India comes to Lanka’s rescue with $500 mn credit

Colombo: India has come to the rescue of Sri Lanka with a $500 million line of credit (LOC), as it faces one of its worst financial crises leading to breakdown of power and fuel supplies. India's assistance followed discussions between the two sides during the visit of Lankan finance minister to India in December last. With the recent support, India’s overall development assistance to Lanka stands at close to $4 billion. Meanwhile, the Indian Oil company has announced the supply 40,000 metric tons of diesel to the country to generate electricity.
India's Exim bank and the Sri Lanka government signed an agreement for purchase of petroleum products in the presence of Lanka’s finance minister. The Indian support for fuel imports by Lanka from India, through the LOC, is in response to Sri Lanka’s request for assistance. This critical support comes in the wake of a virtual meeting between India’s External Affairs Minister S Jaishankar and Lankan president Gotabhaya Rajapaksa on January 15, during which they discussed a range of issues.
Expats urged to send money home
Meanwhile, Lankan president has urged the expats settled abroad to send money home as it struggles with the worst economic as coronavirus has dealt a heavy blow to an economy that depends heavily on tourism and trade. The government has estimated a loss of $14bn over the last two years. The economy is estimated to have contracted by 1.5 per cent in July-September 2021, according to the central bank.
Addressing a ceremony marking the independence day in Colombo, Gotabhaya urged expatriate Sri Lankans to invest in their homeland. Data shows that overseas remittances have fallen by nearly 60 per cent to $812m in December from a year earlier. Because of the currency shortage, importers are unable to clear their cargo and manufacturers are unable to buy raw materials from overseas.