri Lankan government has made preparations to mobilize USD 1,550.5 million in external finance to assist the public investment program. One arrangement involved the EXIM Bank and State Bank of India extending USD 1,500 million in export credit facilities for the import of necessities.
The entire undisbursed balance of foreign finance from already committed loans that is to be used in the following 3-5 years was USD 8,054.3 million as of April 30, 2022. The Asian Development Bank is to get the largest portion of the remaining funds, followed by the World Bank, China, Japan, China, and India, in that order. With USD 359.6 million disbursed in the first four months, ADB was the second-largest lender, trailing only the World Bank by USD 67.3 million.