India on Thursday extended a line of credit worth $1 billion (over Rs 7,600 crore) to Sri Lanka.
The short-term concessional loan will be provided by the State Bank of India. The aid will enable Sri Lanka to import food, essential commodities and medicines from India, The Indian Express reported.
In a tweet on Thursday, External Affairs Minister S Jaishankar said that the credit line is a key element of India’s support package to the island nation. Sri Lanka is in the midst of a foreign exchange crisis.
The agreement was signed between Sri Lankan Finance Minister Basil Rajapaksa and his Indian counterpart Nirmala Sitharaman. Jaishankar was also present at the occasion.
On Wednesday, Basil Rajapaksa had also met Prime Minister Narendra Modi to discuss India’s assistance.
In a statement on Thursday, the High Commission of Sri Lanka in India said: “During the bilateral talks, the two sides agreed to set up a framework for short, medium and long-term economic cooperation between the two countries aimed at addressing Sri Lanka’s present economic challenges”.
Sri Lanka is facing problems in paying for imports due to its foreign reserves being at an all-time low. The nation had declared an emergency in August last year, The Hindu reported. It is facing an acute shortage of fuel and gas along with essential foods and food.
According to Al Jazeera, Sri Lanka’s financial crisis is partially driven by outstanding foreign debts of $7 billion (over Rs 53,000 crore).
In January, India had offered assistance of $1.4 billion to Sri Lanka. However, the total aid will only partially help mitigate Sri Lanka’s ongoing economic meltdown – worst in decades.
On Tuesday, thousands of people gathered outside President Gotabaya Rajapaksa’s office on Galle Road in Colombo, shouting anti-government protests, Al Jazeera reported. Opposition leader Sajith Premadasa blamed the government for the economic woes and called upon people to dislodge it, Al Jazeera reported.