Monday, April 22, 2024
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India reiterates its support to Sri Lanka under ‘Neighbourhood First’ policy

India says under its ‘Neighbourhood First’ policy it has always come forward to help debt-ridden Sri Lanka, and in the latest instance New Delhi has distributed rations in Kalmunai.

Taking to Twitter, the High Commission of India in Colombo said, “Support by @IndiainSL to needy sections continues!! Glimpses of ration distribution in Kalmunai.”

The cash-strapped country in April declared its first-ever debt default in its history as the economic crisis since independence from Britain in 1948 triggered by forex shortages sparked public protests.

The island-nation plunged into a financial crisis after the Covid-19 pandemic affected tourism, which is considered the country’s economic backbone, and remittances from citizens working abroad fell.

The war in Ukraine escalated the crisis as prices for imports, particularly fuel, rose sharply due to soaring inflation. And in such a situation, India offered its help to the debt-ridden country.

The Executive Board of the IMF is scheduled to meet on March 20 to consider Sri Lanka’s request for a bailout, and if approved, the first tranche of the facility would be released shortly.

Meanwhile, Sri Lankan President Ranil Wickremesinghe has assured the country’s official bilateral creditors of transparency, equal treatment of all creditors, and equitable burden-sharing of all restructured debt in resolving the country’s economic crisis.

The new legislation will prioritize controlling inflation and introduce an inflation target, Weerasinghe said, adding that the finance minister and the central bank would together agree on what that target should be.

Sri Lanka will also eventually set up a separate entity to raise funds to settle its sovereign debt, removing that responsibility from the central bank, once the new legislation is passed, he said.

India announced a USD 1 billion line of credit to Sri Lanka last year as part of its financial assistance to help the country deal with its economic crisis.

After an agreement to extend the line of credit was inked, Ministry of External Affairs (MEA) Spokesperson Arindam Bagchi had said India has always stood with the people of Sri Lanka and will continue to extend all possible support to the country.

A concessional credit facility of USD 1 billion was extended to the Government of Sri Lanka by the Government of India in March 2022 for supply of essential items including food, fuel, medicines, industrial raw materials.

Till date, lines of credit worth over USD 4 billion have been extended to Sri Lanka in diverse sectors including supply of essential items, petroleum, fertilisers, development of railways, infrastructure, defence sector and renewable energy, the statement said.

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