Sri Lankan finance minister to visit India today in hopes of sealing a billion dollar letter of credit

Amid the deteriorating economic situation in his country, Sri Lankan Finance Minister Basil Rajapaksa will begin his visit to India on Tuesday, hoping to seal a $1 billion Line of Credit (LoC) .

Earlier in January, External Affairs Minister S Jaishankar held a virtual meeting with Basil during which the two ministers reviewed progress made in extending India’s $1 billion credit facility. dollars for the import of foodstuffs, essential items and medicines.

As Sri Lanka faces a severe economic crisis, India has continued to support its neighboring country in its fight against the COVID-19 pandemic, and to mitigate its negative impact and development priorities.

India provided more than $500 million in currency swaps to bolster Sri Lanka’s foreign exchange reserves, bringing the total to $900 million. India has also extended the repayment deadline for Sri Lanka’s $500 million debt in the Asian arbitration.

This crucial visit by Basil Rajapaksa precedes Sri Lanka’s discussions with the International Monetary Fund (IMF) on an aid plan for the country in crisis.

The talks, due to take place in mid-April, are expected to include help with debt restructuring and dealing with its foreign currency shortage.

According to reports, the Sri Lankan foreign minister will visit the United States next month to present the country’s proposal to IMF officials.

The Daily Mirror reported that the island nation has to pay off around $4 billion in foreign debt this year.

The decision to engage with the international lender comes after months of government resistance despite calls from opposition leaders and experts for a stimulus package.

Additionally, Sri Lanka’s foreign exchange reserves have depleted to US$2.3 billion in February 2022.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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