India greenlights $ 1.9 b package

By Our Political Editor

Two financial aid packages from India amounting to $ 900 million will reach Sri Lanka this month, The Sunday Morning learns.

Indian Government sources confirmed to The Sunday Morning that the $ 400 million swap facility and the $ 500 million credit line for fuel would both reach Sri Lanka this month. It is believed that one of the facilities will reach the island’s coffers by 10 January.

“India will release the three requests for financial assistance presented by the Government of Sri Lanka. However, it is difficult to give the exact dates of the disbursements,” the source noted.

When questioned about the delay in disbursing the financial assistance, the source explained that the Indian Government had stopped credit lines for commodities and had to recommence the process once the Sri Lankan Government had presented such requests to the Indian Government. “This is the main reason for the delay,” they said.

The $ 1 billion facility sought by the Government will take more time due to the documentation process, it is learnt.

However, the source downplayed whether the Indian financial support was being delayed pending a positive nudge from the Sri Lankan Government, like the agreement to jointly develop the Trincomalee Oil Tank Farm.

Energy Minister Udaya Gammanpila last week announced that Sri Lanka and India would jointly develop the oil tanks while the lease of the Lanka Indian Oil Company tanks was also extended by another 50 years.

Apart from the $ 400 million swap facility, Sri Lanka has sought a $ 500 million credit line for fuel and a $ 1 billion credit line for food and medical purchases.

It is in this backdrop that Finance Minister Basil Rajapaksa is to make his second official trip to India starting 10 January.

Sri Lanka’s dangerously low foreign reserves last week received a boost with the receipt of a Yuan 10 billion (equivalent to $ 1.5 billion) facility that was signed last March. The Chinese facility is to be utilised to pay Chinese import bills.

Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal has continuously expressed confidence in building reserves without seeking assistance from the International Monetary Fund (IMF).

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