‘Sri Lanka to seek fresh $1 billion credit from India to buy essential items’

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COLOMBO: The official media in this city claimed on Monday that Sri Lanka would ask India for a fresh temporary credit facility of $1 billion so that it could buy necessities like food and medicine.
This week, Sri Lanka got the first installment of a $ 3 billion bailout programme from the International Monetary Fund (IMF) to help it out of its economic crisis and spur financial assistance from other development partners.
In order to get the new temporary $1 billion facility for the “buying of necessary foodstuff, medications, and other products for the country,” Sri Lankan finance ministry officials met with their Indian counterparts, according to the state-run Daily News newspaper.
In the meantime, Dr. Indrajith Coomaraswamy, a former governor of the Central Bank, remarked during a conference hosted by the Central Bank’s Centre for Banking Research that “…the negotiations are also underway to achieve an Indian rupee swap from RBI.” It’s still unclear how much it will be; it might be as much as $1 billion. We’re still figuring that out.”

“The senior economist was reported as saying in the Daily Mirror newspaper on Saturday that this is anticipated to facilitate trade between Sri Lanka and India.
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’re aiming for a five-year settlement on that money. The negotiations are still in their early stages, he noted, adding that it was unlikely that the island country would be granted a lengthy extension for the $400 million multi-currency exchange facility, which has already been 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 $121 million from earlier facilities provided by India.
Due to years of poor management and the spreading pandemic, Sri Lanka is currently experiencing a devastating economic and humanitarian disaster.

According to the Indian High Commission in this country, India has provided Sri Lanka with lines of credit totaling more than $4 billion for a variety of projects, including the provision of basic necessities, petroleum, fertilisers, the construction of railroads, infrastructure, the development of the defence industry, and renewable energy.

Midway through last year, as the state ran out of foreign currency to buy gasoline, the Indian Oil Company’s local operation continued to keep fuel supplies flowing despite miles-long lines growing at retail fuel stations.

This Monday, the IMF Executive Board agreed a 48-month extended arrangement with an SDR 2.286 billion (about $3 billion) amount under its Extended Fund Facility (EFF).

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 financing guarantees.

The IMF negotiations were led by President Ranil Wickremesinghe, who specifically praised Nirmala Sitharaman, the Indian finance minister, for her assistance to his government.

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.