Sri Lanka is an economy heading towards certain doom. Power cuts extending over 7 hours a day, fuel prices skyrocketing, people facing severe inflation and protesting in the streets are common sights in the country nowadays.
Sri Lankan Finance Minister Basil Rajapaksa has confirmed that PM Modi has assured Colombo its full support in all social and economic matters, including international matters, along side a $1 billion Line of Credit (LoC). Last month India had extended a $500 million LoC to Sri Lanka.
The Line of Credit has no special conditions associated to it and will be repaid in 3 years. Local importers in Sri Lanka are free to import goods from India under the loan facility. This LoC comes after Sri Lanka purchased 40,000 metric tonnes of diesel and petrol from Indian Oil Corporation to meet its urgent requirements.
People are currently forced to stand in long queues and be satisfied with what they receive at under stocked pumps throughout the island nation. Both countries have been in bilateral talks according to which India will assist the island nation with short, mid and long term cooperation to assist the country.
Sri Lanka is only left with foreign reserves worth $2.31 billion. The country is unable to provide for its citizens’ food, medicinal and energy needs. It has voiced its intent to repay its oil debt to Iran via tea. The country is set to begin talks with the IMF next month when Mr. Rajapaksa will travel to Washington to present Sri Lanka’s proposal to the IMF.