- Extends $ 350 m in concessional credit lines with additional $ 100 m grant
The Government of India extended $ 350 million in concessional lines of credit, and an additional $ 100 million in grant funds to Sri Lanka, with the intention of supporting the reconstruction and recovery efforts related to the aftermath of Cyclone Ditwah, Indian External Affairs Minister Subrahmanyam Jaishankar informed Colombo, last Tuesday (23).
“The assistance package that we have proposed is worth $ 450 million; it will include $ 350 million in concessional lines of credit, and $ 100 million of grants,” Jaishankar said, adding that the package was being finalised in close consultation with the Government of Sri Lanka.
“Our assistance would cover sectors worst affected by this cyclone, including rehabilitation and restoration of road, railway and bridge connectivity, support for construction of houses fully destroyed and partially damaged, and support for health and education systems, in particular, those that have been damaged by the cyclone.”
He further added that the assistance is to also be utilised to address possible shortages in agricultural supply, in the short and medium term, and work towards better disaster response and preparedness.
This development arrives seven months after Sri Lanka concluded restructuring of almost $ 931 million in lines of credit and buyers’ credit facility agreements with the Indian Government.
Addressing the courtesy call, Sri Lankan Foreign Affairs Minister Vijitha Herath noted India’s past assistance efforts during Sri Lanka’s economic crisis in 2022.
“We recall the unprecedented assistance amounting to $ 4 billion extended through lines of credit for essential goods and petroleum, bilateral currency swaps and liability deferment.”
During the crisis, with foreign reserves at $ 2.36 billion and having defaulted on $ 51 billion in external debt, the Reserve Bank of India (RBI) had assisted Sri Lanka with a $ 400 million currency swap and a deferral of $ 510 million in trade liabilities in the Asian Clearing Union (ACU).
Further, the Indian State Bank, a national commercial bank, extended a $ 500 million credit line for petroleum and a $ 1 billion credit line for essential commodities, particularly for pharmaceutical imports. The Indian Exim Bank also extended a $ 55 million credit line for fertilizer imports, Sri Lanka was grappling with the aftermath of a nationwide ban of chemical fertilisers and agrochemicals from the previous year.
“Sri Lanka and India share a long-standing multidimensional relationship rooted in expanding economic linkages. Our bilateral relations continue to go from strength to strength, through regular high-level engagements and close cooperation at political, official and people-to-people levels,” Herath said.
“In this regard, we deeply value India’s continued support in stabilising the Sri Lankan economy through multi-bound assistance, including emergency financing and foreign exchange support, as well as $ 20.66 million extended to settle payments due for projects completed under existing lines of credit,” he added.