India comes forward to extend credit facility to Sri Lanka amid crisis.

The economy of Sri Lanka is at a very delicate stage for now. Therefore, India has extended credit facilities to its closest neighbor during such tough times. India has decided to advance a credit facility to Sri Lanka. The amount is more than USD 1 billion. This facility is temporary for the time being and hence would help Sri Lanka purchase essential food commodities and medicines for the country. The agreement has been executed between both the parties. However, the terms and conditions of the loan and the swap value of the rupee are still yet to be worked out.
India has already helped its neighbor many times. Last year, the Government of Sri Lanka also requested the Indian Government to extend a certain amount as a part of the Asian Clearing Scheme for 5 years. However, such a request was turned down by the Indian Government due to internal pricing issues. Instead, the Reserve Bank of India proposed an extension of USD 400 million swap facility to Sri Lanka for 5 years. The tenure could be further amended if Sri Lanka agrees to increase the margin.
In a press conference last week, the Finance Minister of Sri Lanka disclosed that the island nation had already settled a loan of USD 121 million to India within the period. Not only this but also, there are outstanding loans worth USD 4 billion that Sri Lanka has to repay India. These loan facilities have been extended to grow industries, technology, defense, and energy in Sri Lanka. The Indian Public Entities, such as the Indian Oil Corporation, have even locally installed fueling stations ever since the foreign exchange reserve of Sri Lanka dried to pay for the fuel imports.
India has always proved to be a helpful aid during times of distress, especially for Sri Lanka. Sri Lanka is currently under an obligation to settle the Extended Fund Facility sponsored by the International Monetary Fund. Despite these outstanding obligations, India is again trusting Sri Lanka with such a huge amount. The Indian experts would be helping Sri Lanka restructure its debt facilities. Indian officials have acknowledged that India is extending such facilities on humanitarian and economic grounds. The interest rates have been kept very low to enable the country to repay the debt easily and without default.

error: Content is protected !!