Economic crisis: India looking at $ 750 m fuel LOCs for Sri Lanka

• Govt. requested $ 250 m enhancement of previous fuel LOC
• Further request made for fresh $ 500 m fuel credit line
• CWC seeks Indian assistance to overcome ongoing crisis
• Indian Govt. says will support SL to recover from current crisis

By Our Political Editor 

The Governments of Sri Lanka and India are currently engaged in the final stages of discussions on Lines of Credit (LOCs) amounting to a total of $ 750 million for fuel purchases, it is learnt. 

The Government of Sri Lanka has already sought a $ 250 million enhancement of the $ 500 million fuel credit line granted in March by India, while another request has been made for a fresh $ 500 million fuel LOC.

Highly-placed sources told The Sunday Morning that discussions were ongoing and had reached the final stages.

It is in this backdrop that India’s Finance Minister Nirmala Sitharaman had assured Ceylon Workers’ Congress (CWC) Leader Senthil Thondaman of India’s continuous support to Sri Lanka to overcome the current crisis.

“India will always support Sri Lanka and will definitely help the country recover from the current crisis,” Thondaman told The Sunday Morning, quoting Sitharaman’s comments during his meeting with the Finance Minister last week.

The CWC Leader was accompanied by MP Jeevan Thondaman during the meeting with Minister Sitharaman. After discussing the ongoing economic crisis in Sri Lanka at length, Senthil Thondaman also handed over a letter to the Indian Finance Minister with seven points seeking Indian assistance.

The seven points are: 1. Enhancement of the Line of Credit for essential commodities like food, medicine, fuel, and gas; 2. Indian financial institutions operating in Sri Lanka to adopt a new policy to support Indian investors and Sri Lankan businesses while encouraging new investments from India which will help stabilise the Sri Lankan economy; 3. Continuing with Indian Government-funded projects – which have been disrupted due to the hike in raw material prices – by revising prices; 4. Most of Sri Lanka’s essential food items are imported from India and the need to permit certain export restricted food items on a Government-to-Government basis; 5. Increase of education scholarships for the plantation community to include travel and accommodation of the students; 6. Establishing a power transmission cable from India to Sri Lanka on an emergency basis for nonstop power supply under the low power tariffs that exist in India; and 7. Considering a currency swap to support the economy to face the dollar crisis.

When asked about the response received from Sitharaman to the requests made by the CWC on behalf of Sri Lanka, Senthil Thondaman said the response from the Indian Finance Minister was very positive.