India Extends $1-Bn Credit Facility for Sri Lanka by One Year

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India on Tuesday extended by a year a $1-billion credit facility provided to the Sri Lankan government to cope with an economic crisis, with officials saying this was done in response to a request from Colombo.

An amendment agreement to extend the credit facility, provided in March 2022 for procuring essential items, was signed in Colombo in the presence of Sri Lanka’s minister of state for finance, Shehan Semasinghe.

India provided economic aid worth almost $4 billion, including lines of credit to purchase food, fuel and medicines, currency support and deferred payment of loans, to Sri Lanka last year so that the island country could cope with its worst economic crisis in decades.

“India reaffirms its commitment to the people of #SriLanka. The Amendment Agreement signed in presence of Hon. Minister @ShehanSema today will enable [Sri Lanka] to use the USD1 billion #Indian credit facility for the procurement of medicine, food, and other essentials for one more year beyond the original duration, that is, till March 2024,” the Indian high commission in Sri Lanka said in a tweet.

The credit facility was extended through the State Bank of India (SBI) in response to a specific request from the Sri Lankan government, and forms part of the multi-pronged assistance of $4 billion provided by India last year.

Senior officials from Sri Lanka’s finance ministry and the Indian high commission were present at the event where the amended agreement was signed, while SBI officials joined virtually.

Since last year, this credit facility has been used for urgent procurement of fuel, medicines, food items and industrial raw materials in line with the requirements and priorities of the Sri Lankan government.

The Indian mission in Colombo said the assistance was in line with New Delhi’s “Neighbourhood First” policy. “India’s continued support to Sri Lanka is a testament to our abiding commitment to stand with the government and the people of Sri Lanka towards early economic stabilisation and recovery,” it said.

Source: Hindustan Times