Tuesday, May 21, 2024

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Sri Lanka receives US$2.4 billion worth of support from India

Finance Minister Basil Rajapaksa received the assurance of Indian External Affairs Minister Dr. S. Jaishankar that his country is extending US $ 2.4 billion worth of support from India with its recent relief package.

Details of the fresh assistance package were discussed and finalized during their virtual meeting, which was a follow up to Rajapaksa’s visit to New Delhi last month.

A statement from the Indian High Commission said both Ministers positively noted the extension of $ 400 million to Sri Lanka under the SAARC currency swap arrangement and deferral of A.C.U. settlement of $ 515.2 million by two months, which would assist Sri Lanka.

Separately, the two Ministers also reviewed the progress in extending the Indian credit facility of $ 1 billion for importing food, essential items and medicine and $ 500 million for importing fuel from India.

Rajapaksa had recalled India’s long standing cooperation with Sri Lanka and deeply appreciated the gestures of support.

He welcomed Indian investments in Sri Lanka in a number of important spheres, including ports, infrastructure, energy, renewable energy, power and manufacturing, and assured that a conducive environment would be provided to encourage such investments.

In this context, both Ministers noted that the recent steps taken by the Government of Sri Lanka for jointly modernizing Trincomalee Oil Tank Farms would boost confidence of investors, apart from enhancing Sri Lanka’s energy security.

The two Ministers agreed to remain in close touch for guiding mutually beneficial bilateral economic cooperation towards long-term economic partnership for shared progress and prosperity, the Indian High Commission added. 

Ruling out default or immediate rescheduling, Finance Minister Basil Rajapaksa assured the public and the private sector that essential imports would be sourced whilst servicing the country’s debt. 

He pointed to the record $ 21 billion in imports last year despite the challenging foreign reserves situation as well as all-time high exports of over $ 12 billion. 

“The impressive export performance proves that the required imported inputs have been facilitated,” the Finance Minister added. 

Basil’s assurance comes amidst fresh concerns over reliable supply of fuel, especially for thermal power generation, as well as continuous complaints by the private sector that banks don’t have adequate foreign exchange to open Letters of Credit in a timely manner. 

However, the Finance Minister’s confidence appears to stem from his successful online discussion with India’s External Affairs Minister Foreign Secretary Dr. S. Jaishankar on Saturday where the giant neighbour assured forex support to the tune of $ 1.9 billion.

The Central Bank had been boosting reserves to over $ 3 billion by the end of last month. China, as well as Japan, has also assured support to Sri Lanka. 

Of the nearly $ 7 billion total debt repayment scheduled for this year, the $ 500 million International Sovereign Bonds (ISBs) mature on Tuesday 18.

 The CB by Monday 17 had already placed the funds for settlement. Another $ 1 billion worth of ISBs mature in July. 

Sri Lanka repaid $ 2 billion worth of maturing ISBs each in 2020 and 2021 whilst overall debt repayment amounted to approximately $ 6 billion in the past two years. Sri Lanka faces $ 25 billion in sovereign foreign currency obligations until 2026. 

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