India has expanded its $ 1 billion credit line to debt-stricken Sri Lanka to help island nations try to mitigate the worst economic crisis in a few years.
According to India’s Sri Lanka High Commission, India signed an agreement to provide Sri Lanka with a $ 1 billion short-term concessional loan facility when Finance Minister Basil Rajapaksa visited New Delhi on Thursday. statement.
The loan facility provided by the State Bank of India helps the Sri Lankan government procure food, medicines and other necessities.
“Neighborhood is first. India is alongside Sri Lanka. A US $ 1 billion credit line signed for the supply of essentials. An important element of India’s expanded support package.” Tweet.
The loan will be made in addition to the $ 500 million credit line provided by India to help Sri Lanka buy fuel last month.
Sri Lanka’s foreign exchange reserves have fallen 70% over the past two years to about $ 2.31 billion, struggling to pay for important imports such as food and fuel.
Opposition leaders and citizens protested all over the country and blamed the government for the country’s economic crisis. The result is fuel shortages, electricity cuts and rising food prices.
On Wednesday, Sri Lanka President Mahinda Rajapaksa announced that his government was discussing postponement of loan repayments with the International Monetary Fund (IMF) and other international financial institutions.
“Through these discussions, I would like to find a way to repay annual loan installments, government bonds, etc. After discussing with the International Monetary Fund, I will consider the strengths and weaknesses and then work with them. I did it, “said Rajapaksa. The aired address.
IMF spokesman Gerry Rice said Friday that financial institutions are “ready to discuss all options in Sri Lanka.”
Rice told reporters that the IMF emphasized Sri Lanka’s urgent need to “implement a credible and coherent strategy to restore macroeconomic stability and debt sustainability.”
The Sri Lankan government has also called on China to help restructure its debt, and China has asked China to provide a concessional trade credit plan for its imports, but whether Beijing will accept the request or not. Still unknown.
China is considered the fourth largest lender in Sri Lanka after the international financial markets, the Asian Development Bank and Japan.
Reuters contributed to this report.