India extends $1-billion line of credit to Sri Lanka

India on Thursday extended a $1 billion credit facility to Sri Lanka which is in the midst of a severe economic crisis triggered by a shortage of foreign exchange.The “short term concessional loan facility” will be provided by State Bank of India, under an agreement signed between the two governments on Thursday during the visit of Sri Lankan Finance Minister Basil Rajapaksa. Finance Minister Nirmala Sitharaman nd External Affairs Minister S Jaishankar were present at the signing.  Key element of the package of support extended by India, Jaishankar tweeted.

Neighborhood first. India stands with Sri Lanka.

US$ 1 billion credit line signed for supply of essential commodities.

Key element of the package of support extended by India. pic.twitter.com/Fbzu5WFE3n

— Dr. S. Jaishankar (@DrSJaishankar) March 17, 2022

According to the statement, the three ministers — Rajapaksa, Sitharaman and Jaishankar — have “agreed to stay in regular contact and a co-ordinating mechanism consisting of senior officials from the two countries was set up to maintain a regular dialogue”. The assistance is to enable Sri Lanka to import food, other essential commodities and medicines from India, and was described by an Indian official as a “humanitarian measure to help the Sri Lankan people during a difficult time”. With this, Delhi has provided a total financial assistance of $2.4 billion to Sri Lanka since January, but this will only partially help mitigate the country’s economic meltdown. On Wednesday, President Gotabaya Rajapaksa said in an address to the nation that his government would work with the International Monetary Fund (IMF) to tide over the crisis. President Rajapaksa spoke after days of massive protests over the shortages and steep prices that have created day-to-day uncertainties for Sri Lankans across the country.