Finance ministers of Sri Lanka and India to meet; Negotiations on a $1 billion loan

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Sri Lanka’s finance minister met with Prime Minister Narendra Modi on Wednesday.

Dove:

Sri Lankan Finance Minister Basil Rajapaksha is expected to meet his Indian counterpart Nirmala Sitharaman this week to discuss the $1 billion loan the Indian government has agreed to provide and will also share the roadmap on how to use the funds.

India has already provided a $500 million fuel loan and a $400 million currency swap under the South Asian Association for Regional Cooperation (SAARC) facility, reported the Policy Research Group.

Earlier, the Sri Lankan Finance Minister met Prime Minister Narendra Modi and Foreign Minister S Jaishankar on Wednesday and thanked Prime Minister Modi for India’s support to the Sri Lankan economy.

India has stepped up its efforts and pledged $2.415 billion to the island nation to help overcome severe financial constraints caused by paying off foreign debt and the lack of US dollars in the country for business.

Sri Lanka is moving away from China while moving closer to India following Colombo’s failure to repay Chinese loans worth $4.5 billion amid fears of a “trap debt “.

The Sri Lankan Foreign Minister has asked China and different countries to help them in their financial crisis.

Sri Lanka has also proposed that whichever country helps them, Sri Lanka will collaborate in providing the essentials and providing them with the economic opportunities on their island, the think tank reported.

Sri Lanka’s credit rating was downgraded by Fitch Ratings and Moody’s Investors Service due to delays in securing new funds, which are needed to honor loan commitments. The country is on the verge of default.

The Saudi Foreign Minister, who recently visited Colombo, was invited to invest in the port city project and the Hambantota port project. Similarly, Oman was asked to contribute to their fuel prices.

Sri Lanka’s financial crisis started with the Easter Sunday bombings in 2019 and the situation deteriorated when the tourism rate plummeted and the government gave 25% tax breaks to investors.

In January this year, Jaishankar held a virtual meeting with Sri Lankan Finance Minister Basil Rajapaksa and said that India has always supported Sri Lanka and will continue to support Sri Lanka in every way possible to overcoming the economic and other challenges posed by the COVID-19 pandemic.



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