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India to support crisis-hit Sri Lanka's economic recovery

Island nation needs about $5 billion in the next six months to cover basic necessities for its 22 million people

Reuters June 23, 2022

A woman waits to apply for a passport at the Sri Lanka's Immigration and Emigration Department, amid the country's economic crisis, in Colombo, Sri Lanka, June 8, 2022. PHOTO: REUTERS

COLOMBO:

India's top diplomat held talks with Sri Lanka's president and prime minister on Thursday as India signalled its willingness to go beyond the $4 billion in loans, swaps and aid that it has already provided its cash-strapped neighbour.

Sri Lanka is facing its worst economic crisis in seven decades, with a severe foreign exchange shortage hampering the import of essentials, including food, fuel and medicines.

The island nation off the tip of southern India needs about $5 billion in the next six months to cover basic necessities for its 22 million people, who have been struggling with long queues for basic items, worsening shortages and power cuts.

Indian Foreign Secretary Vinay Kwatra, accompanied by other Indian officials, held talks with President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe on providing further financial assistance to the country, the president's office said in a statement.

"Indian Foreign Secretary Vinay Kwatra has said that the Government of India will extend its fullest support to Sri Lanka in overcoming the current difficult situation as a close friend," the statement said.

"The Indian delegation stated that the Government of India and the political authorities are committed to provide continued support to Sri Lanka," it added.

The Indian team held a separate meeting with Wickremesinghe, the central bank governor and finance ministry officials, an official from the prime minister's office said.

Also read: Sri Lanka’s growth trajectory: some policy lessons

India has been the principal source of foreign assistance to Sri Lanka this year, supplying more than $4 billion, Wickremesinghe told parliament this week.

The neighbours are also in talks for additional support including a $500 million credit line for fuel and help with importing fertilizer and rice as Sri Lanka attempts to stave off a food crisis, officials said.

Sri Lanka plans to hold a donor conference with China, India and Japan, Wickremesinghe said, as it continues talks with the International Monetary Fund for a bailout package of about $3 billion.

COMMENTS (1)

test | 2 years ago | Reply I am shocked to know that the island nation has 22 million population. Look at the size of Australia its population is 26 million. Sri Lanka just messed up it self. There is no massive industrialization even no industry in Sri Lanka at all. How was it feeding those masses Simply by taking loans which means economy default was its destiny it was slow but was inevitable. Taking loans to feed your over population means you will end up being bankrupt one day. The only solution is to cut imports massively forcefully take the money out of your corrupt and elite. Increase taxation and remove subsidies for un productive sectors completely. Close your assembly plants and start instant manufacturing. Look for investments if countries refuse then close your embassies overseas. Bring in a specialist teams of economists policy makers engineers technicians skillful persons highly specialized industrialists and information technology specialists and sit down with them to talk about future in a most serious manner. Build your own IT and Manufacturing capacity by buying cheap raw materials and by producing cheap electricity. Produce your own agriculture and then you will never go bankrupt unless corrupt ruling elite or dynasties come back then you will certainly go bankrupt.

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