global economy

India to support crisis-hit Sri Lanka’s economic recovery

Reuters
India to support crisis-hit Sri Lanka’s economic recovery

LONG WAIT. Vehicles queue for diesel and gasoline, amid the country's economic crisis, in Colombo, Sri Lanka, June 23, 2022.

Dinuka Liyanawatte/Reuters

India has been the principal source of foreign assistance to Sri Lanka in 2022, supplying more than $4 billion. The neighbors are also in talks for additional support.

COLOMBO, Sri Lanka – India’s top diplomat held talks with Sri Lanka‘s president and prime minister on Thursday, June 23, as India signaled its willingness to go beyond the $4 billion in loans, swaps, and aid that it has already provided its cash-strapped neighbor.

Sri Lanka is facing its worst economic crisis in seven decades, with a severe foreign exchange shortage hampering the import of essentials, including foodfuel, and medicines.

The island nation off the tip of southern India needs about $5 billion in the next six months to cover basic necessities for its 22 million people, who have been struggling with long queues for basic items, worsening shortages, and power cuts.

Indian Foreign Secretary Vinay Kwatra, accompanied by other Indian officials, held talks with President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe on providing further financial assistance to the country, the president’s office said in a statement.

“Indian Foreign Secretary Vinay Kwatra has said that the government of India will extend its fullest support to Sri Lanka in overcoming the current difficult situation as a close friend,” the statement said.

“The Indian delegation stated that the government of India and the political authorities are committed to provide continued support to Sri Lanka,” it added.

The Indian team held a separate meeting with Wickremesinghe, the central bank governor, and finance ministry officials, an official from the prime minister’s office said.

India has been the principal source of foreign assistance to Sri Lanka this year, supplying more than $4 billion, Wickremesinghe told parliament this week.

The neighbors are also in talks for additional support including a $500-million credit line for fuel and help with importing fertilizer and rice as Sri Lanka attempts to stave off a food crisis, officials said.

Sri Lanka plans to hold a donor conference with China, India, and Japan, Wickremesinghe said, as it continues talks with the International Monetary Fund for a bailout package of about $3 billion. – Rappler.com