The loan agreement is aimed at helping Sri Lanka cope with its current fuel shortages, amid worst economic crisis in the island nation.
India’s support for fuel imports by Sri Lanka, through the Line of Credit, is in light of Sri Lanka’s “urgent requirement”.
Following the agreement, the Sri Lankan government is likely to invite bids from Indian suppliers soon to finalise its import.
India’s support to Sri Lanka came after a virtual meeting between External Affairs Minister of India S. Jaishankar and Minister of Finance of Sri Lanka Basil Rajapaksa. The meeting was held on January 15, 2022.
India extended a USD 400 million currency swap to Sri Lanka in January 13, 2022.
India also deferred another USD 500 million due for settlement to Asian Clearing Union (ACU), in a bid to help Sri Lanka cope with its dollar crunch.
Now, governments from both the nations are in talks for another USD 1 billion assistance, at a time of unprecedented economic crisis in Sri Lanka.
