Home Asia India Renews Sri Lanka’s $1 Billion Credit Line

India Renews Sri Lanka’s $1 Billion Credit Line

On May 30, 2023, India extended its $1 billion credit line to Sri Lanka for another year to assist the island nation, struck hard by an unprecedented financial crisis, in obtaining much-needed medication, food, and other supplies.

In March of last year, the State Bank of India (SBI) and the Sri Lankan government reached an agreement for a $1 billion loan facility. At the height of the country’s economic crisis, India extended a credit line to Sri Lanka.

An amendment agreement was signed in Colombo in the presence of Sri Lanka’s minister of state for finance, Shehan Semasinghe, to extend the credit facility offered in March 2022 for the procurement of necessary products.

Last year, India donated about $4 billion in economic aid to Sri Lanka, including lines of credit to purchase fuel, food, and medicines, deferred payment of loans, and currency support to help the island country deal with its worst economic crisis in decades.

The Indian High Commission in Sri Lanka tweeted that India reiterates its support for the people of Sri Lanka. The Amendment Agreement signed in the presence of Hon.Minister @ShehanSema would allow Sri Lanka to continue using the USD 1 billion Indian credit facility for the purchase of food, medication, and other necessities for another year.

It further said that beyond the original time frame, that is, until March 2024, The facility was released by India via @TheOfficialSBI in accordance with a particular request from the GOSL and is part of India’s USD 4 billion in multi-pronged assistance provided last year.

State Minister of Finance Shehan Semasinghe tweeted that the agreement to extend the US$1000 million aid scheme for the import of critical supplies for another year had been signed. The State Bank of India executives virtually attended the ceremony.

Senior officials from Sri Lanka’s finance ministry and the Indian high commission were present at the signing ceremony for the modified agreement, while SBI officials participated virtually.

According to the Indian mission in Colombo, the help was provided in accordance with New Delhi’s “Neighbourhood First” policy. It said that the continued support of India for Sri Lanka demonstrates their steadfast commitment to working with the government and people of Sri Lanka to achieve early economic stabilization and recovery.

Meanwhile, on May 30, Sri Lanka announced that preliminary work to revive the abandoned Japan-funded Light Rail Transit (LRT) project had commenced. The cabinet agreed with President Ranil Wickremesinghe’s request to restart the project. Mr. Wickremesinghe recently visited Japan.

The Cabinet spokesman and Minister for Transport and Highways for Sri Lanka, Bandula Gunawardane, told reporters that due to the abrupt termination of various agreements and plans, President Wickremesinghe traveled to Japan to assuage some of their concerns.