India has decided to extend its under-utilized USD 1 billion credit line to Sri Lanka for an additional year, in an effort to help the country overcome its severe economic crisis. The credit facility, which will last until March 2024, was granted by India in response to a specific request from the Government of Sri Lanka. This extension will enable Sri Lanka to procure essential items such as food, medicine, and other necessities. The agreement between the State Bank of India (SBI) and the Sri Lankan government was initially signed in March of the previous year, during the height of the country’s economic turmoil.
Commitment to the People of Sri Lanka
The Indian High Commission in Sri Lanka expressed its commitment to the people of Sri Lanka through a tweet, emphasizing that the $1 billion Indian credit facility will be used for the procurement of medicine, food, and other essentials. This extended support aligns with India’s ‘Neighbourhood First’ policy and demonstrates its unwavering commitment to stand with the government and people of Sri Lanka during this period of economic recovery.
Background on Sri Lanka’s Economic Crisis
Sri Lanka faced an unprecedented financial crisis in 2022, which marked the worst economic downturn since its independence from Britain in 1948. The severe scarcity of foreign exchange reserves led to political turmoil in the country, ultimately resulting in the removal of the influential Rajapaksa family from power. The credit facility extension provided by India is part of a comprehensive assistance package of $4 billion that was provided to Sri Lanka last year.
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