COLOMBO: Sri Lanka has sought an additional credit line of $1 billion from India to import essentials amid its worst economic crisis in decades, two sources said on Monday, as the Indian foreign minister began talks with the government of its neighbour.
Sri Lanka faces an economic crisis as it struggles to pay for essential imports of food and fuel after a 70% drop in foreign exchange reserves since January 2020 led to a currency devaluation and efforts to seek help from global lenders.
New Delhi has indicated it would meet the request for the new line, to be used for importing essential items such as rice, wheat flour, pulses, sugar and medicines, said one of the sources briefed on the matter.
Sri Lanka fuel prices soar as economy reels
“Sri Lanka has requested an additional $1 billion credit line from India for imports of essentials,” the second source said. “This will be on top of the $1 billion credit line already pledged by India.” Both sources declined to be identified as the discussions were confidential.
The finance and foreign ministries of Sri Lanka, as well as India’s foreign ministry, did not immediately respond to requests seeking comment.
Sri Lankan Finance Minister Basil Rajapaksa signed the earlier credit line of $1 billion in the Indian capital of New Delhi this month to help pay for critical imports by the Indian Ocean island nation.